Football Governance Bill [HL]

Lord Moynihan of Chelsea Excerpts

Committee stage
Wednesday 4th December 2024 Lords Chamber

[Lord Moynihan of Chelsea (Con)]

My Lords, I support all three amendments in this group, particularly Amendment 253. I am delighted to follow the noble Lords, Lord Jackson, Lord Markham and Lord Parkinson, in their advocation of these amendments. I declared my interests on Monday, but this evening I have a fairly massive conflict of interest. I do not believe that I am alone in the Chamber in having been forced not to watch Chelsea breach all the principles of equity by beating Southampton 5-1 as we sat here. The poignant thrust of this conflict would be if my football friends started telling me that my staying away from Chelsea matches is good luck for the team. Therefore, it is not without anguish that I stand before your Lordships.

I go back to my earlier warnings about the dangers of regulators. Such dangers are stark in the clauses that we seek to amend and in the amendments themselves. The questions that your Lordships have raised in the debate boil down to what it will cost overall. That is what clubs will be asking, and then they will be asking what it will cost them. The third question that will come to the mind of the clubs—except those luckless ones in the Premier League—is around what they are going to get. We will talk about that in a minute but, to go back to what it will cost overall, we have heard over and again that we have no idea. There are estimates, which are clearly—

[Lord Mann (Lab)]

I have met plenty of clubs that have given an estimate of the likely cost, including across the Premier League. There is no ambiguity around the kind of sum that many Premier League clubs are citing as to what they expect the cost to be.

[Lord Moynihan of Chelsea (Con)]

I thank the noble Lord for that intervention but the fact remains that they cannot know what it will cost because, for a start, we do not have any certainty about what clubs will be in the scheme. We have been told what it might start at, but the Minister has said that she will not—

[Lord Mann (Lab)]

There have been extraordinarily levels of dialogue between the Premier League and the Government over a long period on this. The suggestion that the Premier League does not have some idea of the likely potential cost and has not spoken to clubs in relation to that is simply nonsense. I have spoken to clubs which have given specific estimates of what they anticipate it will be. Whether that is accurate or not, the idea that those figures have not been discussed at length is something of a fantasy.

[Baroness Brady (Con)]

I am sorry to intervene on the intervention, but I have not seen the noble Lord at any Premier League meetings; I have been to them all. I can assure him that we have never had a discussion about the potential costs, because we have never known what the potential costs are; no one has told them to us. We have looked at the impact assessment and that has given us a vague estimation, but to suggest that we have had a long, detailed discussion and debate, and that we understand and know what the costs are, is not correct.

[Lord Moynihan of Chelsea (Con)]

I thank the noble Baroness, Lady Brady, and the noble Lord, Lord Mann, for his intervention. He seemed to think I was talking about Premier League clubs. I was not. I was saying that the Minister had said that she did not want to specify in the Bill which clubs were going to be regulated, so the club does not know whether it will be regulated, and it certainly does not know how much it will cost it. The noble Lord might shake his head, but that is a fairly obvious point. We do not know who will pay. We also do not know what it will cost. I believe the noble Lord, Lord Hayward, talked about an estimate of £10 million—I beg your pardon; it was the noble Lord, Lord Markham.

[Lord Hayward (Con)]

If I might clarify for my noble friend: the noble Baroness, Lady Brady, referred to £10 million; I was quoting from the impact assessment, which says that £140 million over 10 years is the mid-point the Government are operating to.

[Lord Moynihan of Chelsea (Con)]

I beg the noble Baroness’s pardon for not attributing the £10 million figure to her. The fact is that we know that is ludicrous, because the cost of other regulators is way more than that.

I will make some headway. What will it cost overall? We do not know what the overall cost will be or what it will cost individual clubs. To talk a little bit more about that, imagine you are a local entrepreneur. There is a club in a little bit of trouble. They come to you and say, “You always wanted to own a football club. Why don’t you take over our club and then you can have one of those back-to-back league promotion successes that you’ve dreamed about and you’ll be famous in your community?”. You say, “Well, I’ve got a few bob. I don’t know how much, but yeah, okay, I’ll consider it”. It is one of those clubs that a noble Lord opposite talked about on Monday. I think the numbers cited were a turnover of £2 million and seven employees. You are invited to take over this club and bung in some of your money. You may not have a lot, but you may think you have enough. Then you say, “What’s going to happen?” My concern is that when you are told there is going to be a regulator that will tell you who to have on your board and all that, you will say, “Forget about that; as an entrepreneur, I don’t play that particular game”. But let us say you swallow that. Then you say, “How much is this regulator going to cost me?” The answer: “Dunno mate”. You ask, “Well, what could it be?” The answer: “Dunno”. So you turn your back and go off to sponsor the local cricket club or something like that. It does not work if you are not absolutely clear about what the cost will be.

[Lord Markham (Con)]

I ask the noble Lord this given his experience of consulting in a lot of entrepreneurial and start-up situations. I know that he has done lots of these types of moves. Clearly, when you invest in a start-up business or a club you will have business plans. They might be good or bad business plans, but they are normally based on an investment and an expansion. In this case, given that the regulator can say no to those business plans and that investment once it gets into it, I assume your investment proposition would suddenly be up a creek. I would like to hear the noble Lord’s opinion on what that will do to the investment proposition.

[Lord Moynihan of Chelsea (Con)]

The noble Lord, Lord Markham, makes a very good point. If some local worthies approach you and ask, “Will you invest in this club?” and you say, “Well, I’ve got to figure out what it’s going to cost me”, and they then say, “You’ve also got to figure out whether your plans are going to be acceptable to the regulator”, again, you would turn your back. Entrepreneurialism is the heartbeat of the economy, as several noble Lords have said in this debate over the past few days. This regulator proposal just turns entrepreneurs away from wanting to invest.

[Lord Mann (Lab)]

It would be helpful if the noble Lord could give examples of entrepreneurs wishing to invest in football who he has spoken to. I have spoken to a lot of entrepreneurs, including people who have invested smaller amounts in smaller clubs and larger amounts in Premier League clubs. They know exactly what they are anticipating and what they are going into. Of course, as part of their business plan, they are factoring that in. There is a figure, there is a concept, and investment has not gone down in the past 18 months. Indeed, further major investment in major clubs in English leagues is likely to happen soon. What is going wrong if they are all running away? Can he give a single example?

[Lord Markham (Con)]

I posed the question, and I can give an example of that. I have mentioned to noble Lords before that I have experience of the Brighton situation and know the board and the set-up there quite well. Brighton is a perfect example, and it is a shame that the noble Lord, Lord Bassam, is not in his place, because he is very familiar with it. It was a club without a stadium or good training facilities. An owner, Tony Bloom, came in and invested a lot of money in it, with a plan predicated on investing in players and doing a lot of analysis to get the best ones from around the world. It was absolutely a start-up scenario where he was heavily investing, and part of that was the concept of being able to yo-yo in terms of having parachute payments. He cited to me the example of West Bromwich Albion, which at that time had been promoted and relegated and promoted and relegated, but each time, because they had the parachute payment, they were able to become more sustainable.

Suddenly you get a situation whereby someone is thinking, “I want to do another Brighton like Tony Bloom, but I do not know what my cost base will be. I do not know whether the regulator is going to stop me going on with my plans because it thinks I am unsustainable or make me deposit a large sum of money as a financial buffer. I do not know whether my parachute payments, which are part of my plan, are then going to be taken away. Suddenly I’ve got a hell of a lot more risk involved”. I can only believe that that is going to dampen enthusiasm to invest in the first place. That is a very real example.

[Lord Moynihan of Chelsea (Con)]

I thank my noble friend. I apologise to the Committee for going over my allotted time, but I hope that it will appreciate that a great deal of that time was taken up not by me but by entirely welcome interruptions by other speakers.

In the interests of trying to move this on fast, I will stop talking about this issue of “What is it going to cost me?”, important though it is to have far more understanding of and far more limitations on the regulator’s ability to charge, and will move on to that of “What I will get?”. As soon as it becomes possible for a club to get money out of this arrangement, suddenly you have discussions about parachute payments and backstops; you have supplicants; you have lobby, lobby, lobby. It is called crony capitalism, state capture, rent-seeking. These are the dangers that you get when you involve the Government, and although we are calling it a regulator, this is a governmental action. It is essential that we limit the amount of money that that regulator has to play God with football in this country.

With those problems, it goes beyond just stopping the regulator spending beyond the levy amounts, as I understand Amendment 253 to say. We need to ensure that the levy amounts in the first place are suitably parsimonious and as little burdensome as possible to the clubs. I appreciate what the noble Lord, Lord Addington, had to say, but let us not be too free with other people’s money. I am sure it is not popular in all parts of this House to quote the great Baroness Thatcher, but she had the great remark, “You can spend other people’s money until pretty soon there isn’t any more”. Let us think about the impact.

[Baroness Blake of Leeds (Lab)]

I understand that the noble Lord received a number of interventions, but I think he is reaching the limit of his time. I would be grateful if he drew his comments to a close.

[Lord Moynihan of Chelsea (Con)]

I would almost have concluded in that space of time.

Once the method for determining the levy is agreed and the amounts are fixed, most surely the regulator should be prevented from spending any more than that. I thank noble Lords for their attention.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, the noble Lord, Lord Mann, is right that we have had extensive discussion on the issue of cost, but if there has been lengthy dialogue on this point then it is because the answers have not been forthcoming in the way that the Committee has wanted.

I am particularly grateful to my noble friend Lord Hayward, who is doing an invaluable service not just for this Committee but for the smaller clubs on whose behalf he has spoken this evening, and in the way that he has gone through the impact assessment to try to get to the bottom of the cost implications for them in particular. I am glad that he will continue to keep at this important point, and I hope he gets some better and more detailed answers from the Minister as he does so.

My noble friend mentioned a letter that the Minister had sent him. Again, she has been kind in responding in writing to individual points that noble Lords have raised, but I ask her to share those letters with the whole Committee when the team sends them through. I think they are coming through to the individual noble Lords who have raised those points but they are not always being shared, and it would be a benefit to the whole Committee if we could all see those letters when they come. However, I am grateful to her, as I know those noble Lords are, for the speed with which she is responding in writing to the points that they have raised.

I am grateful to my noble friends Lord Jackson of Peterborough and Lord Markham for tabling their amendments in this very important group, which concerns the state funding of the regulator. That is a big issue that is worthy of debate, and I support the way that they have drafted them. I put my name to my noble friend Lord Markham’s Amendments 171 and 253, but I am happy to associate myself with my noble friend Lord Jackson of Peterborough’s Amendment 50 as well, which was the one that began this group.

My noble friend’s amendment seeks to strip away the broad powers that could be granted to the Secretary of State to provide financial assistance to the independent football regulator as she sees fit, subject to conditions deemed appropriate by her. Amendment 50 from my noble friend is an important amendment in seeking to safeguard the integrity and independence of the independent football regulator. We would like to think that one of the core purposes of the new regulator is to serve as a neutral body overseeing the governance and financial management of football clubs in this country. By granting the Secretary of State the power to provide it with financial assistance, there is a real and present risk that the independent football regulator’s independence could be compromised.

As with any independent regulator, it is crucial that the independent football regulator operates free from any external pressures, particularly from the Government. The role of the regulator should be to assess the game on its own merits without any concern about political influence or the priorities of the Government of the day. If we were to allow the Government to fund the regulator, we would be introducing the potential for at least the appearance of government influence over the regulator’s work and its activities.

Even if that influence were not overt or immediate, the mere existence of government funding could lead to the perception, and possibly the reality, that the regulator would become beholden to future Governments. That is a danger we must seek to avoid, as it would erode the public’s trust in the new regulator, undermine its effectiveness and hamper its impartiality. The Government have rightly made much of the changes they have made to the Bill in order to guarantee the independence of the regulator in the eyes of international bodies that have paid attention to the Bill, so I am sure that is something they want to avoid in this instance as well.

I hope the Minister will agree that the provision as it stands is concerning in the way that it gives the Government the power to impose conditions on how the regulator uses its funds. The consequences of that are worth considering. The Government could impose restrictions or directives on the work of the regulator, such as mandating certain areas of focus or influencing the scope of its investigations. It could lead to the independent football regulator neglecting crucial issues or, even worse, aligning its work with the agenda of the Government of the day. That sort of shift would diminish the regulator’s ability to act in the best interests of football clubs, players, fans and the broader football ecosystem which the Government and all of us are mindful of protecting.

The existence of that sort of conditional funding could set a dangerous precedent for other regulatory bodies. If government assistance became contingent on adhering to political agendas or priorities, then the independence of other regulatory bodies could be called into question, further eroding public trust in oversight.

I would like also to support my noble friend Lord Markham’s amendments in this group, Amendments 171 and 253. Amendment 171 restricts discretionary licence conditions to include only “internal financial controls”. In Clause 22, the Government allow discretionary licence conditions to relate to “internal controls”. It is important that, in a Bill such as this, the Government recognise the details of the Bill and make clear that the provision refers to financial controls as opposed to solely internal ones.

As my noble friend set out, “internal controls” is broad and open to wide interpretation. Without his amendment, the regulator could potentially impose conditions that extend beyond the presumably intended focus on financial oversight. That surely creates a risk of the sort of regulatory overreach that the Committee has been very concerned about, whereby the regulator might intervene or interfere in areas unrelated to the core objectives of this Bill, such as operational decisions or non-financial activities within football clubs.

If we were to insert “financial” as my noble friend suggests, we would ensure that the discretionary licence conditions relating to internal controls are focused exclusively on financial governance. This refinement would make the regulator’s powers more precise, ensuring that its interventions are effective, proportionate and fully aligned with its mandate to oversee the financial health of football clubs. We have heard, repeatedly and rightly, that the financial sustainability of English football is what the Government are most concerned about and what has led to the Bill that is before the Committee.

The non-financial resources threshold requirement as outlined in the Bill is designed to ensure that clubs have adequate resources, financial and otherwise, to operate sustainably, but the specific mention of internal controls as part of this framework needs to be carefully defined to prevent unintended consequences. Without this amendment, the regulator could use its powers to impose conditions on internal controls that have little or no connection to financial matters. That could include operational areas such as staff management, logistical decisions or club culture, none of which falls under the regulator’s core responsibility to ensure financial sustainability.

By explicitly tying internal controls to financial matters, my noble friend’s amendment reinforces the Bill’s focus on financial governance, while respecting the operational independence of football clubs. They are of course complex organisations operating in—