Football Governance Bill [HL]

Lord Markham Excerpts

Report stage
Tuesday 11th March 2025 Lords Chamber

[Lord Moynihan (Con)]

My Lords, I shall address Amendments 16 and 26, standing in my name on the Marshalled List. In moving this amendment, let me set out a number of legal issues that have been raised outside this House. To set them in context, what we are talking about tonight is the importance of the Premier League. It is watched by 1.9 billion people across 189 countries. It is the most successful domestic league in the world. Its financial support flows down through the football pyramid. It supports £8 billion in gross value added to the economy. It contributes more than £4 billion annually to the Exchequer and supports more than 90,000 jobs. The Championship, which it strongly supports, is the sixth most successful league in Europe. The issues which are central to this amendment reflect the importance of the Premier League, which generates more revenue internationally than domestically. It has attracted substantial foreign investment over recent years and operates within a complex international regulatory framework governed by UEFA, FIFA and numerous international trade and investment arrangements to which the UK is a party—though the FA will no longer play a part.

The establishment of the IFR introduces unique risks of potential legal dispute with international investors and potential complications regarding the UK’s compliance with international obligations. Two significant issues arise. The first is the impact on foreign investors: many Premier League clubs have significant foreign investment, relying on regulatory stability, property rights protections and non-discriminatory treatment. The second is trade agreement compliance: the UK has international obligations, including investment protections within trade agreements and bilateral investment treaties requiring fair and equitable treatment, transparency and non-discrimination towards foreign investors. Non-compliance could trigger diplomatic repercussions and costly arbitration claims.

The key legal risks which exist, are, I believe, threefold. The first, which we will come to discuss on a future occasion, arises from the assiduous work of the noble Lord, Lord Birt. The mechanism of the backstop as it is currently structured—and I will not go into it this evening except in the context of my amendment, to look at its legal implications—allows the regulator to impose financial redistribution without clear or predefined limits, effectively giving it the power to divert private commercial revenues arbitrarily. Such intervention poses a significant risk of constituting what lawyers call indirect expropriation, where regulatory action substantially diminishes the economic value of investments without fair compensation. Foreign investors protected by bilateral investment treaties have reasonable expectations of regulatory stability and fairness. An unlimited or unpredictable redistribution power would likely trigger claims under international investment treaties, arguing violation of their rights to fair and equitable treatment and protection from uncompensated expropriation.

Secondly, as we have discussed earlier this evening, there are risks from new ownership rules retrospectively applied. The Bill proposes potentially retrospective and uncertain changes to the owners’ and directors’ test. These new, undefined ownership criteria could retrospectively affect existing owners, potentially forcing divestment of clubs by foreign investors based on criteria not in place at the time of investment. Such retrospective application could breach fundamental legal principles of fairness, stability and investor protection. It could be interpreted as discriminatory and arbitrary treatment under international investment law, leading to significant litigation risk and investor state arbitration claims, damaging the UK’s international credibility as a reliable investment destination.

Thirdly, there are the risks of discrimination. Linked to the points I have just made, regulatory actions perceived as disproportionately targeting foreign-owned clubs, particularly through retrospective regulatory criteria, risk breaching international obligations of non-discrimination between national treatment and most favoured nation treatment. Investors could legitimately claim discriminatory treatment, triggering significant diplomatic and legal disputes.

If there is validity in law to these concerns, my amendment is carefully designed to seek to mitigate them. It explicitly requires the football regulator to comply fully with the UK’s international trade and investment obligations, thereby avoiding unnecessary litigation or trade disputes. It mandates non-discriminatory and proportionate regulatory interventions, ensuring predictability and stability for international investors. Thirdly, in my second amendment before your Lordships this evening, early consultation between the football regulator, HM Treasury and the Department for Business and Trade to proactively manage compliance with international obligations will avoid regulatory paralysis.

Embedding these protective measures in this Bill, which I see as being as helpful as possible to the Government on this front, clarifies the regulatory framework up front. It pre-empts costly disputes and ensures that the regulator aligns clearly with the UK’s international economic and diplomatic interests from the outset. It is, therefore, a helpful amendment. It is intended to be pragmatic and is necessary for addressing significant international and domestic risks comprehensively. It respects property rights, ensures regulatory proportionality and maintains international investor confidence, which is critical in the Premier League to ensure growth. It thus safeguards the UK’s attractiveness and reputation as the premier destination for global football capital. I beg to move.

[Lord Markham (Con)]

My Lords, I thank my noble friend Lord Moynihan for his vital and very sensible amendments in this group. As he has touched on, there could be some serious unintended consequences unless we introduce his amendments to the Bill. The Premier League, as we have said many times, is the most successful football league in the world. One of the major reasons for that is its openness to global investment and its attractiveness for that. Foreign investors have played a transformational role in modernising clubs, developing world-class infrastructure and cementing English football to an elite global brand. They have helped to create the most competitive and commercially successful football league in the world.

Yet without my noble friend’s amendment, the Government will be introducing a regulatory framework that could unfairly target foreign-owned clubs, placing them at a disadvantage compared with those owned by UK investors. That is not fair, not necessary and not in the best interests of English football. I am sure that this is not intended by the regulator, but it could be one of those unintended consequences as to where some of those decisions might fall. The amendment asking for Treasury advice, for want of a better word, ensures that the IFR is not sleepwalking into some of these difficulties, which I hope will be seen as very sensible and helpful in all of this. As my noble friend mentioned, most important is that any investor has a clear set of rules that they can rely on, and which are guaranteed and completely transparent.

[Lord Watson of Invergowrie (Lab)]

The noble Lord, Lord Moynihan, was briefer than I had anticipated; I had intended putting this point to him. We have had a lot of discussion about the intervention of UEFA in terms of the regulator not being able to take into account UK government foreign policies and trade policies, following that provision having been withdrawn from the Bill. How does that differ from Amendment 26, which expects international trade agreements to come within the consideration of the regulator? Surely the two are the same. In either case, they are getting into the realms of government policy, which UEFA has made it quite clear it is unhappy about.

[Lord Markham (Con)]

This amendment is trying to avoid that and do it the other way around. Our trade agreements are in place already and well-known. We are asking the football regulator to do many things, but I would not expect it to know, because of the large levels of foreign ownership, how its decisions might disproportionately affect some segments versus other segments and how that could trip over some of the World Trade Organization agreements or other such bodies. That is what we are trying to protect against. Hopefully, it is not even relevant, but again it is trying to ensure that we do not sleepwalk into something that is thoroughly unintended. This is a simple precautionary amendment to avoid such unintended consequences.

So, as I say, we must all recognise that our existing trade agreements are not just beneficial but vital for our future growth. The Government have repeatedly said, quite rightly, that growth is their number one mission. All we are trying to do with this amendment is make sure that we do not inadvertently trip up on one of those and the regulator has one of those unintended consequences, because clearly none of us wants to see that happen.

[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Moynihan, for his amendments. There is much on which we agree, but, unfortunately, I cannot agree that these amendments in this group are required. Good investment, which comes in many forms, has helped make English football the global success it is today, and this Government are absolutely committed to continuing that. Of course, this regulator will not discriminate against foreign investors or act unfairly against anyone else—nothing in this Bill allows it to do so. This amendment is not needed to prevent that. Not only is it unnecessary but, as noble Lords will appreciate, it would be highly unusual to bring a broad range of treaty obligations directly into our domestic law in such a sweeping way.

This Government take our international obligations very seriously and the Bill complies with our treaty commitments. But, if foreign investors have concerns about the regulator’s decisions, there are mechanisms within our treaties to allow them to raise these concerns at the international level and, if necessary, to bring disputes. That is the appropriate forum, not our domestic courts. Let me be clear once more: we are confident that the Bill complies with our international obligations. Nothing in it requires or even allows the regulator to make discriminatory or unfair decisions.

Finally, I was slightly surprised to see the last part of this amendment tabled by the noble Lord, Lord Moynihan. We have carefully ensured the regulator’s independence from government and ensured that UEFA is content with the Bill as drafted, so I was not clear why the noble Lord wants to require the regulator to consult the Treasury and DBT on a wide range of occasions and risk undermining the regulator’s independence. This would be concerning, especially given how much time the noble Lord has spent discussing UEFA and FIFA throughout the passage of the Bill through your Lordships’ House, and I am sure the risk would be highly concerning for many others in this House. That is why I urge the noble Lord to withdraw his amendment.

--- Later in debate ---

[Lord Markham (Con)]

I start by not thanking the noble Lord, Lord Birt, for his update on the score, because I am hoping to catch the highlights at the end. So I hope that, when he speaks further on his amendments, we will have no further updates; that is a small plea.

On a more serious matter, I too add my thanks to the Minister for listening and bringing forward this series of amendments. They cover the sentiment of what I think we all agree the noble Lord, Lord Pannick, and others were trying to do with their light touch. I must admit that I am particularly taken by the points made by my noble friends Lady Brady and Lord Fuller around a variable-touch model. We will move on to talk on day two about some of the other things. There was a big consensus around the House on trying to promote independent and non-exec directors on the boards of these clubs. Again, this is something that will come up later.

What we want more than anything is well-run clubs and a system in which, if a club is well run and has independent non-exec directors who are making sure it is run in a good manner, we really do have a light-touch model. At the same time, we should have flexibility. If there are greater concerns, there should be a heavier touch. Again, we have precedent for this. We have so-called special measures in schools and situations such as those.

I thank the Minister for recognising that sentiment about a light touch and bringing it forward. As the Bill goes through the Lords, I would ask her to consider whether we can bring a variable touch so that there is not just a one-size-fits-all approach and that, if clubs show that they are well run and reputable, they will not need the same level of scrutiny and the same burdens placed on them as those that are in more difficulties. With that, I welcome these amendments and I wish to hear the Minister’s thoughts on the idea of a variable-touch model.

--- Later in debate ---

[Lord Birt (CB)]

My Lords, Amendments 21 and 22 are in my name and those of the noble Lords, Lord Burns and Lord Pannick, and the noble and learned Lord, Lord Thomas of Cwmgiedd. I strongly support the notion of a “state of the game” report, above all to encourage an evidenced and sophisticated dialogue between the leagues about fund flow, either in direct negotiation or as part of the mediation process if the backstop is triggered. But I will make three points.

First, the Bill currently states that the report should include

“information about any other matters relating to the state of English football”.

One highly critical matter, which has come up more than once today, is the global position of the English game. The Premier League, as was said a moment ago, is the most successful sporting league of any kind in the whole world, its global broadcasting revenues now surpassing those raised domestically. We propose that the “state of the game” report should capture the position of the Premier League in relation to other major European leagues—the purpose of our Amendment 21.

Secondly, producing the first draft of the “state of the game” report should not take, as the Bill suggests, up to 18 months. Football is an incredibly data-rich activity, as I have learned over these last few months, with enormous pools of relevant publicly available information at home and abroad. Six months to produce the report should be quite sufficient.

Thirdly, the noble Lords, Lord Burns and Lord Pannick, the noble and learned Lord, Lord Thomas, and I will argue next Monday that a well-evidenced “state of the game” report should be the first step in a redesigned backstop process. But there is a problem. The Bill indicates that, after the first “state of the game” report is complete, future reports will be produced on a five-year cycle. We cannot be certain at what point in the five-year cycle the backstop might be triggered—this is all quite technical. Hence, our Amendment 22 suggests that, if the backstop is triggered and more than two years have passed since the last report, the “state of the game” report should be refreshed and updated before the backstop mediation process begins.

I do not plan to test the opinion of the House, but we tabled these amendments in the hope that the Government will continue to refine the Bill, as they have been doing, as they take their next steps. We hope they will consider these points. I beg to move.

[Lord Markham (Con)]

Given the late hour, I will speak briefly in support of these amendments. As the noble Lord, Lord Birt, quite rightly said, the value of the global rights is now greater than the value of the domestic rights. Of course, it is the rights money that affords the best players in the world. We have put out this stat before: the Premier League has 44% of the best players in the world, which makes it the most exciting, which creates a virtuous circle and grows the rights. It is entirely proper that the global appeal should be recognised in the “state of the game” report. We wholeheartedly support the amendments.

[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Birt, for his amendment. I am grateful for the huge amount of time and effort that the noble Lord has put into considering how we could all further improve this legislation. I also thank him for the amount of time he has given to discussing it with my officials and me over many weeks.

This amendment would see the regulator having to provide an overview of English football’s global appeal in the “state of the game” report. The report is focused on the issues affecting English football so far as relevant to the exercise of the regulator’s functions. The issue that this amendment intends to capture will likely already be captured in the “state of the game” report, as it could impact the regulator’s objectives and duties. We have purposely left the required content of the “state of the game” report broadly to the regulator’s discretion to ensure flexibility and independence. It would not be possible to list every issue worth including, as the list would be too long and doing so would remove the regulator’s ability to prioritise issues and to adjust them over time.

Amendment 22, requiring an updated “state of the game” report if the backstop is triggered, could place a significant burden on the regulator, and might slow the process down significantly. In our view, three months would definitely not be long enough to update a review of English football, given the breadth and depth of relevant issues it must cover. The regulator has to identify the analysis needed, request it from parties, let them respond, analyse it and consult on findings before publishing.

We also have to consider the significant burdens this amendment would place on the regulator, but particularly on smaller clubs. Furthermore, an updated “state of the game” report would be required solely if an application to trigger the backstop was put forward, regardless of whether that application was accepted. Ultimately, a three-month delay in the backstop process, with the burden on both the regulator and the industry to engage with a rushed updated review, would likely be disproportionate to the benefits. I therefore hope the noble Lord will withdraw his amendment.