Football Governance Bill [HL]

Lord Jackson of Peterborough Excerpts

Committee stage
Monday 9th December 2024 Lords Chamber

He then has Amendment 52 as well. Under those circumstances, it is relevant, as I have said persistently, to ensure that there is clear identification of the impact on the clubs, more specifically than saying that this will be proportionate. We need to adopt a frame of mind that ensures that the regulator is acting beneficially to football in general and not imposing undue burdens on our clubs that are not faced by other clubs around the world, with whom we will have to compete not only in tournaments, to which I have just referred, but for television rights and international funds. Without that frame of mind, we will not have a Premier League of which we can be rightly proud. With those opening comments, I beg to move my noble friend Lord Maude’s amendment.

[Lord Jackson of Peterborough (Con)]

My Lords, I will speak to my Amendment 57 in this first group. I am delighted to see the noble Lord, Lord Harris of Haringey, in his place and I appreciate his cameo role in this Committee. I had not noticed him here for most of the deliberations of the Committee, but we welcome him anyway.

This is a probing amendment to press the Government on how much intervention they envisage the regulator pursuing in the internal financial affairs of clubs. It is a probing amendment because we on this side seek to solicit from the Minister more precise details, which are not in the Bill, about how much she and the Government envisage the independent football regulator having a part to play in the technical minutiae of the finances of each club.

Because of the nature of the Bill and the wide-ranging powers under its Henry VIII clauses, we simply do not know the degree of interference in those 116 clubs. For instance, will a club be required periodically to enunciate its liquidity requirements on a quarterly, half-yearly or annual basis? What debt cap rules will they have? What player acquisition and sales issues will the regulator become involved in?

Importantly, there are also the decisions taken by the boards of the 116 football clubs around land and property, which are covered elsewhere in the Bill but relate to this amendment—where they play and what contractual arrangements they may have with landowners on a rental, leasehold or freehold basis. Will the regulator be prescriptive about which banking arrangements, and with which organisations, each club is free to enter into?

These are important issues. This Committee’s effective scrutiny requires more insight from the Government into the regulator’s intentions regarding financial regulation, not least because other non-departmental public bodies already have significant powers and the capacity to intervene directly in what are, in effect, small and medium-sized enterprises and significant, big businesses turning over large amounts of money. There are the Financial Conduct Authority, the Competition and Markets Authority and His Majesty’s Revenue & Customs, and local authorities have widespread powers to intervene in the everyday activities of the clubs contained within their local government areas. There are also various companies Acts, such as the Companies Act 2006 and that of 2016, that are within the bailiwick of the interface between government and football clubs.

As we asked on the sweeping powers over raising finance, and since the Bill does not expand on this, is Parliament not being asked to write a blank cheque to allow the Government to regulate as they wish? Not just the Premier League but clubs in other leagues are most concerned about this because of the nature of this legislation. Will the Minister address the concerns of each of those clubs about the powers of the regulator potentially to interfere in each club’s everyday financial affairs?

[Baroness Brady (Con)]

My Lords, I refer the Committee to my interests declared in the register. I support Amendment 71 tabled by my noble friend Lord Markham, which raises a crucial point regarding the backstop mechanism. We must be clear at the outset about what this mechanism governs and, critically, what it does not.

First, it is vital to understand that the backstop is categorically not about the fair apportionment of collective football revenues. Each party—the Premier League and the EFL—has its own central broadcast revenues. Indeed, the EFL has just secured a landmark five-year domestic broadcasting deal worth nearly £1 billion, increasing its central revenues by 50% from next season. This is testament to the Championship’s growing competitiveness and appeal.

I will not dwell on the fact that many of its recipients are incredibly wealthy—I believe there are nine billionaire owners in the Championship, along with many other extremely well-funded ownership groups—but I will dwell on the fact that, despite its very healthy income, the EFL does not give any money to the National League. It gives no funding to the leagues directly below it. It is the Premier League that supports the National League. Far from some sort of neutral arbitration to allow all parties to share with each other, the backstop is in fact a mechanism for the forcible redirection of billions of pounds of Premier League revenue only. In other words, this is one set of private businesses handing over money to another competing set, even if they do not want to give more than the £1.6 billion they already do and it damages their ability to compete.

The critical point, therefore, is that this backstop mechanism represents a completely unprecedented and untested intervention in what are the private commercial rights of Premier League clubs only. It impacts uniquely on Premier League clubs. The gravity and novelty of such an intervention demands the most careful consideration. Crucially, the backstop introduces a major and radical change in the Bill: the inclusion of parachute payments. This decision was taken without adequate consultation with Premier League clubs.

I mentioned earlier in Committee that just seven out of 20 clubs were invited to a 30-minute meeting on the Bill with the Secretary of State between the Government taking office in July and the decision, which was taken in October. It is no surprise that this lack of consultation has produced such a reckless decision. There simply cannot have been an appropriate understanding by the Government of its potential consequences.

Parachute payments are not a financial convenience; they are a cornerstone of the Premier League’s competitive balance. Without them, clubs cannot plan for long-term investment, or the stability required to maintain the intense competitiveness that is the hallmark of the Premier League and a significant driver of its global appeal. Parachutes are also—this is an often-overlooked point—a key part of the financial incentives for Championship clubs to invest in that league, knowing that if they reach the promised land, it will not all be undone with one bad year.

To fundamentally alter this system risks undermining the very factors that have made the Premier League such a global success and one of the UK’s greatest soft power assets. Potentially harming the magic ingredient of the Premier League’s competitive balance threatens to destabilise long-term commitments, jeopardising investment in lower-league stadiums, academies and community programmes. I believe it would fundamentally undermine the Championship, too.

We should also consider the concerns raised by UEFA. It has warned that the backstop mechanism could disrupt the balance of power in football governance and negatively affect the competitive equilibrium in both domestic and European competitions. UEFA has urged the Government to carefully reconsider their approach, emphasising that mandating redistribution in this way risks deterring amicable solutions and the very investments that underpin the success of English football.

This unprecedented intervention into private commercial rights must be carefully scrutinised. It very obviously has a differential and disproportionate impact on the clubs within the Premier League. It is also clear that the consequences of this seismic and deeply flawed intervention have not been fully understood. We do, as UEFA has said, need to reconsider this critical issue.

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[Lord Mann (Lab)]

My Lords, I am a little bewildered by the direction of the debate. Some of these amendments have been put to tease out the issues. My general commentary would be rather different from that of the noble Baroness, Lady Fox, who seemed very unkeen on the tremendous work being done across football by the clubs, which I commend. Indeed, I do not just commend it; I can quantify it. I reference my entry in the Register of Lords’ Interests as the Government’s adviser on anti-Semitism, then and now. I am particularly impressed by the first ever programme of anti-Semitism training in football, which was launched two years ago. There were a few eyebrows at first, with people asking, “What is this?” In two years, two-thirds of English football has volunteered to be trained. Significant numbers are having their academies trained and some are having players, the board and staff trained. It is particularly interesting and valuable that the biggest single piece of training in the city of Leeds—ever—was the training of Leeds United stewards under this programme.

I am delighted that Liverpool Football Club will be one of many clubs starting in the new year. The list of engagements on this in the first quarter of next year is quite formidable—but there is space for more. This is a success in football, because of what it said to the small number of Jewish players, Jewish staff and Jewish fans: you are valued here.

Just last week, I was at Leyton Orient, where the Jewish supporters’ group sponsored the match against Bristol Rovers. Leyton Orient outperformed anything they had done this season as a response. There will be the first-ever Hanukkah events at Fulham Football Club and at Leeds United Football Club. Other new groups are being formed. Other groups have existing events around Hanukkah and Holocaust Memorial Day. This is a positive, and it is not to the exclusion of any other group. Indeed, we find that other small groups of people who perhaps do not see many people like themselves in the stadium, on the pitch or in the club also welcome it. I have seen clubs embrace that as well. If I was running a club, which I have no desire to do—sometimes I would like to influence one or two of the footballing decisions, but would not we all?—then I would want my club to do that and welcome it. I would call it a good business plan.

On the whole question of diversity, one of its weaknesses and the reason why I tabled an amendment, just to tease out what the Government think—not because I think this is a good regulation necessarily but it should be good club business—is that there is a deficit in the number of black players getting into the better coaching and managerial jobs. That is clearly to the detriment of our national game. Their talent is not being used. How that is captured and by whom is, of course, important, but from a business point of view it is a competitive disadvantage if a large group of participants in the game are then not getting into the coaching and managerial side even vaguely relative to the numbers who participate as players. It is clearly a weakness, and whichever clubs are best at addressing that will have a competitive advantage. I am interested in teasing out and listening to the Minister on how we can help football to grab that.

I say to the noble Baroness, Lady Fox, that the overall picture is that football is full of EDI officers. I have had the pleasure of meeting many of them over the last two years —indeed a majority in English football. They are excellent people doing brilliant work. They are out doing work in the community as well, supporting young players from a range of backgrounds. They are a key strength in the clubs and in the clubs’ business plans, as well as in the communities. They should be commended. The more we can encourage that by whatever means, the better we will be doing our job.

[Lord Jackson of Peterborough (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Mann. He is a man of great good sense and pragmatism. In fact, I could have agreed with most of what he said but, unfortunately, on this occasion I will not agree with his amendment.

First of all, I will go back to the amendment from the noble Lord, Lord Blunkett, which I agree with. It is very sensible, and the Minister would be wise to accept it. But his preamble was simply wrong. It presupposes that external forces are exerting inappropriate pressure on this side to make cases in their favour, which is completely untrue. I say that because we on this side are merely going through the proper process of scrutiny and oversight, which is our job, to test the efficacy or otherwise of the Bill. Remember: we had a general election, and we have a new Administration, a new Bill and a new Opposition. Therefore, we are quite within our rights to challenge the Bill on its face.

I pray in aid figures from the past few years about the number of Committee days given over to various Bills in this House. The Parliamentary Voting System and Constituencies Act 2011 had 17 sitting days. We have six. The Children and Families Act 2014 had 12 sitting days, and the Localism Act 2011 had 10. There are a number of examples. Much as I hugely respect the noble Lord, Lord Blunkett, I respectfully disagree with him.

I move on to the specific issues of, particularly, Amendment 156 from the noble Lord, Lord Bassam, and Amendment 249 from the noble Lord, Lord Mann. These are two quite insidious amendments; I find them quite Orwellian, actually. It is not that we do not trust local football clubs to do the right thing in terms of community outreach, working with their community and improving equality and diversity, but noble Lords are being asked to put those powers into a regulator that will develop a national template. Whether, therefore, you are Bristol Rovers, Brentford, Brighton and Hove Albion or Bradford City—to use some alliteration—you will be told what you have to put in place in terms of your EDI policies, which I do not think is right. It nationalises corporate philanthropy and community outreach. It is also a displacement activity, because it presupposes that that work is not already being done.

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[Lord Jackson of Peterborough (Con)]

My Lords, I support my noble friends’ amendment, for the obvious reason that, from the beginning of our discussions, we have not substantially defined in the Bill what we mean by “English football”, other than by alighting on the word “sustainability”. We also have not defined what we mean by the “heritage of English football”. That was specified in the impact assessment—in fact, it says on the first page that we do not know what the heritage of English football is.

This is a very helpful amendment from my noble friends Lord Markham and Lord Parkinson of Whitley Bay, because it at least gives us and the regulator an opportunity to have a firm understanding in the Bill, among all stakeholders in all leagues, of what we mean by the heritage of English football. It is important that it means the tangible and intangible elements that define the unique historical identity of English football. I am surprised that the Government, for whatever reasons, have decided not to adopt that in the Bill and have left it to—

[Lord Watson of Invergowrie (Lab)]

I am a bit surprised, because the Benches opposite have, on several occasions, accused us on this side of trying to extend the reach of the regulator. The noble Lord asked: what is English football? In the Bill English football covers the top five levels—that is the definition. Personally, I think it should go to level six, but it is at level five. It is clear what it means by English football.

Under subsection 1(d) of the proposed new clause, Amendment 58 seeks to increase “the number of clubs”. I do not see how you can increase the number of clubs without it taking in other levels beyond those in the Bill. These amendments seek to extend the role of the regulator, which is rather inconsistent from those opposite.

[Lord Jackson of Peterborough (Con)]

As usual, the noble Lord makes a very pertinent and astute point. I disagree with it, because what we are seeking to do is further define what is in the Bill. There is a lack of definition—there has been since we discussed the issue in relation to Clause 1 a week or so ago. That is the difficulty.

The general point the noble Lord makes is also pertinent, because we are still deciding whether this is a hybrid Bill. It is important that we define English football, because if we do not properly define it, there will be an issue of hybridity. According to the Minister’s letter, as I understand it, it is still only provisionally being ruled as a hybrid Bill, and there is no definitive position.

The point that I was making was that we need a proper framework. The new clause proposed by the amendment would add that definition to the Bill. It would therefore make it a better and more holistic Bill. At the moment, there are significant concerns about the Bill’s enabling powers and Henry VIII powers, and the new wording would go some way—were it to be adopted by the Minister; I live in hope that it might be on Report—to ameliorate that issue. For that reason, I support the amendment moved by my noble friend Lord Markham.

[Lord Wrottesley (Con)]

My Lords, I start by offering sincere apologies for not being able to contribute at Second Reading. I am afraid that I had to attend a close friend’s funeral. I did, however, manage to be in the Chamber for the latter part of that debate. I have watched the debate back on Parliament TV, updated myself via Hansard and, where able, attended most of the Committee. I also apologise if parts of what I say might have been more appropriate for Second Reading, but I feel that your Lordships may deserve a bit of background on why I feel privileged to offer some reflections to the Committee on this matter. This may, mercifully, be the only substantial contribution that I make on the Bill.

I declare my interests, as set out in the register, specifically having around 12 years of direct experience in sports governance, but also make an admission. First, I have been a lifelong Chelsea supporter and, as an excepted hereditary, I have of course passed that unfortunate affliction down to my sons and even to my nine year-old daughter who, yes, plays football—although she confessed the other day to having considered the unthinkable: supporting Manchester City. Given Chelsea’s recent form, though, I hope that she will now revert to her inherited team.

I support my noble friend’s amendments that try to define the objectives of the regulator, as well as others that have already sought to address the actual purpose of the Bill. Where I hope we will eventually get to is that something can be financially sound, resilient and sustainable, and grow and be successful. We have already discussed that if sustainability is the sole rationale and motivator for this legislation, sustainability could have a far lower bar and be an inhibitor to growth and success. Given the context of being one of this country’s greatest exports, the success of the English Premier League and now the English Football League is not solely dependent on their sustainability. There is much more to it. I suggest that they are successful not simply because of their sustainability, or unsuccessful because of the lack of it. They are deemed successful because of a whole host of factors, be that results on and off the pitch, financial sustainability, fan engagement or community outreach, to name but a few. Are growth and success not things that we should ask clubs, leagues and all stakeholders to strive for? What enables them to be successful and what should we try to support through the Bill?

In my view, and as we have heard from other noble Lords, the UK is globally successful in the game of football, and the Premier League, the EFL and other successful domestic leagues have grown to a position of global prominence because of various factors, including the game’s heritage and the English language—the lingua franca of football, as indeed it is with most global sports. Football is successful in the UK because of the pro-business environment in this country, which encourages foreign investment into our game and, ironically, is potentially threatened by aspects of the Bill.

We must also credit the consistently strong leadership of the Premier League, its global appeal through strong marketing and its willingness to embrace expertise from abroad in players, coaches and support staff. Some of your Lordships might remember that this pursuit of excellence and diversity was strongly criticised in the first few years of the Premier League’s existence. It was seen as a threat to homegrown player development and that talent progressing up the pathway to the national team—an attitude that I think we can all now agree has been shown up by the recent successes of our national teams.

More broadly, football’s success relies on this country’s position in the world and, yes, the crucial part played by our strong domestic marketplace, characterised by the role that a fiercely loyal fan base has in supporting the leagues and their teams. Above all, it is the ability of so many of the clubs in the UK to build brands around themselves—some of them mega-brands—that has led to five of the top 10 best-supported clubs in their global reach being from the UK, with just one from Germany, one from Italy, one from France and two from Spain. The bottom UK-based team in that top 10, Arsenal, has over 40 million followers on Facebook alone, with a fan base that extends far beyond these shores.

All these factors are more complex and, frankly, equally as important as some of the simpler definitions contained in the Bill. Growth and success are what the Bill should seek to preserve, enable and maybe protect, rather than inhibit. To repeat: the Bill should be about preserving and promoting growth and success, not just ensuring, for instance, sustainability.

Do we measure success simply by sustainability or should we seek a broader, more detailed and more accurate set of definitions—a higher bar as a North Star for this Bill, as suggested by my noble friends Lord Markham and Lord Parkinson in their Amendments 56 and 58? This could be a subtle but fundamental tweak to what this Bill is trying to achieve.