Football Governance

Lord Mann Excerpts

Thursday 16th December 2010 Commons Chamber

[John Mann (Bassetlaw) (Lab)]

I rise to speak in an Adjournment debate that the Speaker has kindly granted me on football governance and what the Government can and should do about it.

If one were to ask about the crisis in English football, one would anticipate that, at the top of football’s establishment, facts and figures would pour forth to demonstrate that English football, under the premier league, is one our prime exports, that receipts and revenues have exponentially expanded over the years and that things are growing healthier and going better than ever.

Last Tuesday, a unique—but, I fear, not for long unique—football match took place near my constituency. It would have been in my constituency if one of the teams in a rearranged FA trophy match, Worksop Town, had a stadium or, even, a pitch, but it does not, because the fourth oldest football club in the world has been locked out of its stadium by the owner for some years and exiled to rented stadiums elsewhere throughout England.

Unusually, however, the match was also a major derby, because not for many decades have Worksop Town played near rivals Mansfield Town. Many leagues have separated the two but, by luck, the FA trophy brought them together. There were snowy conditions, but the match could not be switched to Mansfield, because Mansfield Town has also been locked out of its stadium by its previous owner and landlord. The match therefore took place in Ilkeston, which is the same Ilkeston where the football club has recently been liquidated. So, two teams played a match in the grounds of a club that has been liquidated and that some people are trying to reform. I shall not waste the House’s time by giving the result. In that match, there were, uniquely, two teams that were both without a ground, with 250 years of history between them. That demonstrates the true crisis underlying English football.

I will just make one comment on the recent FA bid for the World cup—I will not attempt to draw the Minister into such a small distraction. Suffice it to say that there is a 23-member committee and if one country has a member on that committee and it ends up with just two votes when there are two decisions, there is something very wrong indeed. Politicians know the dynamics of committees and decision making, so hon. Members will appreciate and understand the negotiating hand available to anyone with a vote within such a system.

Now is the time to start changing English football. The impetus and imperative is not the much-publicised World cup bid and its failure, but the less well publicised uniqueness of Worksop Town versus Mansfield Town and where that match was played and could have been played last Tuesday. Both teams’ owners could have put out any football team they had bought on to those two grounds because no one has deemed them not to be fit and proper persons for the governance of English football.

A second issue that has not been explored is how we are seen across the world, particularly in Europe. Some 60% of European football debt is in English football. I have heard such a theme before, although not quite in relation to those figures. We call it the financial crisis—the big banks. Before Lehman Brothers collapsed, no one had said that banks in this country could collapse. However, the Royal Bank of Scotland, Lloyds, HBOS and other smaller entities were on the verge of collapse and there had to be major Government intervention that involved huge amounts of taxpayers’ money. Those banks were ever onward and upwards. They were taking risks, leveraging and presuming that growth would be for ever. No one really questioned in advance whether such a situation was sustainable.

In English football, there has been a similar boom to that experienced by the banks. It is contemporaneous—perhaps not coincidentally contemporaneous—that there is a risk that the English football boom will turn to bust, and that we will see major forced restructuring when something significant happens. The banks have a term for what happened: toxic debt. Much of the money lent to English football is exactly that—toxic debt. In other words, it is money that the banks cannot rationally hope they will get back.

The contrast to English football is the German Bundesliga. With its good governance law, the Bundesliga is in profit. Indeed, if a Bundesliga club is not in profit, according to the rules, it will automatically be relegated. The Swedish league is in profit. There are many models of football bodies that have reorganised their governance, but in terms of the competitive advantage that our clubs perceive that we have on the European stage, the German one, in particular, will come back to haunt us.

--- Later in debate ---

Motion made, and Question proposed, That this House do now adjourn.—(Miss Chloe Smith.)

[John Mann]

Perhaps we should be looking at the German model of football refinancing itself. I suggest to the Minister that we should consider how people were persuaded to change the rules of football governance through the German football association.

[Mr David Lammy (Tottenham) (Lab)]

Is my hon. Friend as concerned as I am about the rumours on the internet that a Qatari consortium is planning to buy Tottenham Hotspur football club? This is apparently to do with a decision to leave the poorest ward in London and move across London to Stratford. Is he concerned that Manchester United or Liverpool FC might fancy moving down to London to increase their shareholder profits? Does he think that community and history should stand alongside the big business that is taking over football?

[John Mann]

In 1923, Tottenham Hotspur famously bribed Worksop Town to replay a match two days after its initial historic 0-0 draw, allegedly providing copious amounts of beer to disable the team, which unfortunately then had a rather heavy defeat.

My right hon. Friend makes a very important point from which two issues emanate. First, who owns English football clubs? Are they merely chattels to be bought and sold, as we have seen, but, more dangerously, to be moved across London or across the country, as we saw with AFC Wimbledon, or indeed to be moved across the world, be it for the 39th match or the entire club? That is a scenario that I foresee in 10 years’ time. Who knows what will happen? Football clubs are free to make their decisions. However, community responsibility is involved. Good governance should instruct that the FA, at the top of the pyramid, ensures, in terms of its rules and their use, that good community relations, community development and community inspiration are key.

Secondly, it is rather outrageous that the football world has not stood as one behind the athletics world regarding a football club using the Olympic stadium as part of the legacy. It would be very good for a high-level football club to use that superb stadium. But when we have the best athletic stadium in the world, it would be outrageous for the football world to think it acceptable that it will be just for football, not athletics, so that we would not be able to host and win the 2015 world athletics championships because we do not have a stadium. The Minister can have some influence on that.

[Mr Lammy]

Does my hon. Friend remember the video with which we won the Olympics, with the faces of young Londoners, many of them black, and the dream of athletics that is now apparently to be ditched in favour of big business? Will he, like me, continue to remind the House and the Government of that responsibility?

[John Mann]

Worksop Town and Retford United, the two semi-professional clubs in my area, do not compete quite on the levels of Tottenham Hotspur, but their communities’ views are the same. We want our clubs in our communities. At our rather modest level, we expect those governing English football to give us every assistance in having rules that they implement to ensure that we are not simply chattels to be moved around. It can be as big as the Tottenham Hotspurs, or as small as the Worksop Towns or smaller still, but we have a right to expect that the history, the tradition and the communities who have funded these organisations should not be cast aside because someone has some developmental idea of making more profits out of that institution by shifting it, be it elsewhere in London, into the Olympic stadium, to the far east, or wherever else. That will be an increasing risk in English football. Similarly, the bubble of television rights might burst. I shall say a little on that in a minute.

I return to my analogy of the banks, because it is a relevant one. Football debt is toxic debt. The risk taking of the banks was predicated on a model of permanent growth. They offset and hedged tomorrow’s income and used it for today’s expenditure. Football has got into precisely the same mindset. The premier league is rightly proud of its success, its export potential and the tax revenue that it brings into this country, but so were the banks. The premier league thinks that there will be permanent growth. A simple change to the European Commission’s rules on the bundling of football rights could prick the bubble and send some clubs out of business, because the money would be pulled back by the banks, as their shareholders would expect. Those are the risks that football is taking.

The Deloitte report is rather expensive, but luckily it is available free to Members through the Library. Because of the risk of great personal expense, the copy that I borrowed is being returned at this very moment. According to the 2008-09 figures in that report, of the 44 premier league and championship clubs, only eight had a pre-tax profit, a majority did not have net positive assets and only two had no debt. That is extraordinary considering the growth and success in revenues. However, that has been increasingly squeezed out by players’ wages and agents’ fees. Teams compete to buy big-name players and more expensive players because of supporter demand. That is not a sustainable business model. Even building a club’s brand as an investment is not sustainable with that amount of leveraged debt. The bubble will burst and it is about time we started to say so. Will it be next year, in five years or in 10 years? Who knows? However, just as with the banks, the bubble will burst and the over-exposure to debt will ripple throughout football.

We used to hear about administrations, but now we hear about liquidations. It is a new language. Clubs vanish and have to be reformed. King’s Lynn football club, which was in the same league as Worksop Town, disappeared last season—bang! Gone! That meant one less club to be relegated, much to Worksop’s relief. It had a regular crowd of 1,500, which I think was the highest in the Unibond North—disappeared, gone, vanished! Another example is Ilkeston Town. Chester City was once a great and famous club that sometimes beat the very top clubs. It had been a member of the Football League throughout most of the league’s history, but then bang! Gone! It now has to be recreated right at the bottom by the supporters. Scarborough Athletic has had to move to Bridlington, which is rather ironic, to exist in any form. Of course, such clubs can come back with their supporters behind them. We would keep Retford United or Worksop Town going however low they went.

Is any of this fair and just? Fairness and justice have gone out the window as far as the FA is concerned—not in its rules, but in the application of its rules. Why should Exeter City, a club that was saved by its supporters and that has sensible balance sheets, have to compete with clubs that are borrowing money that they will not be able to pay back and that know that they may well go into administration if they do not succeed in getting promotion? More than half the football clubs in the Football League have gone into administration in the past 15 years. That has been the boom time for English football, during which we have said that we are leading the football world.

Who are the losers? No one has yet fully quantified the losses for Portsmouth, for example, but it would not surprise me if the losses—not to the football world, nor even to the Exchequer, but to local businesses in Portsmouth—were in the order of £4 million. One remembers that horrendous time when a club that I first saw at the age of four and have seen thousands of times since, Leeds United, went into administration and St John Ambulance was not paid, even though it was the boom time for English football. Governance in English football is in crisis, and has been for a long time.

When there are big music concerts—the Glastonburys and the rest—the organisers pay for the policing and stewarding required. They hire stewards in large numbers. There are not thousands of police thronging around every time there is a music festival in London or anywhere else, but when there is a football match the police are there, and who pays for them? The taxpayer pays a lot of the money. We need to use leverage—if football will not put its house in order, some of us will start demanding that it pays full policing costs. Why should my police force lose out, and why should I have football clubs in my area that are not able to play in their own stadiums because of the weakness of the application of football’s own rules? That is not sustainable in the political world, and it is not sustainable for my constituents.

[Mr Lammy]

Will my hon. Friend give way?

[John Mann]

Sorry, I should make some progress.

There is an inquiry into the matter by the Select Committee on Culture, Media and Sport, and I hope that the Committee will consider a few matters. It ought to consider the chocolate question: Cadbury and Rowntree’s, once great British institutions—gone. Should that be allowed to happen in English football, as it did in the car industry, as you know very well, Mr Deputy Speaker? It should consider whether the UEFA fair play league, an excellent initiative, should be part of the root-and-branch reform of English football.

I should also like the Committee to examine in detail the question of Leeds United, not to pick on Mr Ken Bates specifically—I do not particularly care about his arrangements and motives for having the club owned offshore—but to see what the football authorities have done and who owns Leeds United. That is a legitimate question for the Committee to take detailed evidence on, not to attack Mr Bates or the club but to explore the processes behind it. We need to know why the FA and the Football League have been unable to answer questions about the matter.

We need to know whether Mr Ali al-Faraj, once owner of Portsmouth, actually exists. That would be a good question for the Culture, Media and Sport Committee to ask. If he does, by what process was that man, who some claim does not even exist, deemed a fit and proper person to own a premier league football club, and who is he? The process by which football leaders asked and answered that question should be part of the inquiry, and I am sure it will be. I am sure the Committee will also examine why there are not currently three non-executive directors appointed to the FA, and how long it will take for that to happen.

It may sound as though I am attacking the big names, the brands. I am not. Frankly, it is a free market and they can do what they want, as they have done and will continue to do. I am attacking the governance of English football. If the big brands disappear abroad to a European super league, or go to play a 39th game or locate themselves in China or wherever else in the far east, that will be their choice and their loss. I want to ensure that the structure of English football means that the teams in my constituency can play at their own grounds and not be thrown off them. I want the Worksops, the Mansfields, the Ilkestons and the Chesters, as well as clubs higher up, to exist in the future.

I think that the FA is somewhat terrified of the figures in the premier league. The Minister ought to strengthen the FA’s resolve by asking it the difficult questions and forcing its hand. Where are the black managers in English football? Where are the Muslim and Jewish players? Where are the women at the heart of the FA? No other sport would tolerate unfit, improper persons in the ownership of clubs. Football, uniquely, wearisomely and supinely, does so. Why are the rules not applied? In Spain, there is a law on transparency, and in France the law gives people the ability to open the books. I have mentioned the situation in Germany already.

As well as leverage over the European Commission and thus Sky’s packaging and bundling of football, the Government have leverage over the FA. They give the FA an awful lot of money. A new chairman is about to be independently appointed. I say to him or her—that would be a turn-up for the books—that they have to use the powers they have already and reject the pressures from the premier league when the premier league conflicts with the FA, because we cannot justify taxpayer support for football if football cannot sort out the absurdities of last Wednesday, when Mansfield and Worksop were locked out of their grounds by the club owners.

I trust and hope that the Minister will use his leverage—his influence—to ensure that our national game survives at every level, and that we force good governance on the FA. Every change in English football has been forced on the FA, and the Minister must use his leverage to ensure that it gets its act together and runs English football properly, as it should be run.