Football Governance Bill [HL]

Debate between Baroness Taylor of Bolton and Lord Markham

Committee stage
Wednesday 15th January 2025 Lords Chamber

[Baroness Taylor of Bolton (Lab)]

While the noble Lord is talking about parachute payments and the yo-yo, he used the figure of 14%. If you take out parachute payments, is the figure not an awful lot lower and actually near 4%?

[Lord Markham (Con)]

I am sure that we can get the absolute reference from the statto—the noble Lord, Lord Birt, will probably calculate it and tell us by the end of the debate. I think the figure is about 9%, but we can check that.

The point I was trying to make is that Tony Bloom, the chair of Brighton, and Paul Barber, its CEO, whom I have spoken to during this process, would say that parachute payments were a very important part of their business planning in giving them the confidence to invest, which allowed Brighton to stay up and thrive in the Premier League. There is a very good argument for them being there.

As much as I would like the regulator not to get involved in redistribution payments, I accept that it is likely that those powers will be granted. If we really narrow it down, the debate on this group and the previous one is all about the negotiation mechanism. That is where I appreciate so much the work that the noble Lord, Lord Birt, has done on this, because it is not a political point. I do not think anyone in the outside world would get into the intricacies of and care more broadly about the negotiation mechanisms that we are talking about, but what we are talking about is, as the Minister said, a theory behind binary choices and what will happen in terms of gaming. It is an untried theory that has not been done anywhere else, and it has been put forward. I thought the Minister said that it had not been done by the commission.

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[Baroness Taylor of Bolton (Lab)]

My Lords, I just want to pick up on some of the points made. It is right that we need a proportionate system and we have to be careful in what we do. But we cannot afford to be complacent about the state of British football today. Yes, the Premier League is doing very well at the moment, but we have to acknowledge the difficulties of many other clubs and the serious need for some change in the way in which many football clubs are run.

A report published on Monday this week from Professor Nick Lord and lecturer Peter Duncan in the department of criminology at the University of Manchester shows some of the dangers that Premier League clubs could face if we do not get the right financial structure, and how certain clubs could be, because of the complexity of their ownership, vulnerable to their funds being used for illicit purposes. I mention that because we do need regulation and we cannot be complacent and pretend that all is well even in the Premier League.

[Lord Markham (Con)]

I rise to speak to Amendment 329 in my name and that of my noble friend Lord Parkinson. I will speak very briefly, because Amendment 327, on costs, was spoken to extensively.

I think we all accept the need for a regulator. The points about broadcasting made by the noble Lord, Lord Birt, were points I am very familiar with as a former director of ITV and were very well made. On proportionality, we have talked a lot about Premier League clubs, but I would argue that when you have National League clubs who have two, three or four members of staff and an impact assessment that says they will need one member of staff for compliance on this, that tells me that we have the balance wrong. We are saying that a third of their staff need to be in compliance.

I would like to answer the point made by the noble Lord, Lord Bassam, who said that clubs should already have all this information because they are doing an audit. An audit is backward-looking over the year that has happened. What the regulator is asking clubs to do here is to write a three-year business plan, which is forward-looking.

[Lord Markham (Con)]

I can bore on this issue, as a former FTSE chief financial officer. An audit is backward-looking, and you have to have a going concern statement, which is the forward 12 months. It is nothing like the business plan requirements that the regulator is asking clubs to provide for three years going forward. There is no doubt that that will require clubs to employ consultants, accountants—you name it—so it will be a significant burden on them, and this is exactly the point we should be considering. When you think about it, if you are talking about one member of staff per national—

[Baroness Taylor of Bolton (Lab)]

The noble Lord is almost suggesting that clubs of whatever size should not have a business plan. One of the things we want to encourage and develop is sustainability. There has been complacency among many clubs at different levels, such that they have not made proper forward-looking plans. I do not think it is a burden on them to do so at the appropriate level and proportionately, as we were saying earlier, but it would help the sustainability of all football clubs if they were to look forward in that way.

[Lord Markham (Con)]

Speaking as a fully signed-up member of the anorak club, I completely understand the point about business plans, which I have always done in businesses I am involved in. I am talking about the reality of football clubs. There is no way I am going to argue that having a business plan is not sensible, but at the same time, suddenly putting business plan requirements on a club with a turnover of a couple of million and two or three members of staff is an expensive exercise. That is the context in which I am making this point, and it is why I think Amendment 327 is sensible. It would make sure that everything is set out, so that we go into this with our eyes fully open to the burdens and what we are expecting clubs to do.

Football Governance Bill [HL]

Debate between Baroness Taylor of Bolton and Lord Markham

Committee stage
Monday 2nd December 2024 Lords Chamber

[Baroness Taylor of Bolton (Lab)]

Can I just suggest to Members opposite who are making their point that they might look at Amendment 72, in my name and that of my noble friend Lady Grey-Thompson? It is called “Support to clubs”, which very specifically gives advice on how smaller clubs might be helped.

[Lord Markham (Con)]

I thank noble Lords and I think the point about Amendment 72 was well made. Why I believe this is so critical is that when we have been talking about big clubs the feeling almost is that they are going to look after themselves and somehow we do not need to worry about the Premier League. But, as we have all said, the clue is in the word “pyramid”. The fact that the Championship is the sixth-richest league in the world—richer than Portugal, Belgium and the Netherlands—is because of the money passed down from the Premier League. Fundamental to the health of the whole game, all the network and all the clubs is the health of the Premier League.

As my noble friend Lord Maude was saying, I am afraid that the more that I look into this Bill and the more I understand it, the more worried I become. As we have said before, if the only objective of the regulator is the survival of clubs, as the shadow regulator mentioned, the only tool it has in its locker is to get them to deposit cash as a cushion. I do not think there is any other mechanism. Again, I would be delighted if anyone else can come up with another mechanism and I will sit down and hear it. I really would be delighted.

But the only measure is to say “Okay, we want to be sure that there is no chance at all of you getting into financial difficulties, so put this money aside”. There have been figures of £20 million a club—£400 million—but, as noble Lords have said, maybe the bigger clubs are better able to cope. I bet the top eight or so—the Liverpools, the Manchesters, the Tottenhams et cetera—will be better able to cope. It will be the smaller clubs, especially the ones that are just trying to break in—such as Brentford and Brighton, which have now broken in, but as they were trying to get there—are the ones which will be disproportionately affected.

It is not just the Premier League clubs because, of course, we would be talking about clubs right the way down the pyramid having to make deposits to make sure that there is less risk of them getting into financial difficulties. Of course, the further down the pyramid you go, the more of a hardship that becomes. Let us understand it more. The shadow regulator was talking about his concern about dependence on rich owners and what you can do about that.

We can give two examples recently from my club, Chelsea. I think everyone would say that Matthew Harding was a very reputable business guy, had very good intentions and was an absolutely stand-up person. He was tragically killed in a helicopter crash. No one could have expected that. The club was in financial difficulties and had to be sold. What would the regulator’s answer to that have been? Probably, “Oh, you were dependent on a rich owner. You have to deposit more money in case, God forbid, they die in a helicopter crash”. Our next owner, Roman Abramovich, was very well regarded for about 18 years and was absolutely fine. Then Russia invaded Ukraine and, all of a sudden, he was no longer a reputable owner. What could the financial regulator have done about that? Well, clearly, it has to look at all the owners and think “Ooh, what could happen in your circumstance? Could your country end up doing something bad on the world stage? Deposit more money”.

It goes beyond that. Lots of noble Lords have said, “What do we want? We want better management of our clubs”. Are we asking the financial regulator to assess managers and say “Oh, I don’t think you’re very good”, or “I don’t think your business plan is very good”. What can a financial regulator do if they do not like the management of the club? They cannot sack them. What can they do if they do not like the business plan very much? They can say, “Well, please try better, please make it a bit better”. The only thing they can absolutely do at the end of the day is say “I don’t like your management very much, I’m not very confident in them, and I don’t like your business plan very much, so I’m going to ask you to put more money on deposit”.

Then you get into a situation where I guess you follow that through to its logical conclusion and some clubs are going to have to put a lot more on deposit than others, because the regulator has decided, you know, “I don’t like the cut of your jib”, for want of a better word. What sort of situation are we going to get into there? We can see as we peel back the onion that this is fraught with more and more difficulties. You are asking the regulator to opine on each club, each business plan, each set of owners and each set of management and say, depending on all that, how much money a club should set aside—with only one criterion for success for that regulator: that that club financially stays in its place and never gets threatened with going bust. There is only one criterion, so every time we are going to have an ever-increasing ratchet to de-risk every club, and the only mechanism to do that is to get them to put more and more money on deposit.

Again, please, I would be delighted. I know the Minister cares about football and the welfare of the game, so I would be delighted if someone could come up with another tool on how the regulator can try to manage sustainability. He could not come up with one the other day, so maybe we should ask him.

Football Governance Bill [HL]

Debate between Baroness Taylor of Bolton and Lord Markham

Committee stage
Wednesday 27th November 2024 Lords Chamber

[Lord Markham (Con)]

I must admit that I am similarly scratching my head over how the debate seems to have gone into whether it needs to be one or the other—whether there is somehow a trade-off between sustainability and success. I am just surprised that success is not something that we would all want. I do not just mean success in terms of England playing in all the tournaments, which I hope we would all agree we want, and I do not just mean success in terms of taking on responsibility, as the noble Lord, Lord Watson, says, for how well the teams do. We are talking about the success of the game in terms of the financial wherewithal.

I am a big believer that in life you want to maximise the size of the cake before you argue how you divide it. How do you maximise the size of the cake? Certain measures are vital to that. TV viewership is key—not just because of how much people enjoy watching the game, but that is what the media rights companies pay for. That is what is paying for the game, so why would we not want that as one of the criteria? I think the noble Lord, Lord Londesborough, was absolutely correct. Why is there not room for both? Why, all of a sudden, as the noble Baroness, Lady Evans, said, has growth become something we do not want here? Surely we all want growth; the Government are saying, quite rightly, that they are all about growth. I could not agree more, so why would not we want a measure of success here in the objectives of the football regulator to have growth?

[Baroness Taylor of Bolton (Lab)]

I hear what the noble Lord is saying, and as I have been chairing the Industry and Regulators Committee, I have heard a lot about growth. What worries me is that in one moment he and his colleagues are complaining that the regulator is going to be interfering too much, but in the next, we are hearing that the regulator should do more—it should be responsible for growth, for getting more fans and for getting more viewers. Is it more or is it less?

[Lord Markham (Con)]

I am very glad the noble Baroness mentioned that. When you set the objectives of any organisation, you want to set out the balancing factors. If it is only sustainability, you can get into the lowest common denominator, because a regulator would have absolutely done its job, by the nature of what is set down, just by the survival of all the clubs. There is a very easy way to do that: just dole out all the Premier League money to all the clubs straight away. That would make them all sustainable, giving the money to all the clubs. I think we would all agree that that would be a pretty nonsensical way to do it, but that would achieve the objective. If you set only a single objective, it is very one-dimensional.

Why would you not want a regulator to take into account that the overall financial health of the game is dependent on the TV viewership? That is what drives the money. What drives the TV viewership? It is how competitive the games are—not just the top games but all the games through the league? As I mentioned at Second Reading, and as the noble Lord, Lord Birt, mentioned, we are people who have sold and bought media rights around the world. The reason why countries as far flung as Nigeria, Thailand and everywhere else will pay so much for the rights is that every game is competitive. There is a chance that Bournemouth will go out and beat Liverpool, so everyone cares about it. The Premier League does not have a God-given right to be successful. As the noble Lord, Lord Birt, said, many years ago, the Italian league was more successful. The difference today is that you do not have just two or three top teams, as you see in Germany, Spain and Italy. You have a whole host of teams which are all competitive in the league, so every game becomes interesting to watch.

My concern in all of this is if the only criterion set down is that of sustainability, it is so one-dimensional that the regulator could just decide to discharge its duties in that way. I hope it will not, but when it comes back to the scrutiny that we are all saying it should have, the regulator could sit here among us all and say, “Look, I have made all these clubs sustainable. Okay, too bad that the TV viewership has gone down and too bad that a load of the games are no longer competitive, so the TV rights money has gone down, but they are all sustainable, because I doled out all the money”. I do not think that is what any of us would want. I really do not understand why this should be. This is not a political point; I really do not understand the objective at all. I am literally scratching my head as to why there should be a problem with that.

That is why in our later amendments we try to put in other criteria of success. Those are designed to be the ones that are all about maximising the size of the financial pie, by making sure that TV viewership and attendance are high. People forget in all of this—

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[Lord Markham (Con)]

I thank my noble friend for his point. I would totally include in that measure of success, as the noble Lord, Lord Mann, says, enjoyment. That is absolutely part of it, because it is the enjoyment which means that people will pay a lot of money for their TV subscriptions, but it is all about the financial health of the game.

On the point made by the noble Baroness, Lady Taylor, I know that in terms of Clause 10 and the funds for six months, the amendment is well intentioned and sounds quite reasonable. However, I have been speaking to a different Premier League chair—I am sure that we have all been speaking to club chairmen—and from one of those clubs that is very respectable. They are afraid of having to lock a lot of money into escrow for their sustainability. They said that all that this will stop them doing is investing in their team and their players. They look at their club as a balance sheet, with assets and liabilities. If the worst came to worst, they would look to sell one of their players, because they are assets. That is what businesses do; it is what clubs do. You do not need to say, “You’ve got to lock six months’ worth of money in there, £30 million, so you can’t afford a striker”. It is, “If you want to buy that striker, take the risk,” as my noble friend would say.

[Baroness Taylor of Bolton (Lab)]

Would the noble Lord agree that many other businesses have constraints on the kind of reserves that they have to have and that charities certainly have constraints on the reserves that they have to have? One of the difficulties, when many clubs go under or are on the verge of going under, is that there is a category of football creditors who have special access to any money that might be there, so lots of local businesses, as well as many fans, get really hit if things go wrong. Even discussing this seems to be alien to him. I am not saying that the wording of that amendment is perfect, but it is an area that is worthy of consideration if we are going to improve the future of clubs throughout the pyramid going forward.

[Lord Markham (Con)]

The point that I was trying to make is that I absolutely agree that the noble Baroness’s amendment is well intended in terms of sustainability. I am worried that, as we all get back to the mission creep point and try to resolve all these things, we get into the law of unintended consequences. I know from speaking to a club chairman that if you put that money aside in that way, all you will do is deter their ability to invest in players. As the noble Lord, Lord Watson, said, if we want to make ourselves unpopular in all this, it is by starting to do things that stop clubs buying players and investing. We think that VAR is unpopular today. Suddenly, you make all the clubs put £30 million to £40 million in escrow and they cannot buy those players. That would be a very brave decision for a Minister.