Football Governance Bill [HL]

Baroness Evans of Bowes Park Excerpts

2nd reading
Wednesday 13th November 2024 Lords Chamber

[Baroness Evans of Bowes Park (Con)]

My Lords, I declare an interest as a long-standing Norwich City season ticket holder and a supporter of King’s Lynn Town FC.

England is the home of football and English football is enjoyed by millions of people, as we have heard, who watch their team every week. The Premier League is the most-watched league in the world. It drives economic growth, generating £8.2 billion of GVA in the 2021-22 season, and supports 90,000 jobs across the country. The EFL is thriving; last year, one in four paid admissions to a UK sporting event were to an EFL match. Football is a much-loved, global British success story, and it is in this context that we should consider the Bill and its proposals to create a new regulatory structure.

This Bill is unquestionably novel. The Explanatory Notes themselves acknowledge that football

“was previously not regulated by statutory provisions”,

and explicitly state that

“the new regime and the distributions provisions in particular are unique and unprecedented”.

To avoid unintended consequences which could undermine the success story that football is, we need to be very careful in our deliberations to ensure that what is being regulated for and legislated for, as the Minister has said, creates a truly proportionate regime.

That means a light-touch regulator and clear boundaries to its powers to prevent regulatory creep and overreach. Indeed, we should assess the measures in the Bill against the words of the Prime Minister, who said at the recent investment summit that

“the key test for me on regulation is … growth. Is this going to make our economy more dynamic? Is this going to inhibit or unlock investment? … where it is needlessly holding back the investment we need … we will get rid of it … we will make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room does”.

Those seem very sensible benchmarks to me when considering a new statutory regime. We should make sure it fits within those parameters.

The key objectives of the Bill—particularly enhancing financial sustainability, preventing breakaway competitions, safeguarding club heritage assets and strengthening fan engagement—are all laudable aims for the regulator and will undoubtedly be an important focus of its work; I am sure that it can take things forward in that regard. However, the competitive and unpredictable nature of football must not be undermined by the new regulatory regime. We all know that football is about promotion, play-offs and passion. All fans dream of the possibility of their team triumphing against the odds, and sometimes they even get to see it happen. So football is clearly not akin to the typical regulated sector. As a result, the regulator in its actions needs to be mindful that football is a dynamic, risk-taking industry, with competition at its heart. That is a significant departure from the approach of other regulators, but it is imperative to protect this if the football regulator is not to unwittingly undermine the very sector it is there to support and help thrive.

The task of the new regulator will be considerable—for instance, to license clubs, it will have to review detailed business plans of all 116 and reach agreement on them. In addition to mandatory licence conditions, the regulator will have the power to impose discretionary requirements bespoke to a club. Clubs already deal with a lot on regulation, with the FA, the league and other bodies, so the new regulator needs to be careful that it does not overburden or duplicate requirements, adding unsustainable costs and bureaucracy, particularly for smaller clubs in the lower leagues.

All this will come at a cost, with money spent today by clubs on the game in future being spent on funding the regulator. Can the Minister provide reassurance that, in designing the levy, the regulator will be required to adopt a proportionate approach and ensure that costs to clubs, particularly those at the lower levels, are kept to a minimum? Can the Minister also give an indication of the expected costs or levels of staffing that will be needed for the regulator once it is fully up and running, to give us a sense of the scale of the task ahead?

How revenues are distributed through the financial pyramid is essential to the health of the game. The Bill introduces backstop powers to intervene in the currently voluntary distribution of the Premier League clubs’ TV revenues. These are unprecedented and untested powers, with the potential, if not carefully developed, to cause regulatory and investment uncertainty. It is critical that we consider the possibility of unintended consequences that may flow from this Bill and that we are confident there are strong checks and balances in the legislation to ensure that it sets out an approach that supports the continued success of football.

I am sure that we all find it disappointing that, since the introduction of a version of this Bill in the last Parliament, the latest round of financial negotiations between the Premier League and EFL have broken down again—and, to be honest, from talking to them it seems that both sides are anticipating that the backstop mechanism will be triggered. The use of these powers by the regulator may, rather than being a last resort as was hoped, be used quite quickly, once the regulator is set up. So when the process is introduced, it must not do more harm than good.

In that regard, I confess that I have some concerns about the process as set out in the Bill, particularly the binding final offer arbitration model. Rather than consider each proposal and determine the best overall approach, which may be a compromise between the two, the regulator instead must choose one of the proposals in front of it. To me, that does not make sense. In any negotiation, if both sides feel somewhat disappointed at the deal reached, it is likely to be fairer and achieve a balance between the two sides’ competing proposals. Yet in the current scenario, it seems that one side will take all. I am sure that we will explore this more in Committee, but can the Minister explain in more detail why the Government think that this is the best approach to include in the Bill?

Perhaps the most significant change to this Bill from its predecessor is the inclusion of parachute payments in any consideration that the regulator may make in relation to financial distribution through the football pyramid. I am afraid that I take a different view from the noble Baroness who spoke before me. I am somewhat concerned that this change may inadvertently incentivise bottom-half Premier League clubs in particular—and, going forward, newly promoted clubs—to cut squad investment, given the greater financial risk that relegation would present. That would be hugely damaging to the competitiveness of the league and a massive blow to fans of the clubs involved.

Rather than improving the level of competition, uncertainty around parachute payments could do the opposite and weaken the competitiveness of the Premier League—the very attribute that attracts the revenues that sustain the game. I know that that is not the intention and I look forward to more detailed discussion around these issues as the Bill goes through Committee.

To conclude, the reforms in the Bill mark a step change in the regulation of our national game. To ensure that they do not do unintended damage to the game millions of us love, it is essential that the board and those employed by the new regulator are mindful from the outset of the unique nature of football and the dangers that any ineffective regulation, or overregulation, may pose.