Football Governance Bill [HL]

Lord Pannick Excerpts

Committee stage
Wednesday 18th December 2024 Lords Chamber

[Lord Pannick (CB)]

My Lords, I declare again my interest as counsel for Manchester City Football Club in recent disciplinary proceedings brought by the Premier League. I offer my support to Amendment 173A from the noble Lord, Lord Moynihan. We discussed the principle of consultation on Monday evening. I repeat that, in my view, consultation with clubs and specified competition organisers is vital to ensure that they have confidence in the operations of the regulator. It is also vital to ensure that the regulator is operating, as he or she would want to do, in a fair manner. I very much hope that the Minister will give consideration to that and bring an amendment back on Report, in relation to Amendment 173A and earlier provisions of the Bill.

I am far less keen, I regret to say, on Amendment 172 from the noble Lord, Lord Markham, which seeks, as I understand it, to remove from the Bill the discretionary licence condition relating to restricting the clubs’ overall expenditure. I suggest that it is important to see the limits of that power of the regulator, because Clause 22(4) provides that this discretionary licence condition

“may not impose restrictions on expenditure of a particular kind or a particular transaction”.

As I understand it—the Minister will say whether or not this is correct—the regulator would therefore not have the power, using the example given by the noble Lord, Lord Markham, to say, “You can’t buy a particular player for £50 million”, as that would be outside the scope of Clause 22.

It is not difficult to see that there may be circumstances —one hopes that they would be very rare indeed—where the regulator takes the view that its objective under Clause 6

“to protect and promote the financial soundness of regulated clubs”,

which is what it is there for, would be damaged if it did not have a power to restrict in exceptional circumstances a club’s overall expenditure.

[Lord Addington (LD)]

My Lords, I am beginning to wish I had jumped up before the noble Lord, Lord Pannick, because I have come to a similar conclusion.

For every success story in football, if you look you will find a failure. It is often the case when people come forward and buy themselves the dream team, then something goes wrong. You will find that especially in the lower levels. There are stories of those clubs, with Bury et cetera copping out, that have more expenditure going out on wages than they have coming in from revenue. If the regulator does not have the power to stop that speculative spending in certain circumstances, it is being denied a basic power over one of the biggest problems that has led to instability, particularly in the lower parts of the game. After some of the discussions we had on this, I really cannot see how we can support the lead amendment here and still have the central thrust of the Bill.

How will the regulator assess the slightly strange finances of investing in people who are always one trip away from being worth nothing? One accident on a training field and your principal asset is worth nothing. How is that taken into account and balanced, which would require a level of expertise? Does the Minister have examples of where information will be gathered to make a sensible assessment on this?

On speculative purchases, we have heard about deals with agents, et cetera, on other parts of this Bill; it is important to bear in mind how these are done. If the Minister has information on how that information will be gathered and those assessments made, I would be very interested to hear it.

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[Baroness Twycross (Lab)]

I hear what the noble Lord says and look forward to further discussions with him on that point, but we feel that the regulator will be best placed to determine which persons are appropriate to consult.

[Lord Pannick (CB)]

I am sorry to keep on at the Minister about this, but can she really think of any circumstances in which it would be appropriate for the regulator not to consult the competition organisers and the clubs in this context? If the answer to that is “Of course not”, let us put it in the Bill and make it clear.

[Baroness Twycross (Lab)]

I recognise the strength of feeling on this point and look forward to discussing this further as we proceed through the Bill’s progress in this House.

Amendment 173B is in the name of the noble Lord, Lord Hayward, and the noble Baroness, Lady Evans of Bowes Park, spoke to it in his absence. Its intention is to place procedural requirements around the regulator’s use of capital buffers as part of a liquidity requirement. First, I reassure noble Lords that the model of financial regulation is about making clubs more financially resilient.

The noble Lord, Lord Markham, raised an issue that has been discussed previously in this Committee, where owners tragically die and the issues this can cause clubs, which is that clubs will have to submit detailed financial plans, including contingency plans. This could include what the club would do in the event of a financial shock such as the sudden loss of an owner.

If the regulator has concerns about the level of financial risk exhibited in a range of scenarios, it can place discretionary licence conditions on clubs in limited areas. That does not necessarily mean that owners will have to put funding in up front. If the regulator does reach for liquidity requirements, there are already safeguards. Indeed, the amendment seeks to require the regulator to have regard to a number of considerations, but in each case the Bill already requires this.

When assessing whether to attach the discretionary licence conditions needed to meet the appropriate financial resources threshold condition, the regulator will already be fully informed of the club’s financial position because clubs have to submit a financial plan, which would already include detail of any existing liquidity buffers. Consideration of proportionality and existing financial rules is covered by the regulatory principles in Clause 8(c) and (d). Again, consideration of the impact on competitiveness and investment is covered by the regulator’s duties in Clause 7(2). Therefore, this is all already accounted for.

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[Baroness Butler-Sloss (CB)]

I do not want to deal with human rights. I have come here to deal with modern slavery. I disagree with the noble Lord. The problem is that Section 56 is voluntary and not mandatory. Consequently, companies are not obliged to follow what happens. In a 2019 review led by Lord Field of Birkenhead, of which I was a part, we picked up the fact that it was not mandatory. Consequently, if the regulator does not have to think about modern slavery, he would not have to look to see whether or not an individual taking over a club is making his money in a wholly inappropriate and extremely wicked way. Because it is not mandatory, it is important that someone else looks at it. If it were mandatory, I would entirely agree with the noble Lord.

[Lord Pannick (CB)]

Is it the case that the reason it is not mandatory is that Parliament did not think it should be? Therefore, the question is: why should it be imposed in this context and not generally?

[Baroness Butler-Sloss (CB)]

Section 56 says that it is utterly wrong to have companies that make money by exploiting people down the chain—consequently, it is wrong. But, for reasons I do not know but can guess, the last Government, who put in place this very good bit of legislation, presumably did not want to offend businesses. I understand that there are problems in making it mandatory but, if somebody is making money that they are going to put into a football club by exploiting other people down the chain, that is something we should not want our clubs to be involved in.

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[Baroness Grey-Thompson (CB)]

My Lords, in speaking to Amendments 178, 185 and 199, I draw attention to my interests in the register. I thank my noble and learned friend Lady Butler-Sloss for her contribution to the debate this afternoon.

Among the detail of what a regulator may or may not look like, we spent some time noting para football and how it can change and improve lives, and almost change the world. I would imagine that modern slavery is something that we would want to try to impact. Major games, such as the Olympics and the Paralympics, have made strong commitments in this area, as well as around trafficking. Their success is up for debate, but surely football and sport should try to leave the world a better place, and so I believe that these amendments are important.

Briefly, Amendment 199 is about the ownership of clubs. We have debated Reading and Aston Villa at length. This amendment merely seeks to strengthen the owners’ and directors’ test.

[Lord Pannick (CB)]

My Lords, I think a very strong case has been made this afternoon by the noble Lords, Lord Bassam and Lord Scriven, the noble and learned Baroness, Lady Butler-Sloss, and my noble friend Lady Grey-Thompson to require the regulator to assess whether a prospective owner of a football club respects and promotes the protection of human rights and prevents modern slavery.

I am very sympathetic to the principle. I am just concerned about the practicality. Is it really practical to expect that the regulator is going to have the expertise, time or ability to conduct a general assessment of whether a particular person—who may, for all I know, be based abroad—is generally respecting human rights and preventing modern slavery? This is going to take an enormous amount of time and money, and I fear that it would distract the regulator from the more day-to-day, prosaic functions that Parliament will be asking it to perform. I would be pleased to hear from the noble Lord, Lord Bassam, how this is going to work in practice, because I am very sceptical.

[Lord Scriven (LD)]

Does the noble Lord accept that it already takes place for certain individuals and entities with regard to the regulations that I pointed out, and that the Government already have a system in place to do this for takeovers? The issue is that there are gaps, which is why it needs to be in this Bill, particularly around football and state entities.

[Lord Pannick (CB)]

I entirely accept that there are detailed regulations, in particular in relation to money laundering, but that is a far more specific area, where there is a government system and a whole army of people with expertise to assess those matters. The question is whether we wish to make it a function of the independent football regulator to have a whole department that is concerned with this. I see the force of the principle, but I remain sceptical about it in practice.

[Lord Moynihan (Con)]

My Lords, this is one of the best debates we have had in Committee to date. I am equally sympathetic to the points made by the noble and learned Baroness, Lady Butler-Sloss, and the interventions of the noble Lord, Lord Scriven, and the concern about the practicality of this, but none of that is covered in Amendment 200, which is in this group.

Let us just assume, hypothetically, that a state-owned entity acquiring a football club in England has an excellent human rights record and no problems with modern slavery. Under Amendment 200, it would be banned from owning a club in England because it is state-controlled. All the points that have been made are relevant and important, but Amendment 200, in the name of the noble Lord, Lord Bassam, is very specific and states that:

“No state-controlled club may be granted an operating licence”.


There is no reference to human rights abuses or to any of the important issues regarding the supply chain, which have been mentioned. It simply states that a foreign-owned, state-controlled company cannot own an English football club. If we pass this amendment, immediately we would then have to divest the Abu Dhabi United Group of its majority ownership of Manchester City and Saudi Arabia’s Public Investment Fund of its ownership of Newcastle United, to mention but two cases.

How have the Premier League and UEFA addressed this to date? They have focused on the word “control”. When the Premier League addressed the Newcastle ownership test, it received “legally binding guarantees” that the state of Saudi Arabia would not have control over Newcastle United in the event of any deal. However, the Bill goes much further. It grants powers to the regulator that are not just about control. An individual has to be considered who has

“a higher degree of influence”

over the ownership of a club. The control test that UEFA and the Premier League currently use, which is a tough test that takes up a lot of time and energy, is overridden by a requirement in this legislation—for the first time in sport—to test whether an individual has a higher degree of influence. There can be no doubt that the Crown Prince of Saudi Arabia, as chair of the PIF, has a very high degree of influence over that board —he appoints it. Indeed, a Minister from that board has been appointed to be chairman of Newcastle.

If we go forward and accept Amendment 200 as it stands, what would we be saying to football, to Newcastle, to the Qataris—who might want to acquire a company, which there has been much speculation about, not least in this Committee—and to Abu Dhabi in relation to Man City? It would drive a coach and horses through the current ownership of the Premier League. It would be a very serious decision by the Government to take state control over who owns the football clubs in this country.

I say that because it comes down to the degree of state influence that is behind the regulator. The Government have said:

“Regarding the scope of the tests, we recognise the trade-offs involved, and are aware of the range of corporate structures behind clubs”,


and they specifically mention here sovereign wealth funds. They go on to say:

“We are designing the legal scope of the tests with these challenges in mind”.


They call them challenges, to be faced down at the request of government. We would have an open back door in the Bill if we accepted the amendment in the name of the noble Lord, Lord Bassam, straying into foreign policy in a way that we do not currently do. We have plenty of legislation elsewhere on the statute book allowing the Government to intervene if they felt they needed to in a certain circumstance.

The Government have therefore further confirmed the scope of the regulator. To me, it is incredibly important that the regulator is not given so many powers as to require it to have direct influence. I lost an amendment on Monday night, when I asked for that at least to be defined and for consultation to go out to find out what “significant influence” means in this context. I think that is extremely important.

I have a question for the Minister. I cannot find an answer as a result of the debates we have had so far, but football needs an answer and probably needs it now. Is it the Government’s position that the Crown Prince, Mohammed bin Salman, should be able to own Newcastle United under the definition of ownership in the Bill? It is a very simple question, with a yes or no answer. If yes, why have Ministers deliberately constructed a Bill that will quickly put him through the ownership test of significant influence, and why did the Minister confirm on Monday that she wanted incumbent Heads of State to be tested? If no then surely the Government should say so, and we should have that as part of an open debate.

I hope that, if that question is answered this evening, there will be no doubt in future about what the Government intend, not least following the Prime Minister’s visit to Saudi Arabia last week and his offer to go to a football match with the Crown Prince. It is only reasonable for Saudi Arabia and the Crown Prince to know whether he is expected to divest himself of the interest in Newcastle United or not.

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[Baroness Brady (Con)]

My Lords, I refer the Committee to my interests as detailed in the register. I support Amendments 187ZA and 187ZB, tabled by my noble friend Lord Moynihan, which propose a sensible and very necessary adjustment to the presumptions under- pinning the ownership test.

These amendments address an important issue in the Bill, ensuring that the ownership process is fair, reasonable and aligned with best practices in other regulated sectors. As my noble friend has said, as it stands, Clause 32(5) means that if the independent football regulator fails to determine an application for a new owner or officer within a set timeframe, the applicant will be automatically treated as unsuitable. This is a really problematic approach. It assumes that any delay is the fault of the applicant or reflective of their unsuitability when, in reality, delays can occur for many good reasons. Quite often, they are entirely outside the applicant’s control or, indeed, the control of the selling club.

Simple cases can, of course, be done quickly, but acquisitions of football clubs can be complex undertakings. Applications for ownership done well involve a detailed examination of financial records, governance structures and regulatory compliance. Imposing arbitrary deadlines does not speed things up; it just risks poor decisions being taken on very consequential issues without all the facts. Indeed, taking time to get it right is in the best interests of all involved: the club, the fans and the broader football ecosystem. To penalise an applicant simply because the IFR runs out of time is neither fair nor proportionate.

The Premier League allocates significant resources to operate its own owners’ and directors’ tests. I have spoken to it about this issue and, of course, so has DCMS. It has told me that the league sees no benefit whatever in arbitrary deadlines and has explicitly told the Government that unless this is staffed and resourced intensively, the IFR will almost definitely hit the deadline in a range of cases. Of course, this will be compounded by the fact that the Premier League will be running its own process without a statutory deadline, meaning the IFR would be ruling people to be unsuitable for no good reason while the league would still be performing its test. This is a recipe for chaos and, I am afraid to say, litigation.

This presumption of unfitness if a statutory deadline is not met could have significant unintended consequences. Let us imagine a scenario where a club is on the brink of critical ownership transfer—perhaps its survival depends on transferring the ownership—and the only prospective buyer is deemed unsuitable purely because the IFR failed to meet its deadline. In the last Committee debate, the Minister said:

“Although the risk of clubs going into administration will be greatly reduced, it may still happen”.—[Official Report, 16/12/24; col. 54.]


For a club to go into administration because the regulator has not met its deadline would be unfair, and catastrophic for its supporters. Even if it did not result in immediate administration, it could leave the club in limbo, unable to secure necessary investment and potentially sliding into financial difficulty or worse.

This issue is not confined to the immediate impact on clubs. There are also wider reputational and practical implications for prospective owners and officers. Being deemed “unsuitable” by default could carry consequences far beyond football, affecting their credibility and standing in other sectors. That is not how a fair and just regulatory process should operate.

The amendments before us propose a simple but important correction. By reversing the presumption, they would ensure that applicants were not unfairly penalised for delays that were outside their control. Instead, if the IFR fails to make a determination within the specified timeline, the applicant would be treated as suitable by default. As my noble friend Lord Moynihan said, that is much more aligned with practices in other regulated sectors. For example, in merger control, if the Competition and Markets Authority fails to make a decision within the statutory time limit, the merger is automatically allowed. That ensures that the time limits are meaningful but that regulatory delay does not create unnecessary barriers or unfair outcomes.

It is important to emphasise that this amendment does not undermine the integrity of the ownership test. The IFR will still be able to make a determination based on the suitability of the applicant, but it will no longer have the ability, in effect, to penalise applicants or clubs because of its own delays. It would, in truth, be far better not have a timeframe at all, for the reasons I have outlined. However, if there is to be one, we must reverse the presumption and place incentives in the right place.

I hope the Minister will recognise the value of these amendments, and the much greater fairness and reduced risk they would bring to the process. It is a small but crucial change that will help ensure the ownership process operates in way that is both reasonable and just. I urge the Government to give the amendments the consideration they warrant.

[Lord Pannick (CB)]

My Lords, I support the noble Lord, Lord Moynihan, and the noble Baroness, Lady Brady, in this matter. It cannot possibly be fair to have a regulatory system in which, if the regulator does not perform and reach a decision within the specified time, for reasons that are not the responsibility of the applicant, the application fails. That is plainly unjust and, as the noble Baroness, Lady Brady, says, it is contradictory to the approach adopted in competition law, where the regulator has short time limits and must comply with them. The alternative is to have a more open-ended system, whereby the regulator can take more time if it is necessary to do so in exceptional circumstances.

[Baroness Blake of Leeds (Lab)]

My Lords, I start by thanking the noble Lords, Lord Markham and Lord Moynihan, for tabling these amendments. I will start with Amendment 180, in the name of the noble Lord, Lord Markham. The regulator needs to know who a club’s prospective new owners and officers are before they can buy or join the club, so they can be tested.

Although clubs, owners and officers are required to pre-notify the regulator, there may be occasions where someone becomes an owner or officer of a club without having first notified the regulator. In these circumstances, it is vital that the regulator is notified after the event—precisely what this amendment would remove. That is because, if the regulator is not aware that someone has become an owner or officer, the regulator will not know to test them. This risks clubs having unsuitable owners or officers in place.

I turn now to Amendments 187ZA and 187ZB, in the name of the noble Lord, Lord Moynihan. I will not deviate to talk about Leeds United at this point, although we always find reasons to do so in our general conversations. I am grateful for his comments and for those of the noble Baroness, Lady Brady, and the noble Lord, Lord Pannick. Clearly, I think we come down to the issue of timely decision-making on the suitability of new owners and officers, and we recognise that this is important for clubs’ financial sustainability.

It is a fact that, without deadlines, we have seen league determinations drag on, unable to reach a decision. That is why the regulator will be subject to a statutory deadline when it tests the suitability of prospective new owners and officers.

We believe that Amendment 187ZA would undermine the regulator’s tests. It would require the regulator to deem an owner or officer suitable to take up a position at a club if the deadline had been met, and the regulator had otherwise been unable to make a determination. This means that it would have to approve an applicant it did not know was suitable.

Amendment 187ZB would then allow that owner or officer to remain at the club until such point as the regulator found them unsuitable. This creates very concerning outcomes. If the end of the time limit resulted in an automatic pass, this could incentivise prospective applicants to stall and withhold information. More worryingly, as I set out, it would also mean that new entrants were approved even if the regulator was not confident that they were suitable—which is something that we simply cannot have.

This risks owners and officers who should never have been allowed to take up positions at clubs in the first place to potentially do considerable harm to clubs, which is why the statutory deadline must result in an automatic negative determination if reached, because this is the only way to ensure that suitable owners and officers become custodians. If the end of the time limit resulted in an automatic affirmative determination, this would incentivise prospective applicants to stall, as I have already outlined. It would also mean that new entrants would be approved if the regulator was not confident, and I hope that noble Lords will understand that this is not an acceptable position to be in. That is why—

[Lord Pannick (CB)]

Does the Minister accept that the current wording of the clause means that the application fails even if the delay is due entirely to the incompetence of the regulator or the failure of the regulator to have an efficient system for dealing with applications? Surely that cannot be right.

[Baroness Blake of Leeds (Lab)]

I understand the noble Lord’s comment but I really believe we are covering our tracks in this. We are improving the situation where the regulator works to avoid the situations that he outlined. I will add that this also provides certainty to the industry and, most importantly, it will incentivise the prospective person to promptly provide information to the regulator to allow it to make its determination. With those comments, I hope that noble Lords will not press their amendments.

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[Baroness Blake of Leeds (Lab)]

I am sorry that we have not had a fuller discussion on that, but I thank the noble Lord, Lord Addington, for his amendment and I agree that equality, diversity and inclusion are significant factors which the regulator has a duty to highlight. Equality, diversity and inclusion are not named criteria in the fitness test, and I do not believe they should be. If an individual has behaved in a seriously discriminatory and harmful way that rises to the level of a criminal offence, and which results in a civil lawsuit or regulatory or disciplinary action, the existing test will capture this. We believe that this is the appropriate threshold. It would not be proportionate to require the regulator to assess individuals’ commitment to equality, diversity and inclusion.

I will return to the point the noble Lord, Lord Parkinson, made regarding a blank cheque, and pick up on his Amendments 195 and 198. The Bill sets out a list of matters the regulator must consider when assessing an owner or officer’s honesty and integrity as part of the fitness test. Those are the relevant matters when assessing an individual’s honesty and integrity, and they are based heavily on precedent—namely, the Financial Conduct Authority’s fit and proper person test. However, as we have discussed before, football is a changing industry and the regulator must be able to adapt to this. Matters may emerge in the future that are crucial to assessing an individual’s fitness.

The purpose of the owners’ and directors’ test is to ensure that clubs have suitable custodians. That is why it is vital that the regulator be able to consider other matters. This sort of discretion is well precedented; indeed, the FCA has more discretion when conducting its fit and proper tests. However, we want to make it explicitly clear that it would not be appropriate for the regulator to add any matters which would allow it to determine an individual’s suitability solely based on their connection with a Government. That should not be what determines whether an individual is suitable or not.

Turning to Amendment 204 from the noble Lord, Lord Parkinson, nothing in the Bill prohibits an owner owning more than one club. I thank the noble Lord, Lord Moynihan, for his comments on this issue. Concerns about multi-club ownership are to do with conflicts of interest and competition, which is why the leagues and UEFA have rules about multi-club ownership. Clubs competing in these competitions will be required to abide by any applicable rules.

Turning finally to Amendment 202, from the noble Lord, Lord McNally, I agree that it is crucial that clubs be protected from unsuitable officers, which is why the Bill gives the regulator the powers to disqualify any unsuitable officer from being an officer at any regulated club, up to and including for life. That, I am sure noble Lords will agree, is a very strong tool that has powerful ramifications. It means that all clubs will be better protected from unsuitable officers, but it should be used carefully.

There are scenarios where the regulator must find an officer unsuitable—for example, if an officer lacks the requisite qualification, experience or training to take up that specific officer role at the club—but it should not automatically follow that they are deemed unsuitable for any officer role at the club. Indeed, there may be other officer roles that they are suitable and qualified for, but this amendment would ban that. It would mean that the regulator would have to disqualify them from being an officer anywhere. This we cannot and should not accept. That is why it is important that the regulator has the power to disqualify unsuitable officers but is not always required to do so. For the reasons I have set out, I hope the noble Lord will be able to withdraw his amendment.

[Lord Pannick (CB)]

Could the noble Baroness say something about the UEFA letter which expresses its views on the Bill? Will she assure the Committee that a copy of this letter will speedily be sent to the noble Baroness, Lady Brady, and a copy put in the Library so that we know what it says?

[Baroness Blake of Leeds (Lab)]

My understanding is that we will not be sending it, but I am sure there will be further clarification on this point.

[Lord Pannick (CB)]

Can I ask why? This is a letter from the sports regulatory body that governs European football. Surely the Committee is entitled to know what its views are on the substance of the Bill we are debating.