Football Governance Bill [HL]

Debate between Lord Moynihan and Baroness Taylor of Bolton

Committee stage
Wednesday 15th January 2025 Lords Chamber

[Lord Moynihan (Con)]

Before the Minister responds, I thank the noble Lord, Lord Birt, who sat through many hours of Committee and held his council until this moment, when he has made some very forceful and powerful points geared specifically towards having a co-operative, thoughtful and collaborative response to mediation. The legislation at present is not like that; it is divisive and nuclear, to use two of the words that the noble Lord used. This is one area where there can be agreement across the Committee, and I hope that there will be agreement from the Minister that we can return on Report to look at this, so that we can be more in line with other regulatory mechanisms for mediation. None is as divisive and polarised as the one in the Bill, and I very much hope that the support will be universal for the noble Lord, Lord Birt. I am grateful to him for the thought that he has given to this.

[Baroness Taylor of Bolton (Lab)]

Will the noble Lord acknowledge that you can have mediation only if both sides are willing to participate? What we have seen from the Premier League in recent years is that it is not willing to do that.

[Lord Moynihan (Con)]

I disagree with the noble Baroness on that. Through the history of the backstop powers and the parachute payments, this has been subject to consistent and constructive negotiations. Some negotiations are tougher than others; there is no doubt that in recent months and the last couple of years there have been examples of both sides failing to reach an agreement. I do not believe that putting this regulatory pressure into a binary system is going to resolve that. Yes, negotiations are tough and are frequently going to lead to detailed iterations before a satisfactory position is reached—but the last round of negotiations in particular was very close to reaching an agreement. I do not believe that the imposition of regulatory pressure is going to resolve that beneficially for the future of the Premier League, or indeed the EFL, at all.

--- Later in debate ---

[Lord Moynihan (Con)]

My Lords, I am very pleased that the noble Lord, Lord Pannick, has just returned. He will be in an exceptionally good mood as his club has just gone 2-1 up with about a minute to spare before half-time. That will put him in a good mood to support my amendment.

Amendment 327 was tabled in the name of the noble Lord, Lord Maude, who is abroad on business and apologises for not being with us this evening. It is a straightforward, simple amendment, which I hope will have support from the noble Baroness, Lady Taylor. She and I have both been concerned about the potential financial impact of the Bill, particularly on clubs in the EFL. Pursuant to her earlier intervention, I am here not on the EFL side or the Premier League side but genuinely to look at the legislation and make sure that good legislation comes out of our deliberations.

One of the areas of particular concern is the cost. This is new; it is the first time it has happened not just in this country but anywhere in Europe for a sport. It is novel, and that word is used quite extensively in the Government’s impact assessment. It is important, therefore, to have an opportunity in Parliament to consider the costs of setting up the regulator and the initial costs of regulation. That is why Amendment 327 proposes:

“Within six months of the day on which this Act is passed, the Secretary of State must lay before Parliament a review of the financial impact on regulated clubs of complying with the provisions in this Act”.


That will give us an opportunity to consider whether it is massively inflated in comparison with the expectations set out in the impact assessment or if there are cost savings. I think the noble Baroness is about to intervene, so I am happy to give way.

[Baroness Taylor of Bolton (Lab)]

I am about to intervene. The noble Lord is somewhat optimistic in thinking that everything can be revealed within six months. I will make a broader point, which we are not specifically discussing tonight. The role of Parliament in holding regulators to account is where many of these considerations could usefully come in.

[Lord Moynihan (Con)]

The noble Baroness makes an important point but, in the context of this, I think her first point was even more relevant. Perhaps at a later stage, more than six months would be appropriate; maybe a year would be appropriate. Either way, it is appropriate that Parliament has a look at the costs of implementation, not least because there will be views among parliamentarians about where that burden should fall, and whether it should fall on some of the EFL clubs that might find it difficult to afford those costs of following this legislation. It is interesting that the French regulator who covers professional football confirmed yesterday that he has five staff to do the job that we are looking to cover with this substantial regulation. He also has 18 volunteers from the leagues, including the French FA, who make up their boards and committees to do the work that we have been considering so far in Committee.

The reason for moving this amendment is the concern about the uncertainty of the additional costs to be imposed on all 116 clubs as a result of the financial regulations set out in this Bill. I am not going to go into the details of questioning each and every figure, because that would be inappropriate, but I think it is worth looking at areas of the impact assessment that lead me to worry about the potential increase in costs that this could result in, not least because there is no estimate of litigation costs involved with the regulator, and we have heard that there is quite a lot of potential litigation that could be flowing as a result of the role of the regulator.

Initially, these litigation costs in the Bill will be funded through fines and interest as a first recourse, and that is set out Clause 96; but the further costs to cover litigation would come via the levy—in other words, come via the clubs themselves, and not be a burden on the taxpayer. That could lead to perverse incentives when it comes to the advocacy-first proportionate enforcement model. The legal costs should not be underestimated when you bear in mind that in the last financial year the Premier League had some £40 million-worth of legal costs alone. We should add to that the potential for legal costs associated with what we have been discussing this evening. I hope they do not come to fruition, but it is perfectly possible that they might, with parachute payments and the backstop.

In the context of trying to establish a cost base for clubs and the government regulator, it is really important that we look in detail at the impact assessment. It addresses costs in three buckets: familiarisation costs of £400,000 to £1.2 million, covering the one-off costs to business occurring in the first year of the appraisal period; compliance costs, which potentially go up to £35.8 million over the 10-year appraisal, which are the ongoing costs to business following the first year of the appraisal period; and then the operational costs, which are significantly higher. While these operational costs will initially be funded by the Exchequer before an industry levy is introduced, the costs will subsequently be clawed back from all clubs.

The role of the regulator and the work required by clubs is based on the belief that professional football in this country is in crisis and requires government intervention to sort it out. The legislation addresses what it has set out to be perverse incentives and misaligned owner motivations which have resulted in excessive risk taking in pursuit of sporting success and promotion. Those are quotes and they are meat to any lawyer immediately before this Bill is even on the statute book. Ultimately, the Government argue that this has resulted in market failure, despite the Premier League being the most successful football league in the world and the Championship the sixth-richest in Europe. However, the Government have ignored that and believe, as is clearly set out in the impact assessment, that government intervention is necessary to correct market failure.

There are complete sections on the problems that the Government believe have led to this market failure. Briefly, in 1.2.1 on page 9, the Government believe there is a perverse incentive for clubs to overreach financially. I anticipate that will be challenged. Paragraph 1.2.2 states that inequitable distribution across the English football pyramid has exacerbated poor financial and operational management. Paragraph 1.2.3 states that unsustainable financial management exists, in the view of the Government. Paragraph 1.2.4 covers poor operational management where financial mismanagement has been exacerbated by poor-quality operational management and decision-making at clubs. That is quite a statement to address towards professional football clubs in this country.

Paragraph 1.2.5 states that clubs will need to spend more to

“take into account the interests of fans/communities”,

which currently they do not sufficiently consider. But the impact assessment does not set out how much this is, or make costs, or rectify any of the other broken aspects of professional football that I have outlined this evening. It argues that the existing regulations have “proved ineffective” and it states that the

“free market will not rectify the football industry’s problems”.

In paragraphs 1.3.2 and 1.3.5, it says that

“market failure has large spillover impacts on society”,

which it does not cost.

In paragraph 1.7.5, the FA is blamed, with the Government concluding that,

“given the inaction of the leagues and the FA, the preferred option is to establish a new statutory independent regulator rather than industry self regulation or a light touch intervention”.

That is somewhat at odds with what the Minister was saying, because she argued quite strongly that light-touch regulation was what was sought—but in the impact assessment it is made clear that the Government favours having an independent regulator rather than

“industry self regulation or a light touch intervention”.

If it is not to be light-touch intervention and it is to be heavy intervention, that will incur significant costs, and it is not clear at all what those costs will be.

This is important, because the Government are rejecting in this document light-touch intervention on the French model for comprehensive state-controlled regulation, which will cost all clubs substantial internal costs and legal costs, potentially with the cost of lawyers and outside advisers for sure, to comply with the tasks outlined in the Bill, since all clubs will need to be licensed and meet in detail all the requirements in this lengthy and comprehensive legislation. To believe that this can be done for £40 million a year under preferred option 4 over the coming 10 years is, to be quite honest, fanciful. It ignores the legal costs and the club operating and compliance costs for all 116 clubs, and it ignores potential litigation costs. It beggars belief to believe that the total central estimate for familiarisation to the clubs and leagues associated with option 4 is £800,000, or £7,000 a club on average. The compliance costs outlined in paragraph 211 are estimated at £100,000 per annum for Premier League clubs and £60,000 for all remaining clubs. I do not see for the life of me how that is possible.

However, at least the Government have added the rider that familiarisation compliance costs “may be underestimated” and that

“this is a novel and high profile area”.

It certainly is that. So, the Government suggest,

“clubs may pay more attention and buy in high-end specialist advice”.

But high-end specialist advice does not come for £7,000 a club per annum.

However, all this is predicated on the most important paragraph, paragraph 289, towards the conclusion of the impact assessment, which states:

“The Regulator will be legally prohibited from intervening in football (e.g. spend on players) or commercial (e.g. ticket price) activities, thus limiting the potential risk of deterring investment”.


We have spent dozens of hours looking into the fact that there will be detailed and intrusive activities by the regulator—understandably, to fulfil the legal requirements of this Bill. Far from not being interventionist in football, the regulator will in fact be legally required to intervene in the running of all aspects of the financing of football, including external factors such as season ticket prices and other ticket prices, in its overview of the finances of all clubs. There is nothing on the finances of the clubs in this legislation that is exempt from the consideration of the regulator, if he or she should wish to look at that in the context of fulfilling their functions under the legislation.

What it should say, as I say, is that the regulator is legally required to intervene in the running of all aspects of football—and, if that is the case, there is a whole different scenario for the costs involved for all clubs. I am not talking about just Premier League clubs or EFL clubs—I am talking about all clubs. That is why I would hope that there would be an opportunity to review the costs at six months—or it could be year—because this is the first time this has ever occurred in sport in this country. It is indeed the first time that it has ever occurred in football in the European Union, or indeed in any international body that I know of.

The statement that I have just made underpins the whole cost structure and sits uncomfortably with paragraph 298 of the impact assessment, which provides for the regulator to enter business premises in conjunction with an investigation or an actual or suspected breach of a club’s licence conditions in any form with its powers of search and seizure and the power to require specified persons to attend an interview. Given the likely cost of this intrusive legislation, I believe it is important to write into the Bill a review of the financial impact on regulated clubs of complying with its provisions, so that football fans can regularly review the true costs of government-led regulation. I beg to move.

Football Governance Bill [HL]

Debate between Lord Moynihan and Baroness Taylor of Bolton

Committee stage
Wednesday 18th December 2024 Lords Chamber

[Baroness Taylor of Bolton (Lab)]

My Lords, I will say a few words about one of the amendments, but first want to follow up on what the noble Lord, Lord Parkinson, was saying about multi-club ownership. He was suggesting that multi-club ownership could alleviate risk. I see the point that he was making, but we have to be clear that it can also generate risk. This is an ongoing conversation that many people in football are having. We have to consider its prevalence and the fact that it is increasing, but there are questions about how it could distort competition and lead to complications with loan deals or the sale of players. This is a big question that will loom over us in the future. It is not just a one-way issue, as perhaps the noble Lord was suggesting.

I want to say a couple of words about Amendment 201. Clause 37 says very clearly that in determining whether it considers that an individual has the requisite honesty et cetera, the regulator should have regard to whether the individual has been convicted of a serious criminal offence. Amendment 201, in my name and that of my noble friend Lord Bassam, goes somewhat further and says:

“No individual with an unspent serious criminal conviction, whether or not in England and Wales, shall be permitted to own a controlling stake in, or serve as a director for, any regulated club”.


That is a clear statement of intent about the serious nature of some of the issues that have arisen about specific clubs in recent times. I ask the Minister to tighten up on this, take the prospect of owners with serious convictions very seriously and say that it should be a bar to ownership and not simply something that has to be taken into account.

[Lord Moynihan (Con)]

My Lords, I too will speak to Amendment 204 on multi-club ownership, as the noble Baroness, Lady Taylor, has made some important points and it would be helpful for the Committee to understand the position of the Government. It can alleviate risk. It is also highly complex and can make it very difficult, in terms of due diligence, for the regulator to look at an English club under this legislation without taking into account the financial exposure that a multi-club owner could have in another country with other clubs.

This is a growing trend; it is not new. A significant number of Premier League clubs and six EFL Championship clubs form part of a wider multi-club model, a structure first explored exclusively in Europe by ENIC, now the majority shareholder of Tottenham Hotspur. The rationale underpinning multi-club ownership aspirations, which underlines just how complex the situation can be, ranges from player recruitment and development efficiencies to knowledge sharing, resource synergies and brand penetration.

Furthermore, accruing interest in clubs that compete in the continent’s top leagues—those that hold higher bands and therefore score more points in the governing body endorsement system—is seen as a means for Premier League and EFL clubs to access a more eligible foreign pool of players. Having interests in multiple clubs is not a phenomenon unique to the UK; it pervades the European game. UEFA reports that clubs with cross-ownership relations account for more than a third of the top division in each of Belgium, France and Italy, in addition to England. Integrity of competition, reconciling the model with football’s rulebook, has become a complex issue for UEFA. At the centre of sport is competition, so if the same person, either a natural or a legally based entity, was to have control or influence over two rivals, there would be a risk to the integrity of competition whenever those rivals competed.

To mitigate that risk, football’s governing bodies have introduced rules to preserve the independence and integrity of competition between its clubs. At a domestic level, approximately two-thirds of European national football associations have rules directly limiting or restricting multi-club ownership. The famous article 5 of the regulations of the UEFA Champions League, on the integrity of the UEFA club competitions, stems from the governing body’s concern, which started back in the late 1990s. Article 5 regulates common ownership by prohibiting the same individual or legal entity having control or influence over more than one club playing in the same UEFA club competition. That notably includes the ability to exercise, by any means, a decisive influence on the decision-making of the club concerned.

With that brief explanation on top of the important points made by the noble Baroness, Lady Taylor, I would be very grateful if the Minister could confirm that she is completely comfortable with article 5 and will instruct the regulators not to impose any conflicting regulations in this area.

Football Governance Bill [HL]

Debate between Lord Moynihan and Baroness Taylor of Bolton

Committee stage
Wednesday 4th December 2024 Lords Chamber

[Lord Moynihan (Con)]

My Lords, my noble friend Lord McLoughlin has made an incredibly important point. While I do not think that this is the moment for us to test it, we should give due consideration to whether this ought to go before the Examiners after Committee and before Report, particularly because the Minister has today said that the leagues are not confused about which leagues this legislation applies to.

We are grateful to the Minister for writing to us today. She stated in her letter that:

“The initial intended scope of the top five tiers of Men’s English football is built on a strong evidence base and extensive consultation with all key stakeholders”.


Nothing could be clearer about exactly who this Bill is meant to refer to. Yet, in this whole long Bill, there is no reference to the five tiers of men’s English football and we have no idea whether the Secretary of State will ultimately keep to that or not. We are going through legislation about which we have no clarity to whom it refers. That is, if not unprecedented, extremely rare. It is important that we heard from my noble friend Lord McLoughlin, not least because, to repeat what his committee said in its report:

“The argument that something should not be fixed in primary legislation because it might need changing in future would be an argument against having any primary legislation”.


I urge the Minister to listen carefully to my noble friends and to make sure that the Government at least place what we are talking about in the Bill, so that we know which clubs it refers to and where the onerous powers contained in it for the potential state-appointed regulator will fall. Without that, we are talking in a vacuum.

[Baroness Taylor of Bolton (Lab)]

My Lords, one of the amendments in question is in my name and that of my noble friend. I am surprised that Members opposite think that the previous Conservative Government would have introduced a hybrid Bill. I remind the House that this Bill is almost identical to the one they introduced and I am surprised that they thought that that might be hybrid. That Bill was discussed in another place at quite some length, but this question was not raised. As I understand it, the Bill would not have received a Second Reading had it been deemed to be hybrid at that time, so I do not think there is any question that this Bill is hybrid now. It can be made hybrid only if one House or the other passes an amendment that makes it so.

Football Governance Bill [HL]

Debate between Lord Moynihan and Baroness Taylor of Bolton

Committee stage
Wednesday 27th November 2024 Lords Chamber

[Lord Moynihan (Con)]

My Lords, I rise to speak to Amendments 5 and 24 standing in my name. In the spirit of cross-party support for this Bill, I thank the noble Lord, Lord Watson of Wyre Forest, for moving my amendment so eloquently. Should the Minister be in complete agreement with him, I think we could curtail this debate immediately and place the wording on the face of the Bill, since what I was looking for was exactly what he sought—namely, to insert

“within the rules laid down by UEFA, FIFA and the International Olympic Committee, relating to the autonomy of sport from government influence and control”.

Since there surely can be nobody who does not want to see us continue to play in UEFA competitions and the World Cup, to make that clear on the face of the Bill, as the noble Lord, Lord Watson of Wyre Forest, spoke to, is important.

Why is this being raised? It is being raised because UEFA has already—before we even got to Committee—raised specific concerns about the Government’s proposal to establish an independent football regulator, emphasising potential government interference in football governance. UEFA made four key objections, as I understand it. I have not had sight of the letter, but perhaps the Minister could confirm that in her response. First, it talked about the autonomy of football governance. UEFA insists that football should be self-regulated without external government influence. As I understand it, in the letter from the UEFA general secretary, Theodore Theodoridis, he stated that there should be

“no government interference in the running of football”.

The second point that he made was about the impact on UEFA competitions. UEFA warned that government interference could lead to the exclusion of English federations and clubs from European competitions, including the Champions League and the European Championships. This concern was highlighted in communications to UK officials, where UEFA emphasised the risks associated with the proposed regulator’s powers.

The third concern that UEFA expressed was on the regulatory powers and the competitive balance, which was referred to in earlier debates this afternoon. UEFA, as I understand it, is apprehensive about the proposed regulator’s backstop powers, which we will come to at a later stage of the Committee’s proceedings. Those are powers to intervene in funding discussions between the Premier League and the English Football League. UEFA argues that such intervention could disrupt the competitive balance and hinder amicable solutions within the football ecosystem. This is interesting; the point was made earlier about the comparison between the German system and the system that we have here. The reason I made that comparison was that Germany has possibly got the most regulated football in Europe in terms of what they call the Sonderweg, which translates as the “special unique past”. It is based on financial regulation and measures, including the 50-plus-one rule.

The point I was making was that the insolvency levels and the financial position of clubs within Germany and the UK are broadly similar, so it is not the regulation that impacts on that. UEFA has therefore concluded, comfortably within its own rules, that Germany, under its regulation, satisfies UEFA’s criteria. However, it raised a fourth point about licensing and club ownership. The proposed regulator would have had the authority to implement a licensing system for clubs and influence club ownership decisions based on the UK’s trade and foreign policy. That was the specific point withdrawn—removed—from the original Bill, and UEFA made it clear that it feared this could lead to fragmented governance across Europe and undermine the independence of football clubs.

These concerns that UEFA has brought forward are very serious. They would have a significant impact on our ability to play in the Champions League and the European Championship—indeed, if we apply the same logic to FIFA, in the World Cup as well. The preservation of the autonomy of football governance is therefore incredibly important. I hope we all agree that in introducing a football regulator nothing should jeopardise the autonomy of football governance and that we are within the rules and regulations set out by UEFA, which are comprehensive, as well as within FIFA’s. There should be nothing that could allow a regulator to overreach that boundary and thus disrupt the sport’s established structure.

[Baroness Taylor of Bolton (Lab)]

I agree that we want to see our clubs competing at the highest level, and the national team as well. Earlier, the noble Lord said that the level of regulation in France, and indeed in Germany, was much tougher than anything that we are going to have in the Bill. But those countries have not got into difficulties, given the regulation that they have, so I do not really see why we should either.

[Lord Moynihan (Con)]

My point was that that is not the case. I do not want to go back into our debate on the first group, but the financial stability in the English system is no different. It is very similar to the financial stability in both the French and German systems. The levels of insolvency are, broadly speaking, the same. It is therefore not the level of regulation that is creating financial stability. If it was, the argument that we needed more regulation to create financial stability would hold water, but in practice it does not.

My point on this set of amendments is simply that if we all agree on this legislation and the role of the regulator, which is not comprehensively defined in the Bill, despite its length—the Minister has said, rightly, that we do not know the details of how the regulator will use its powers in any given situation—the one thing we can be sure about is that we do not want that regulator ever to use its powers in contravention of the UEFA and FIFA guidelines, by which we would have admission to play in European competitions and the World Cup. Should that be the case, there should be no difficulty in placing in the Bill that the whole operation of the regulator should be

“within the rules laid down by FIFA, UEFA and the International Olympic Committee, relating to the autonomy of sport from government influence and control”.

I added the International Olympic Committee because the same principles of autonomy apply, albeit that the British Olympic Association does not enter a men’s football team at present. It certainly enters a women’s football team and would wish to continue to do so. The Bill would enable, by secondary legislation if necessary, the Government to include the women’s game within the scope of this Act, as it would then be. I am thus also looking to have protection of

“the autonomy of sport from government influence and control”

in the Bill for the International Olympic Committee. For those reasons, I put these two amendments before the House. I beg to move Amendment 5.