Football Governance

Debate between Lord Foster of Bath and Dai Havard

Thursday 9th February 2012 Westminster Hall

[Mr Foster]

I hope the hon. Gentleman proves to be right and we will hear about the response on that issue that the Minister will receive. He is right to mention his concern for the sustainability of finance in football. As we heard from the Chair of the Committee, although debt has been declining, in the premiership it still stands at £2.6 billion. Some 68% of its income is being spent on players, rather than on other important things.

If we compare the premiership with the rest of European football, we discover that the English premiership has more than 50% of the debt held by all the leading clubs in Europe. Last season, the championship declared its highest ever debt at £133 million, and we know that it is spending about £4 for every £3 that it generates. That is not sustainable. It is vital to welcome UEFA’s proposals, and they will be implemented even though they will not affect all the clubs in this country. That is why the licensing proposals are so critical.

UEFA’s proposals are key. A report by Deloitte published today reflects much of what it said in its 2011 report, and points out that although there have been a lot of false dawns, the UEFA proposals may provide the key to moving forward and to financial sustainability. As it said in its 2011 report, however,

“the more things change, the more they stay the same. While football’s revenue performance has been spectacular, sustainably managing its costs remains football’s primary business challenge.”

That is a key issue that the Select Committee’s report and the UEFA proposals seek to address, which I welcome.

I also very much welcome the proposals from the Select Committee on governance of the game. It is right that the FA be the leading body for football in this country, and it must take charge of many of the deliberations that take place in the 14 different committees. It is ludicrous that so many of them report not to the board, but to the council. The key people making the decisions are therefore at a distance from the considerations of those various committees. The Select Committee was quite right to suggest that the board must be slimmed down. We should all welcome the moves to bring non-executives on to the board, but clearly more must be done to move forward and slim down.

Reform of the FA council itself is equally important. The Chair of the Select Committee has already made it clear how inappropriate the current arrangements are. I was interested in what Malcolm Clarke, the chairman of the Football Supporters’ Federation, said:

“It is impossible in a body of 118 people to have a critical challenge to the board about what it’s doing, partly because the decisions are long since passed and partly because of the sheer format of a body of that size.”

That echoes very much what the Chair of the Select Committee said, and it is crucial.

Rule 34 should be looked at again. The report fails to say very much about that and the remarks of the Chair of the Select Committee were perhaps slightly lacking for not mentioning it. Rule 34 makes it clear that football should be run like a not-for-profit company, with sport and football put before profit, and sadly I do not see that operating in spirit or to the letter.

Finally, licensing is critical. If we wish for a financially sustainable game, the UEFA rules will not cover all the clubs that concern us. The licensing proposal that the Select Committee and others have suggested is the way forward to ensure that similar rules on “fit and proper persons”, sustainability of finance and so on can be enshrined in a way that covers all the clubs in the game. I am particularly drawn, as the hon. Member for Liverpool, Walton (Steve Rotheram) is, to the recommendations of Supporters Direct on club licensing, which deserve to be looked at seriously.

My right hon. Friend the Deputy Prime Minister recently advocated the great benefits of the John Lewis model of running companies and employee share ownership, but with employee share ownership comes employee participation in governance. It seems vital that those who are key funders of the game have a much greater involvement in the governance of the game that they help to fund. There are real benefits to a stakeholder model of corporate governance, which is why Supporters Direct goes through the all the key things in its proposals, but also talks about how supporters can play a key role in the governance of individual clubs as part of the licensing proposal.

I said that I would try to be quick and I hope that I have been. This is an important report, but what will matter most is not what is in it or the Government’s response, but, critically, what the FA does with it. It must now get a grip on the governance and the finances of this crucial part of the culture of this country. So far, it has failed us. Let us hope that this time it will do something about it.

[Mr Dai Havard (in the Chair)]

Ten minutes with an intervention. Exemplary, Mr, Foster.