Football Governance Bill [HL]

Debate between Lord Pannick and Lord Markham

Committee stage
Monday 16th December 2024 Lords Chamber

[Lord Markham (Con)]

I hope noble Lords will see this as another constructive measure that is in keeping with many of the issues on which there has been broad consensus in the Committee. The principle behind the amendment is delegating regulatory functions to the competition organisers where they are considered best placed to discharge them.

Many noble Lords have said that the competition organisers already regulate their own competitions to a large degree. We are all aware of the fit and proper owner test and of financial fair play, to mention just a couple of areas. We would all agree that competition organisers have extensive experience in this space, having been doing it for a number of years. If they were discharging a lot of the functions and the regulator was also discharging them, there would be the danger of duplication. Again, I think most noble Lords want the regulator to be light touch and low cost, particularly as all the costs are coming out of the pockets of the clubs.

I hope that this will be seen as a sensible move. The regulator would be asked to look at each area of responsibility and to decide which of the competition organisers might be best placed to carry it out. If the regulator thinks that, in delegating some of those powers, the current Premier League or EFL owner tests are insufficient, there would be nothing to stop the regulator saying that, on top of competition organisers’ existing processes, it would like them to add X, Y and Z. That would be entirely appropriate and would give the competition organisers the opportunity to prove themselves.

Given that the regulator would have overall responsibility, it would always have the opportunity to take the powers back if it thought the competition organisers were not up to the job. Amending the Bill in this way would be seen as a sensible move. It would send a good signal to football that we want to work with it in setting up the new regulator. We have all heard the Minister say that she does not want to increase the burdens on the independent regulator—in fact, she made that point in responding to the last group—so here is a way to reduce the burden we put on the regulator and to delegate it to a local level, where others are felt best placed to carry out the functions in a collaborative way. I beg to move.

[Lord Pannick (CB)]

The noble Lord, Lord Markham, puts his case very powerfully but I for one am not persuaded, because the delegation of functions to competition organisers would frustrate the very purpose of independent regulation. The whole purpose is that regulation is done by the independent regulator. As I said in considering the previous group of amendments, it is of course vital that the regulator consults those affected and takes into account their concerns and expertise. But to delegate the responsibility to those who are being regulated, or to the competition organisers, would be an abdication of regulatory responsibility.

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[Lord Pannick (CB)]

Under Clause 22(6), the Secretary of State may make the regulations the noble Lord is concerned about only if requested in writing to do so by the IFR, so the Secretary of State does not have complete discretion. We would be creating a new system which may reveal defects and omissions in its operation, so surely it is sensible to have a power to amend it if defects become manifest.

[Lord Markham (Con)]

I thank the noble Lord. Of course, we want to have the flexibility to react to such situations. This issue comes up in various other contexts, such as government statements. There are lots of points where the Secretary of State can vary the approach. The question is: how do we get the checks and balances right? However, I think there is basic agreement on this issue, and I would like to hear the Minister’s views.

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[Lord Markham (Con)]

I shall speak to Amendments 125, 133 and 135. Hopefully, this will be a fairly uncontroversial, simple set of amendments, which try and set out clear expectations on timing.

I am very aware that, while there is uncertainty as to what the discretionary licensing regime may be, that has an unsettling effect on both clubs and potential investors into the sector. We would all agree that this is not something that we want. We want everyone to know what the rules of the game are, so they can either get on with doing whatever they need to do to apply to those licensing conditions and/or, if they are looking to invest in the game, so they can have that degree of certainty as to what the rules of the game are going to be, so as not to have that potential chilling effect on any new investment.

Amendment 125 tries to give the regulator a time limit of one month from the passage of the Act. I am very aware that there is a shadow regulator in place at the moment, so I hope that this is something that the shadow regulator is working on in the meantime. That is why I think that a one-month deadline is quite doable in that sense.

Related to that is Amendment 135, which says that once a club has put a discretionary licence application in, it will receive a reply from the regulator within one month. Again, I am very much assuming that these things are not a binary process. I would expect the club to be in liaison with the regulator as it put this application in and be receiving advice as it did so—so a one-month timeline at the end of that is quite relevant.

It is for us to set some expectations on the regulator in the Bill. In Clause 17(9), the regulator gets to set its own timing for it all, so it is quite appropriate that we are saying that, given the uncertainties placed on clubs, we expect these sorts of reasonable timeframes. Again, I am quite happy that we decide what those appropriate timeframes might be through our discussions on this, and there may be arguments to vary that slightly—but one way or the other, it is quite important that we set out what those timings and expectations should be.

Finally, Amendment 133 tries to give more time for how long provisional licences last. We want to try and avoid a cliff-edge situation whereby clubs are suddenly in the provisional licensing regime and then do not get beyond that. We would all then have a set of circumstances which I do not think any of us have really planned for, in terms of what would happen and whether the club would have to stop taking part in the competition at that point. Amendment 133 tries to give a bit more time around the provisional licence, increasing it from three years to four.

The main reason for these amendments is to make sure that these things are considered and that there is a good debate on what the appropriate timeframes are. It is reasonable that we put down what those timeframes should be, so clubs get as much certainty as possible in this. I beg to move.

[Lord Pannick (CB)]

My Lords, I am very sympathetic to the purpose of the noble Lord, Lord Markham, in relation to his Amendments 125 and 135. Perhaps I may respectfully suggest to him and to the Minister what may be more palatable than what his amendments suggest. Amendment 125 is rightly concerned that the rules for a provisional operating licence should be made speedily. Everybody must know what the rules are. The amendment would require that these rules be made no later than the period of one month beginning with the day that this Act is passed. If the noble Lord is going to bring the amendment back on Report, I respectfully suggest that it would be more acceptable to say within one month from the date when the Act is brought into effect. The noble Lord will know that under Clause 99(1) and (2), Part 3—with which we are concerned—comes into effect not when the Act is passed but at a later date when regulations are made.

In relation to Amendment 135, the noble Lord is rightly concerned that the IFR should make the decision whether to grant a regulated club a provisional operating licence speedily. He lays down a period of one month from when the application is made. The amendment would allow for an extension of only two weeks. It is an absolute rule, subject to a two-week extension period. I respectfully suggest that that is far too confined. It is normal in a provision of this sort to allow for the period to be extended if there are exceptional circumstances. It is not difficult to envisage cases where, rightly, the IFR cannot take the decision within a period of one month plus two weeks.

For example, the IFR might reasonably take the view that it needs answers from the club to questions of detail, which it puts to the club, and the club may not provide those answers, or be able to provide them, within the period of six weeks for which the noble Lord’s amendment allows. I understand and I share the concerns at the root of Amendment 135, but it really needs to have an exceptional circumstances provision.

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[Lord Markham (Con)]

In speaking to my Amendment 332, I will follow the words of some other noble Lords and say that I find it quite confusing that we have so many disparate amendments grouped together.

My Amendment 332 would stop the Secretary of State being able to define a season. I hope that someone—maybe the Minister or the noble Lord, Lord Pannick—will tell me that I have read this wrong somehow, or that it is not the intention at all, but I think we would all agree that, when it comes to regulatory or government overreach, trying to define a season and when it should start and end is not the role of government or a regulator. I hope that this is quite an easy one to clear up, because I would be very surprised if that is the intention behind it. The relevant Clause 92(3)(a) says that:

“The Secretary of State may by regulations amend this section so as to change … the definition of ‘football season’”.


It would be very welcome if that could be clarified; otherwise, I suggest that we might want to delete it.

[Lord Pannick (CB)]

My Lords, I will comment very briefly on the subject of football agents, which was raised by the noble Lord, Lord Mann, and supported by the noble Lord, Lord Goddard. I declare an interest: my son Joel Pannick is a football agent—I am very proud of my son—who works at Base. My perspective of football agents is that there are still abuses; they need to be regulated and they are regulated. The era of unregulated bungs no longer exists to the extent so vividly described by the noble Lord, Lord Mann.

Let me say why I want, in the interests of balance, to inform this Committee of what the position is. Football agents are now licensed and they have to pass a demanding examination. They are regulated by FIFA and the FA. I should mention that the scope of the regulations was the subject of legal challenges in the last year, and those legal challenges partially were successful. It is the case that HMRC adopts a far more vigorous approach to this topic than it used to, and rightly so; it keeps a close eye on payments and receipts. The noble Lord, Lord Mann, is absolutely right that there are many agents who are not subject to HMRC because they are based abroad, but those based in this country certainly pay tax, and in many cases a great deal of tax. I thought I would just mention those factors in the interests of balance.

Football Governance Bill [HL]

Debate between Lord Pannick and Lord Markham

Committee stage
Monday 9th December 2024 Lords Chamber

[Lord Markham (Con)]

Is it fair that Federer, Djokovic and Murray earned so much in their time? Did Wimbledon not need all the players to take part for it to be so valuable? Is it fair that Verstappen has won the championship four or five times in a row and is earning far more than everyone else? That is about sporting competitiveness—or competitiveness in anything. It is not the role of a regulator to start to redistribute income; I believe fervently that we will then get the law of unintended consequences.

My noble friend Lady Brady talked about parachute payments. This weekend was a perfect example of why the Premier League is the most popular league in the world. Crystal Palace held Man City to a draw. Can you believe that Crystal Palace—fourth from the bottom, right on the edge of being relegated—would have invested that much in players if they knew that, if they got relegated, they would lose all that money and face almost financial ruin in the Championship without it? I do not think so. I think a regulator would have said, “Oh, Palace, it’s not very sustainable having all that money when you could go down”. That would fundamentally alter the competitiveness of those games. That is the value of the Premier League. People will tune in, because they know that it will not be a walkover between Palace and City in this example; they know that it will be a competitive game.

Countries all over the world are prepared to pay more money than anyone else to see these games because they are competitive. Take the Bundesliga or the Italian or Spanish leagues: there are two or three top clubs and then a lot of also-rans, so it is not competitive in the same way. That is the danger we face here. By allowing regulators to redistribute income, on the basis that it is not fair that the top clubs are getting more, you will alter the whole competitiveness of the structure. Again, we say that it is not fair, but is it fair that the Championship is the sixth wealthiest in the world, while the Premier League is the wealthiest? Why is that? First, it gets a lot of payments down from the Premier League as part of voluntary arrangements. Secondly, it is because of how the whole of football has been set up for clubs to be promoted: money is being invested to give them a chance.

We have all said many times that this is our number one industry worldwide—there is no doubt whatever about that. We then have the second tier, which is number six worldwide. There is nothing else like that, and I believe we are at risk of putting that whole system under threat if we meddle in these ways.

[Lord Pannick (CB)]

I declare an interest, having acted recently for Manchester City in relation to the charges by the Premier League. I put it to the noble Lord that the system he and the noble Baroness, Lady Brady, portray of Premier League clubs having the normal activity of a commercial company that can to do what it likes is simply incorrect. The Premier League itself imposes considerable restraints via financial fair play on what companies can spend and how they use their money. It does that because this is a sport, and the effectiveness of the sport depends on competitive constraints. What the regulator may or may not do is simply an aspect of that. The world that the noble Lord portrays simply does not exist.

[Lord Markham (Con)]

I thank the noble Lord. He makes a very strong point, which is that the current system of regulation for Premier League clubs, and the EFL doing it for its clubs, seeks absolutely to set up that competitive environment and those financial fair play rules. My point supports what the noble Lord said: there already is a system of checks and balances, which is working well and making sure that our English Premier League is the first in the world and the Championship is the sixth. Why do we need a regulator coming in between that?

I perfectly accept that there are certain things that the regulator is important for, such as the breakaway league, but is it really the best place to start to have financial distribution from one club to another? That is why I brought this amendment forward. We are fundamentally asking a regulator to do something that we have not asked any other regulator to do in the whole of the economic environment. I thank noble Lords for their interventions; they have added to the debate. I look forward to discussing this further.

Briefly, my other amendments, Amendments 126 and 130, again try to ensure that we do not get mission creep, that we are quite clear about the information the regulator should be asking for from the clubs, and that we cannot set up a regulator that is allowed to go on a complete fishing trip in a lot of these areas. The amendments would set out what information the regulator can ask for from clubs and what they should provide in their strategic business plans, so that we are all clear about that without an endless list that goes on and on. Again, I speak in the context not just of the large clubs; a lot of these are very small clubs, without a large amount of resource to reply to lots of information requests. We need to be quite clear about what we are asking the regulator to do.

I hope this has contributed to the debate. I hope noble Lords will reflect on the fact that we are asking the regulator to do more than we do in any other sector—in our most successful sector too—and whether that is wise.