Football Governance Bill [HL]

Lord Markham Excerpts

Committee stage
Monday 2nd December 2024 Lords Chamber

[Baroness Taylor of Bolton (Lab)]

Can I just suggest to Members opposite who are making their point that they might look at Amendment 72, in my name and that of my noble friend Lady Grey-Thompson? It is called “Support to clubs”, which very specifically gives advice on how smaller clubs might be helped.

[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?

[Lord Markham (Con)]

I genuinely thank noble Lords for their interventions. We are trying to unpack and fix a tricky problem. I completely agree with the suggestion from the noble Lord, Lord Birt, about better boards; of course that is a good idea, but how does the regulator make that happen? Will it be given the powers to force people off boards? I have not heard that; I have not seen that anywhere in the Bill. I fully support recommending a stronger board, but how do you make it happen? The only remedy I see for this in the Bill, and which I keep coming back to, is that clubs have to deposit more money as a sort of punishment.

On the visionary business plan at Brighton, which really was visionary, a regulator at the time could have thought, “That looks a bit risky”—and it probably was a bit risky—“so how do I guard against that?” They could have wondered, “How much does this chairman know about football? He is a poker champion; that is brilliant. He believes in the stats. But he is probably not your conventional person, who you would be going to and asking for more money as a deposit”.

This is what we all keep coming back to. If the only remedy is that the clubs put more money aside—

[Baroness Brady (Con)]

I thank my noble friend for allowing me to intervene. My understanding of the Bill is that the ultimate sanction the regulator can have is to withdraw the licence from the football club. If a football club loses its licence, it ceases to be able to play. It is put in a very difficult situation whatever the remedy: it either complies wholeheartedly with whatever remedy it is told by the regulator to put in place, or it loses its licence and cannot play in the league. Surely that cannot be right.

[Lord Markham (Con)]

Again, I hope the Minister will answer this point. This is what the shadow regulator was explaining to us last week. What is the one thing you can do short of that? You can look to de-risk the situation, particularly if your only criterion is sustainability at that club; in other words, it survives by you saying, “You have to put money on deposit”. That is exactly the model they were taking from the financial regulator and the banks; that is what I see as the whole problem.

It is fundamental. As my noble friend Lord Jackson’s amendment suggests, we could make sure that it is aware of the burdens of regulation, or, as some of the earlier amendments proposed, it could be about broadening the definition and objectives of the regulator so that it has other criteria at stake. I truly believe that, unless we widen it out—it is only one-dimensional—we really are going to harm the great game.

[Lord Mann (Lab)]

My Lords, I appreciate that it is a little unconventional to speak to the amendment, but I would like to make a few comments to the mover of the amendment and the Minister. The case was made that this is all about small clubs. I have met very many clubs outside of the Premier League and discussed this issue with them. They have raised many issues and changes that they would like to see, some of which might be controversial in the football world or in government but not in relation to this regulation Bill. I have not yet come across any club outside of the Premier League that has said that it is worried or opposes this Bill—not one. Perhaps the Minister might like to reflect on that.

--- Later in debate ---

[Baroness Twycross]

If I correctly understood the noble Lord’s point, I do not believe that clubs should be concerned about that particular instance. We will be discussing licences and licensing conditions in a later group so, with your Lordships’ indulgence, if we could wait until then, that would be appreciated.

The amendment would also require the regulator to submit a report on its effects on the financial position of regulated clubs. I reassure the noble Lord that the Bill already includes comprehensive reporting requirements on the regulator—for example, the “state of the game” report and the regulator’s annual report to the Secretary of State, which must be laid before Parliament. These reports would of course be expected to include an assessment of the regulator’s own impact on the market. In our view, the intent of this amendment is therefore already achieved in the Bill.

The noble Lord, Lord Moynihan, asked whether we are risking jeopardising English clubs’ involvement in international competitions. As I reiterated during the last debate, the Government are confident that the Bill and the regulator will not breach the statutes of UEFA and FIFA. This Bill will constitute the business regulation of football clubs in this country; it will not constitute interference in how the FA, or any international body, governs the game. For the reasons I have laid out, I hope the noble Lord will withdraw his amendment.

[Lord Markham (Con)]

The Minister will be aware that I made quite a few points on how the only thing a regulator can really do—the only shot in its locker—is to put in more deposits, and on the impact that would have on clubs in terms of that safety net. I perfectly understand that she may not be able to answer that question now but I would welcome a follow-up in writing, and perhaps we can arrange a meeting on it.

[Baroness Twycross (Lab)]

I am happy to meet the noble Lord to discuss it further.

--- Later in debate ---

[Lord Addington (LD)]

My Lords, I will speak very briefly. I appreciate that with legislation it is always better to have what you want on the face of the Bill. The women’s game needs more attention here, as this is something that deals totally with the top five leagues of the men’s game. It is also true that with a little bit of will, we could amend it. However, we are sitting here thinking about what would be best for the development of women’s football. When the Minister comes to respond, I hope she will give us a better steer on what they regard as that future. It is a growing sport that has outstripped everybody’s idea 20 years ago of where it would be, and we need to discuss what is happening there. My gut instinct is to resist this for the women’s game, but my legislative experience says we should have a definition here.

[Lord Markham (Con)]

I am scratching my head a bit on this. I am with the noble Lord, Lord Addington, in that I would like to see the women’s game included. However, I accept that there is a debate to be had around that, so there could be an argument for having that as part of secondary legislation. What I do not understand that there could be a debate about is whether the Premier League or the EFL should be included. I do not understand for one moment why you would not have that on the face of the Bill. I do not think any of us would debate for one second the thought of somehow having all these discussions and not including the Premier League or the EFL.

I will freely admit that I am not very well versed in this, but my understanding is that, if it was mentioned on the face of the Bill, that does something about the hybrid nature of the Bill and would mean there are greater consultations and involvements that we would have to have—maybe some other noble Lords can help me out here—with those bodies that are impacted by the Bill. If that is the case, and if it is absolutely obvious to everyone here that of course the Premier League and the EFL are going to be involved in this, and probably some others as well—maybe the noble Lord can help me with this in a minute—I think there are consequences from not having it on the face of the Bill. That means it is not getting the proper involvement that you would expect, having the Premier League and other impacted bodies such as the EFL as part of this.

Again, all of this is an education for me and I think my noble friend Lord Goodman might be about to stand up to help me on this. But, if not, maybe the Minister could answer that, because it seems so obvious to everyone here that of course it is going to include the Premier League and the EFL. Why would you not have that on the face of the Bill?

[Lord Bassam of Brighton (Lab)]

My Lords, I rise to speak to my amendment about the inclusion of the National Leagues North and South. I accept that my amendment is defective; I think the Committee on Statutory Instruments has declared it as such. However, I will use this opportunity to raise the question of where down the pyramid the regulatory process should stop.

Some of the teams in the National League North and National League South are quite substantial. Scunthorpe United is quite a big club and has a turnover somewhere in the region of £5 million to £6 million a year. Torquay United has a turnover of probably £2 million or £3 million a year. Even Maidstone, another former league club, has a turnover of between £2 million and £3 million a year. These are small but substantial businesses. They probably employ no more than 10 or a dozen staff—Scunthorpe probably employs more than that, looking at its accounts—but we expect other parts of the business world to be regulated by health and safety or environmental legislation, by financial conduct rules and regulations, and so on.

It is not smart to leave those two leagues out of consideration, because one of the things we should worry about is predatory ownership. We have seen some of that in the past, to the detriment of clubs in the lower leagues. The Bill is about making sure that the clubs in the lower leagues are properly protected. We have heard a lot from noble Lords on the Opposition Benches about the Premier League and how they believe that the regulatory regime may be damaging to the Premier League, but it is the plight of clubs lower down the pyramid that has sparked the most concern over the years and has been the motor for both major political parties to seek a football regulator.

I make that point because at some stage, we will need to have the National League North and National League South clubs in the regulatory framework. It seems odd to regulate one of the National League’s divisions, but not the other two. I wonder about the cliff-edge effect of having clubs coming up from both those leagues into a system of regulation. That does not necessarily seem to be the right way to do things; it would be better if they were all captured by the same framework.

The Minister made the point at Second Reading that regulation would be appropriate at each level of the pyramid—that has to be right—and that teams in the National League do not require the same degree of regulation as teams in the upper leagues. That is a sensible and proportionate way of looking at things. These clubs are already used to regulation; they are regulated by other regulators.

There is a case that we need at an early stage in the life of the regulator—I accept it may not be now—to have a report, or perhaps a section in the “state of the game” report, that looks at this issue. There may well be some unintended consequences and some cliff-edge issues, and if we do not get regulation right for these clubs, which could be vulnerable to predatory takeovers, some of them may well suffer as a consequence. None of us in the Committee wants to see that happen—I certainly do not, based on my experience as a Brighton & Hove Albion Football Club fan in the 1990s, when we were nearly destroyed by a predatory takeover. We very nearly went out of the league and out of business, and it took us a decade to recover our position.