Football Governance Bill [HL]

Baroness Evans of Bowes Park Excerpts

Committee stage
Wednesday 18th December 2024 Lords Chamber

[Lord Bassam of Brighton (Lab)]

My Lords, this is the first of a number of amendments in a very large group—enormous, in fact—but they all have at their core an impact on the way in which the independent football regulator could make financial distribution decisions.

I will run through some of the more important ones briefly. Amendment 260 would mean that it is not only a specified competition organiser that can trigger the mediation process. Amendment 261 would provide for competition organisers to obtain consent before determining the distribution of revenue and would require the IFR to be satisfied that the distribution proposals comply with its general principles which are contained in Section 62(2).

Amendment 267 would oblige the Secretary of State to consult people who represent the views of regulated clubs and the views of fans of regulated clubs before making regulations which specify the source or description of relevant revenue. Amendment 268 would amend the definition of distribution agreement. Amendment 269 is also part of this series and would mean that it is not only a specified competition organiser which can trigger the mediation process regarding the distribution of revenue.

Amendment 276 seeks to provide that a competition organiser can apply to the IFR to trigger the resolution process if there has been a change to rather than any reduction in the revenue received by a competition organiser. Amendment 284 would require any notification that a competition organiser gives to trigger the resolution process regarding distribution revenues. Amendment 293 would insert an amendment to trigger the resolution process. Amendment 318 would narrow the circumstances in which the independent football regulator may revoke a distribution order where the competition organisers have agreed a distribution agreement to circumstances where that distribution order complies with Section 62(1)(a) or (b) or Section 62(4)(a) on the principles in general set out in that section.

Why are these amendments necessary? It is principally because we require a degree of flexibility for the regulator. We want to ensure that the regulator can trigger a mediation process and impose its own deal if the parties fail to reach agreement by mediation. Currently, it seems to me that the regulator will be presented with a binary choice, and neither of those choices might be perfect.

At the moment, the deal is primarily controlled by the Premier League. Overall, 88% of broadcast revenue goes to the Premier League and 7% of the remainder goes to clubs who get parachute payments, meaning that the remaining 5% is split between the next 138 clubs in the pyramid. I accept the case that has been powerfully made by the noble Baroness, Lady Brady, that the Premier League is a great league, that it produces incredible and impressive revenues and that those revenues have worked to solidify the excellence of the league and improve the quality of the clubs, the entertainment on offer and the players who are available to it.

However, it seems to me that we ignore at our peril the rest of the pyramid. Currently, for every £1,000 that goes to a Premier League club, just £313 goes to a Championship club and, if you take it down to a National League South club, it gets just 14p. Yet, if you look at the attendance figures, 45% of football fans, roughly speaking, go to a Premier League match and the remaining 55% go to games in the Championship, League One, League Two, National League, National League North and National League South, so there is a case for better distribution. I am not saying what that distribution should be—that is obviously a matter for which the regulator will be responsible—but the regulator needs to be able to make that decision based on the best possible circumstances. So these amendments are designed to facilitate that and to allow the regulator to act freely, working with football industry bodies and ensuring that they have the best possible information.

That is why my amendments seek to generate some flexibility and why a distribution deal must pass parameters set by the regulator, so that the gap between the various levels of football can perhaps be narrowed. It was never intended to be as wide as it is today. Initially, the gap between the Premier League and the Championship level was a lot narrower, and then again between the Championship and Leagues One and Two. It is the important development of football TV rights that has allowed the Premier League to become as rich as it has and to pay the wages that it can pay. International comparisons put the Premier League way ahead of any similar leading leagues.

We have a strange situation where some 64 clubs in the top four divisions have gone into administration since the start of the Premier League. That is clearly an unhealthy situation and a better distribution deal that is properly regulated would begin to address some of the gaps and some of the disparities. That is the spirit behind these amendments.

[Baroness Evans of Bowes Park (Con)]

The noble Lord will be well aware that the EFL has just signed a very great deal with Sky, with revenue coming in, and I do not believe that that money is distributed down the pyramid either. One hopes that the Championship and the EFL will continue to improve and get better deals. Does his amendment include the fact that perhaps that league needs to start looking to distribute and that if its income starts to increase, as we all hope it will do—we have heard that it is the sixth-richest league anyway—it is not just the Premier League that needs to be involved in this but the EFL itself? At the moment, it does not distribute any of the income from the money that it gets in from broadcasting. Perhaps it needs to look at distributing some of its income down the leagues as much as the Premier League does.

[Lord Bassam of Brighton (Lab)]

My Lords, the noble Baroness makes a compelling point. It is the case that the EFL is dominated by the Championship clubs. The noble Baroness is absolutely right that the EFL has secured a beneficial deal. It is not for me, her or anyone else in this Committee to say what the right sum of money is. I am merely pointing out that the distribution has changed over time. The available money for distribution has grown as the game has become more successful as a product unique to England and Wales, and it is for the IFR to get the distribution right. The point that the noble Baroness makes is that we should not be arguing the case for either the EFL or the Premier League; we should be arguing the case for football, because it is all of football that we want to see benefit, so that the pyramid truly acts as a pyramid and acts well in strengthening the national game.

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[Baroness Twycross (Lab)]

I thank my noble friends Lady Taylor of Bolton and Lord Bassam of Brighton for their amendments on this important topic. I thank my noble friend for outlining why distributions are so important to the football pyramid. I will aim to take the amendments in a sensible order, with logical grouping where possible. In appreciating comments on the size of the group, I note that there is a logic to this, as outlined by my noble friend, and I say to the noble Lord, Lord Markham, that I do not think we have skimped on debate during Committee—though I agree with the noble Lord, Lord Goodman, both that the hour is getting late and that it does not feel like the debate has finished or will finish any time soon.

I acknowledge the probing intent of the amendments and it is really helpful to have this debate. I know that subsequent groups will go into this a bit more as well. I agree with the noble Lord, Lord Addington, that it is important that we do our absolute best to work through the issues that noble Lords have raised and to get the regulator right, which was the point that he made.

I reassure my noble friends that we agree on the importance of regulatory intervention on distributions— I appreciate that not all noble Lords have exactly the same view of this. Amendments 260, 269, 270, 293, 295 and 288 would broaden the powers that the regulator has to intervene by allowing it to trigger the back- stop process. I understand the intention behind the amendments, but we must maintain the backstop process as a last resort, to be triggered by the leagues only if they cannot come to an agreement themselves.

[Baroness Evans of Bowes Park (Con)]

The noble Baroness keeps saying that, and I understand that it is what we hoped was going to happen, but I do not think that anyone in this Committee believes that it will be a last resort. From the briefings that all noble Lords—including, I am sure, the Minister—have had from all sides, we know that the backstop is likely to be triggered very early on by the regulator. I really hope the Minister can move from what we hoped might be the position to where I think we are, whether we like it or not, and look at these processes on the basis of what is likely to happen. This could be one of the first things that the regulator has to deal with.

We have heard concerns about the nature of the conversations and the way that those might set up leagues against one another. I know that the Minister would hope that it was a last resort, as I think we all did, but I urge her to accept that if we are being genuinely honest—and other noble Lords may have heard differently from the various leagues we have all been speaking to—it seems to be a view that this is likely to happen. It would be much more helpful for our discussions if we could stop saying, “It’s a last resort”, and accept that it is very likely to happen quicker than we all wanted.

[Baroness Twycross (Lab)]

I appreciate that the noble Baroness, Lady Evans, may take a different view and I completely understand people’s concerns that it will be a front-stop—as a spoiler alert, and with apologies to my noble friend, I am not going to accept these amendments; we will come to that in a moment. However, we genuinely think that the model we have established is very similar, apart from the possible inclusion of the parachute payment—for want of a better word; it is not the phrase used in the Bill, but that escapes me for a moment—should the “state of the game” report suggest to the regulator that it needs to allow that to be taken into account.

My view is that the model we have presented should incentivise the leagues and the parties to come to an agreement themselves, and that opportunity to do so does not go away once the regulator is established. That is the design of the model and an essential part of it, as it was in the previous iteration of the Bill, so this is absolutely intended as a backstop process. We can go on to debate that in later groups as well as in this group. I am happy to do that and to meet people individually to go through why we think this will be a backstop and not a front-stop whereby the minute the regulator sets off in motion, everybody will claim that they want to have the backstop triggered.

However, there are things that the regulator will need to take into account if somebody asks for the backstop process to be triggered. It is not the necessarily the case that the regulator would have to accept that that process was set in motion. The whole model is designed around the principle of trying to get people to come to an agreement themselves. It is really important to ensure—

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[Baroness Twycross (Lab)]

I am not going to comment on what people did or did not say in that committee meeting at this point. The backstop would be applied only if certain high thresholds were met. The regulator will be an independent regulator and it will have strict measures to meet—high thresholds which it must be satisfied of if the backstop is to be triggered. If there is still no agreement, the parties will move to a final proposal stage and, at that point, the regulator would convene an independent expert panel and invite final proposals from both relevant leagues with accompanying analysis, and the independent expert panel would choose the most appropriate proposal. This model incentivises both parties to compromise, as unreasonable proposals would not be chosen.

The whole model, which is almost identical in every detail to how the previous Government were planning to do this, is intended—

[Baroness Evans of Bowes Park (Con)]

The Minister keeps coming back to the previous model. I think most of us here thought the previous model was nuts, and we still think it is nuts. We never discussed this in the House, so to keep saying that is quite insulting to quite a lot of us who always thought this was a bad idea. We are trying to engage with the Minister now about why we think it is a bad idea, and we would really like her to talk about the detail rather than keep saying, “Well, it was your Government”. Honestly, I would never have voted for this beforehand and, in my ex-position, that would have probably been quite a bad thing, but I am sorry, I would not have done so. I would like the Minister to focus on what we are talking about rather than keep using those issues to deflect from getting into the detail.

[Baroness Twycross (Lab)]

I am not sure how many times I have said that this evening, but it is really not very many. I am trying to establish that this model has been worked on and discussed for some time. I appreciate that noble Lords in this House did not get the opportunity to discuss it under the previous Government. It is a model that has been worked through, with examples from different organisations. It encourages compromise and tries to get people to reach a deal that everybody can work through and which meets the criteria of the regulator.

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So, for all that the Minister maintains that it is somehow improper for us to be questioning this, we have the Government bang to rights on this one. I therefore hope that she will take this away and give it careful consideration, because she is playing with something quite dangerous here. I am no longer a politician—I sit in your Lordships’ House—but I am still alert enough to the political dangers of getting something like this badly wrong, and I have to say to the Minister and her colleagues in the Government that, if this goes badly wrong, they are going to own it.

[Baroness Evans of Bowes Park (Con)]

I support Amendment 263 and declare an interest as a supporter of Norwich City, who, over a number of seasons, endured the pain of relegation and then the joy of promotion on a regular basis. So, unlike my noble friend Lord Maude, I am well aware of the benefits of parachute payments, although unfortunately not for a few seasons now.

As we have heard, parachute payments are a critical foundation for the competitiveness of the Premier League. They help clubs manage the financial impact relegation from the Premier League can cause and give a degree of stability at a time of significant challenge to allow them to adjust to their new financial and footballing reality. That is true of all clubs. Well-run clubs like Norwich City could not have survived, even with the benevolent owners they had, without the benefit of a parachute payment. A parachute payment does not, however, in any way ensure that clubs continually go up to the Premier League, as, unfortunately, the last few seasons for Norwich City have shown.

I am sure a number of noble Lords will have seen the letter from Cliff Crown, chairman of Brentford FC, who said:

“For Brentford FC the parachute payment model provided an essential safety net, enabling us to invest in the team and infrastructure when we secured promotion. This support was pivotal in ensuring we could compete effectively and establish ourselves in the Premier League.”.


Like other noble Lords, I am concerned that the Bill as it stands may inadvertently incentivise bottom-half Premier League clubs and Championship clubs seeking promotion to significantly curb their investment over time, given the greater risk relegation would undoubtedly present. As my noble friend Lady Brady said, relegation would become a real financial cliff edge that would see clubs lose enormous amounts of revenue overnight, while having to continue to cover the costs predicated on their involvement in the Premier League. If that were to happen, the competitiveness of the Premier League would be severely weakened, and I believe the Championship would be significantly weakened too, undermining the very attributes that attract the revenues that sustain the game.

I urge the Minister to look again at this issue and to carefully consider the concerns raised in our discussions today. In particular, if she has not already done so, I urge her to talk to the clubs whose first-hand experience of the stabilising effects of parachute payments surely must be central to any discussion of this issue. I really hope that their experience will not be dismissed out of hand.

[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Markham, for this amendment and all noble Lords who have taken part with a degree of passion that shows their commitment to the game and to the legislative scrutiny process.

First, I acknowledge that all noble Lords—I include myself in this—agree that parachute payments are a significant part of football’s financial landscape. I reassure noble Lords that the Government recognise that they play an important role in supporting the survival of relegated clubs. I agree with the noble Baroness, Lady Brady, that they can provide a lifeline. However, the regulator needs to be able to consider all relevant revenue sources as part of the backstop process to get an accurate picture of the proposal’s impact on financial sustainability. That is why parachute payments have not been excluded in this Bill’s definition of relevant revenue.

We believe that allowing the regulator to make a more informed decision, rather than restricting what it can consider, will only help to achieve the best possible outcome for the future of the game. Notably, parachute payments will be reviewed as part of the process only if the regulator deems them a relevant consideration. The current drafting does not require that parachute payments be considered; it allows them to be so only if they are deemed relevant by the regulator. So, if it agrees with the point made by the noble Lord, Lord Markham, based on the state of the game report, it will act accordingly. What that means in practice—

[Baroness Evans of Bowes Park (Con)]

The Minister talks about the state of the game report, which I completely agree is going to be extremely important, but the fact of the matter is that the backstop could be triggered before the state of the game report is published. From what I remember, it is quite a long time before it needs to be published. It could be that both leagues—the EFL and the Premier League, or whoever—will trigger the backstop before that, so parachute payments will be included. Unfortunately, the state of the game report may have no impact whatever on an initial decision by the regulator. The timescales simply do not work. I am not expecting a particular answer today, as the Minister can well say that she is not in charge of the regulator, but it is important to note that the timing of these things does not necessarily tie up, so unfortunately, reassurances like that are not really reassurances.

[Baroness Twycross (Lab)]

Clearly, it does not need to wait for the state of the game report to decide whether they are relevant. The approach we have adopted in the Bill means in practice that if the regulator has clear evidence, whether from a different source or from the state of the game report, that parachute payments are causing sustainability issues to the wider pyramid, it will now be able to address them. In our view, this was a potentially serious gap in the legislation that we feel has now been rectified. I stress “potential”.

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[Baroness Twycross (Lab)]

I will intervene again, and I thank the noble Lord for giving way. Labour tabled an amendment on this in opposition, so I am surprised that there seems to be so much surprise that the Government have now put this in the legislation. I accept that perhaps it was not noted at the time.

[Baroness Evans of Bowes Park (Con)]

The Minister will also know that Labour tabled a lot of amendments, many of which we are also now pushing, but are told they are not going to be considered. So, yes, but equally perhaps the Minister might like to look through all the amendments tabled by her colleagues in the Labour Party in the other House and see whether she is now prepared to accept them all.

[Lord Markham (Con)]

I hope we can move constructively on this point. I welcome the Minister’s undertaking to give clubs as much time as they request. I appreciate the amount of time the Minister has given all of us in all this. It feels that that may be a point worth taking forward, particularly on parachute payments.

To my mind, the biggest proof on all of this is the fact that 51 of the 92 clubs in the whole pyramid have been in the Premier League at some point. That is way over half. That speaks to how fluid the system is and how much it is working. Over half the clubs have spent some time in the Premier League. To me that speaks volumes. That is the biggest concern I have. We have a system that works; we have competition throughout the pyramid. The real fear from all my noble friends who have spoken on this, and why we speak with such passion, is the fact that we endanger all of that. I will withdraw my amendment.