Football Governance Bill [HL]

Lord Birt Excerpts

Committee stage
Monday 2nd December 2024 Lords Chamber

[Lord Maude of Horsham (Con)]

I am grateful to my noble friend for drawing your Lordships’ attention to that. It is absolutely the case. When Governments consult with a sector, the people they consult with tend to be the big ones. I spent a lot of time thinking about this and trying to work out how to deal with it in previous contexts. If you run a small company, business or operation—a small football club—you are far more concerned with getting on with whatever the next thing is on your agenda. You have got relatively few people around to do the work. Big companies have a machine that is set up to deal with all this, so the point that my noble friend makes is entirely right.

The point behind this amendment is incredibly important, and my noble friend has done a great service in raising it in the vivid way that he has. We have to consider this, because once you create an independent regulator, you have created something that is supposedly independent, and it is much harder to come back. Later in these debates, we will come to my noble friend Lord Goodman’s proposed sunset clause. That would be some kind of constraint because the threat or certainty of there being a proper, serious review after a given length of time will focus the minds of the regulator. But without that, without the kind of amendment that my noble friend has tabled, I think we stand in great danger.

[Lord Birt (CB)]

My Lords, absolutely nobody is going to support the idea of overregulation. I spent my whole career, however, in a highly regulated industry: broadcasting. The BBC was the result of a regulatory regime imposed over 100 years ago, and ITV was heavily regulated, with enormous benefits as a result. We have the best broadcasting system in the whole world, so good regulation makes things better. I agree that we do not want to see overregulation.

The strongest part of this Bill is that it tries to ensure that every club is well managed, and that is to be welcomed. Let us recognise that that has not been the general picture, and there is no club that I know of that has not been badly managed, including my own, at some point in its history. Somebody else gave the example that, for a few hours this weekend, Brighton were number two in the Premier League. That is absolutely 100% down to the fact that they have been exceptionally well-managed in recent years.

In my career, I encountered many boards of clubs at every level and, frankly, it was an extremely mixed picture. We name no names. Some of them I encountered were very well-managed, some were managed by rogues and many by people who had a bit of money—not enough money—and were attracted to football for the wrong reasons but completely and utterly lacked any ability to manage a club properly. The great strength of this Bill, in demanding proper boards and financial probity, will bring, I hope, a great improvement to the generality of English football down the leagues and have strong, competent boards wherever you look.

I cannot resist one short story. I know of a Prime Minister—I will not name who the Prime Minister was, but it is not the person you think that I am thinking of; it is somebody else—who was invited to a match and to have lunch beforehand. The Special Branch at Number 10 looked at all the other guests, and every single one of them had a criminal record. That is a true story. That is what we want to put an end to. We want good, strong boards and prudent financial management.

What is the justification for that intervention? It is all the things we have already mentioned. These clubs are not just normal commercial assets; they are deeply embedded in their communities; they have their own heritage; they have their own history; they are culturally important. That justifies appropriate and proportionate regulation and intervention.

Having said lots of nice things, I do have profound reservations about the mechanism for establishing fund flow down the pyramid, but that is a matter for later in our deliberations.

--- Later in debate ---

[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.

[Lord Birt (CB)]

Is it not far more likely that the regulator will simply insist on having a good-quality, conventional board—I know from the noble Lord’s experience that he will know what that looks like—with a mix of skills, a proper CFO and a real sense of financial accountability and risk management? That is the direction of travel a regulator is likely to take. I am sure the noble Lord would agree from his experience that that tends to lead to strong institutions—and that is not a description of many football clubs at any level.

[Lord Maude of Horsham (Con)]

Before my noble friend responds to that, he is on a very important point here about the remedies that are available to a regulator where they have concerns. The noble Lord suggests that you put in some great and good, experienced, splendid people, and they will make it all better. We have rightly heard a lot from the noble Lord opposite about Brighton & Hove Albion. If a visionary owner had a view of how you could, by investing in the right way, in the right kind of players and the right methodologies, have a different approach to managing and developing a football club, what would a great and good, wise and sage board have said? It would have said “Ooh, very difficult”. Board members would have pursed their lips and sucked their teeth and possibly stopped there being this great success story.

What would a regulator have done? They would have said, “This all looks very risky. How can you justify this great vision you’ve got?” Would they, as my noble friend suggested, say “Well, you’ve got to put more and more money on deposit as a hedge against possible failure”? What are you then going to say to fans when they say, “Well, why aren’t you investing in the players that we need to create the success?” This is why so much of this is of concern. It goes back to the point we made earlier about sustainability. It is all about downward pressure. It is putting a cap on aspiration, vision, excitement, ambition and the possibility of having these great romantic stories of huge success. Is that really what we want the future of English football to be?