Football Governance Bill [HL]

Lord Harlech Excerpts

2nd reading
Wednesday 13th November 2024 Lords Chamber

[Lord Harlech (Con)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Jones of Moulsecoomb.

[Baroness Jones of Moulsecoomb (GP)]

Even if I am an Arsenal supporter.

[Lord Harlech (Con)]

Even if she is a Gooner.

This legislation seeks to overhaul football governance structures in England and Wales to make the sport more transparent, financially stable and responsible. Like any significant reform, it has both pros and cons, and has particularly sparked concern from the Premier League.

One of the Bill’s most significant provisions is the introduction of stronger financial regulation for clubs. The Bill aims to prevent the kind of financial mismanagement that has led to the collapse of several clubs in the past. The Premier League has seen several clubs run up huge debts. More than half of Premier League clubs reported losses in recent years. In the 2022-23 season alone, Premier League clubs collectively posted £1.1 billion in losses.

The issue of financial mismanagement is not confined to the Premier League. The English Football League has also seen its fair share of clubs that have gone into financial turmoil, leading to administration or outright bankruptcy. As the noble Lord, Lord Mann, explained, one of the most high-profile examples in recent years is Bury Football Club. In 2019, Bury, one of the oldest clubs in English football, was expelled from the Football League after it failed to meet financial obligations but could not find a buyer to stabilise the club’s finances. The collapse of Bury FC was a stark reminder of the financial vulnerabilities that can plague even historic clubs if the proper oversight is not in place.

As we have heard, clubs such as Bolton Wanderers, Macclesfield Town and Blackpool—clubs that are intrinsic, essential and at the core of their local communities—have experienced financial crises and been forced into administration. These situations affect clubs, their fans, local communities and the broader football pyramid. The Football Governance Bill seeks to address these issues by introducing stronger financial regulations and governance structures to ensure that no other clubs face the same fate as Bury.

The establishment of an independent football regulator is another cornerstone of the Bill. According to the 2021 survey conducted by the Fan Led Review of Football Governance, 92% of respondents supported the idea of an independent regulator, emphasising the desire for greater accountability in football governance. However, I would caveat that: 92% sounds like a lot, but the total number of respondents was 20,000. If you think about how many fans attend football across a weekend—on a Saturday afternoon or a Sunday—that is not a huge number. We have to think about what the fans who did not engage with the review want. That is just a word of caution before we proceed wholeheartedly down this track.

As other noble Lords have said, not all regulators in this country have been successful. While many are called independent, their accountability, particularly to Parliament, has been called into question. Can the Minister say how the Government will ensure this new regulator’s accountability to Parliament?

Proposals for more transparency in club ownership, and implementing a more rigorous owners’ and directors’ test, might help ensure that only financially responsible, ethical owners run clubs. This is particularly relevant given the history of some club owners who have brought financial ruin or unethical practices to their clubs.

An example is the Glazer family’s ownership of the club I support, Manchester United. Since the Glazers bought the club in 2005, Manchester United has been plagued by massive debt and a lack of investment in crucial areas such as infrastructure and youth development. The Glazers financed their acquisition of the club through highly leveraged debt, meaning that Manchester United was saddled with a debt of £500 million at the time of the takeover. Since then, the club has paid hundreds of millions in interest on this debt, money that could have been better spent on improving the club’s facilities or player acquisitions. Moreover, their ownership has been marked by a lack of transparency, with millions siphoned out of the club through dividends and “management fees”. This has sparked widespread fan protests and has contributed to a decline in Manchester United’s competitive edge despite its enormous global fan base. The Glazers’ negative impact on the club exemplifies the need for stricter ownership regulations, which the Bill proposes, to ensure that clubs are run in the best interests of their fans, their communities, and their long-term success.

However, the impact of these reforms will be felt not just in England; Welsh clubs that compete in the English football pyramid will also be affected. Welsh clubs such as Cardiff City, Swansea City and Newport County are integral members of the English Football League. These clubs will be subject to the same regulations and financial reforms as their English counterparts, meaning that they could benefit from increased financial solidarity payments from the Premier League and the EFL as part of the Bill’s redistribution proposals. However, there are concerns about how Welsh clubs will navigate their unique position within the English system. Welsh clubs are governed by the Football Association of Wales, rather than the FA, which adds a layer of complexity to any governance changes.

One of the main concerns from the Premier League is that the Bill represents excessive government intervention in football’s internal affairs. While the Government argue that reform is necessary, the Premier League contends that football should be governed by its authorities, not politicians or bureaucrats. Football, after all, is a global industry with complex dynamics, and many believe that government interference could stifle its autonomy and commercial success. According to a report by the Premier League, over £10 billion of commercial revenue flows into the English game each year, mainly due to the unique, autonomous structure of the league. Any increase in government regulation could jeopardise the commercial appeal of the league and its competitiveness, which might undermine the Premier League as the most profitable in world football.

As eloquently explained by my noble friend Lady Brady, another significant concern is the Bill’s proposed redistribution of football revenue. The Premier League generates substantial income from domestic and international broadcasting deals, and there are proposals to redistribute a more significant portion of this revenue to lower-league clubs. The Premier League earned £10.6 billion from broadcasting deals in the 2022-25 cycle. While this is a crucial source of income for the league, the Premier League argues that a large-scale redistribution could undermine its financial stability. Any reduction in this income could make it harder to maintain that competitive advantage.

In conclusion, while the Bill has some positive aspects, the dangers must be addressed. Redistributing wealth between leagues and introducing stricter ownership tests could have unintended and far-reaching consequences for the entire football pyramid.