Football Governance Bill [HL]

Baroness Taylor of Bolton Excerpts

Committee stage
Wednesday 27th November 2024 Lords Chamber

[Lord Birt (CB)]

My Lords, sustainability is an insufficient word to describe what the Bill should be trying to achieve. It is necessary but not sufficient. We need football to flourish, develop and innovate and the Bill should make that extremely clear. As I mentioned at Second Reading, I have been around a long time and remember when football was highly conservative. I remember when football bitterly resisted the notion of live broadcasting, which was completely and utterly to transform and create the modern game.

The regulator must not stop football developing, and that needs to be crystal clear in the Bill. Football needs to continue to innovate, as it has done over the last 30 years. The notion for the European super league was quite wrong and rightly kicked into touch, but there are other possibilities in the modern age for having European leagues based on merit and allowing the game to develop. Live-streaming games which are not broadcast live on a subscription service for fans would be a perfectly reasonable way to allow the game to develop. Let us ask the regulator not to stand in the way of the game continuing to improve as it has done so successfully over recent decades.

[Baroness Taylor of Bolton (Lab)]

My Lords, I want to make a few brief comments, not least because, as I have been here rather a long time, I know what is happening when speakers use the words “word search” and “dictionary definition”. It is not exactly intended to accelerate the passage of a Bill. I will be brief even if others, perhaps, were not. I remind Members opposite that this Bill came out of an inquiry from a Conservative former Sports Minister and was a Conservative piece of legislation introduced in the other House, so it is not exactly rushed. In terms of sustainability, there are a heck of a lot of clubs that would settle for any guarantee that they had a future and that the future was more secure for them.

[Lord Hayward (Con)]

I have great respect for the noble Baroness, but she just made reference to comments I made in relation to word search. I believed that doing the word search emphasised the point I was trying to make in relation to the amendment that I had tabled and the comments that other people had made as well.

[Baroness Taylor of Bolton (Lab)]

That is how the noble Lord saw it, and I will say it how I saw it. What I was going to say in relation to the last contribution was that, yes, we all want the football leagues—the Premier League and everybody—to flourish and be more successful, but football will be a success only if the whole pyramid can flourish and be sustainable.

I want to say a word about Amendment 10, which is just one practical suggestion that could be considered to help clubs manage their own financial stability. One of problems we have seen in football over recent years is a degree of optimism on the part of football management about what it can achieve by minimal investment. Amendment 10, which my noble friend Lord Bassam and I have tabled, suggests that regulated clubs under the Bill should meet a financial commitment to have resources for at least six months. Many businesses are under very similar obligations. Charities have to have some financial security, so it would be worth considering whether we should actually make that kind of obligation something that the regulator should look at because, unless we get the overall funding of football clubs more sustainable, the whole pyramid will not be sustainable.

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[Lord Markham (Con)]

I must admit that I am similarly scratching my head over how the debate seems to have gone into whether it needs to be one or the other—whether there is somehow a trade-off between sustainability and success. I am just surprised that success is not something that we would all want. I do not just mean success in terms of England playing in all the tournaments, which I hope we would all agree we want, and I do not just mean success in terms of taking on responsibility, as the noble Lord, Lord Watson, says, for how well the teams do. We are talking about the success of the game in terms of the financial wherewithal.

I am a big believer that in life you want to maximise the size of the cake before you argue how you divide it. How do you maximise the size of the cake? Certain measures are vital to that. TV viewership is key—not just because of how much people enjoy watching the game, but that is what the media rights companies pay for. That is what is paying for the game, so why would we not want that as one of the criteria? I think the noble Lord, Lord Londesborough, was absolutely correct. Why is there not room for both? Why, all of a sudden, as the noble Baroness, Lady Evans, said, has growth become something we do not want here? Surely we all want growth; the Government are saying, quite rightly, that they are all about growth. I could not agree more, so why would not we want a measure of success here in the objectives of the football regulator to have growth?

[Baroness Taylor of Bolton (Lab)]

I hear what the noble Lord is saying, and as I have been chairing the Industry and Regulators Committee, I have heard a lot about growth. What worries me is that in one moment he and his colleagues are complaining that the regulator is going to be interfering too much, but in the next, we are hearing that the regulator should do more—it should be responsible for growth, for getting more fans and for getting more viewers. Is it more or is it less?

[Lord Markham (Con)]

I am very glad the noble Baroness mentioned that. When you set the objectives of any organisation, you want to set out the balancing factors. If it is only sustainability, you can get into the lowest common denominator, because a regulator would have absolutely done its job, by the nature of what is set down, just by the survival of all the clubs. There is a very easy way to do that: just dole out all the Premier League money to all the clubs straight away. That would make them all sustainable, giving the money to all the clubs. I think we would all agree that that would be a pretty nonsensical way to do it, but that would achieve the objective. If you set only a single objective, it is very one-dimensional.

Why would you not want a regulator to take into account that the overall financial health of the game is dependent on the TV viewership? That is what drives the money. What drives the TV viewership? It is how competitive the games are—not just the top games but all the games through the league? As I mentioned at Second Reading, and as the noble Lord, Lord Birt, mentioned, we are people who have sold and bought media rights around the world. The reason why countries as far flung as Nigeria, Thailand and everywhere else will pay so much for the rights is that every game is competitive. There is a chance that Bournemouth will go out and beat Liverpool, so everyone cares about it. The Premier League does not have a God-given right to be successful. As the noble Lord, Lord Birt, said, many years ago, the Italian league was more successful. The difference today is that you do not have just two or three top teams, as you see in Germany, Spain and Italy. You have a whole host of teams which are all competitive in the league, so every game becomes interesting to watch.

My concern in all of this is if the only criterion set down is that of sustainability, it is so one-dimensional that the regulator could just decide to discharge its duties in that way. I hope it will not, but when it comes back to the scrutiny that we are all saying it should have, the regulator could sit here among us all and say, “Look, I have made all these clubs sustainable. Okay, too bad that the TV viewership has gone down and too bad that a load of the games are no longer competitive, so the TV rights money has gone down, but they are all sustainable, because I doled out all the money”. I do not think that is what any of us would want. I really do not understand why this should be. This is not a political point; I really do not understand the objective at all. I am literally scratching my head as to why there should be a problem with that.

That is why in our later amendments we try to put in other criteria of success. Those are designed to be the ones that are all about maximising the size of the financial pie, by making sure that TV viewership and attendance are high. People forget in all of this—

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[Lord Markham (Con)]

I thank my noble friend for his point. I would totally include in that measure of success, as the noble Lord, Lord Mann, says, enjoyment. That is absolutely part of it, because it is the enjoyment which means that people will pay a lot of money for their TV subscriptions, but it is all about the financial health of the game.

On the point made by the noble Baroness, Lady Taylor, I know that in terms of Clause 10 and the funds for six months, the amendment is well intentioned and sounds quite reasonable. However, I have been speaking to a different Premier League chair—I am sure that we have all been speaking to club chairmen—and from one of those clubs that is very respectable. They are afraid of having to lock a lot of money into escrow for their sustainability. They said that all that this will stop them doing is investing in their team and their players. They look at their club as a balance sheet, with assets and liabilities. If the worst came to worst, they would look to sell one of their players, because they are assets. That is what businesses do; it is what clubs do. You do not need to say, “You’ve got to lock six months’ worth of money in there, £30 million, so you can’t afford a striker”. It is, “If you want to buy that striker, take the risk,” as my noble friend would say.

[Baroness Taylor of Bolton (Lab)]

Would the noble Lord agree that many other businesses have constraints on the kind of reserves that they have to have and that charities certainly have constraints on the reserves that they have to have? One of the difficulties, when many clubs go under or are on the verge of going under, is that there is a category of football creditors who have special access to any money that might be there, so lots of local businesses, as well as many fans, get really hit if things go wrong. Even discussing this seems to be alien to him. I am not saying that the wording of that amendment is perfect, but it is an area that is worthy of consideration if we are going to improve the future of clubs throughout the pyramid going forward.

[Lord Markham (Con)]

The point that I was trying to make is that I absolutely agree that the noble Baroness’s amendment is well intended in terms of sustainability. I am worried that, as we all get back to the mission creep point and try to resolve all these things, we get into the law of unintended consequences. I know from speaking to a club chairman that if you put that money aside in that way, all you will do is deter their ability to invest in players. As the noble Lord, Lord Watson, said, if we want to make ourselves unpopular in all this, it is by starting to do things that stop clubs buying players and investing. We think that VAR is unpopular today. Suddenly, you make all the clubs put £30 million to £40 million in escrow and they cannot buy those players. That would be a very brave decision for a Minister.

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[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)]

I thank noble Lords for raising the amendments in this group. This discussion has arguably gone into extra time, although I am assured that we have not got to the point of a penalty shoot-out—although that might be one way to arrive at a conclusion, given that I no longer intend to take up the refereeing option from the noble Lord, Lord Hayward, having heard very clearly what he said.

It is clear that the enthusiasm for talking about football demonstrated at Second Reading remains strong. I am not surprised, however, given the time we have spent on this group, that my noble friend Lord Watson of Wyre Forest appears to have contributed on the next group. I will respond to his points then.

Before I get into the substance of the amendments we have discussed this afternoon, I want to make a general point that was made succinctly by my noble friend Lord Bassam: it is clear that the party opposite has very unfortunately caught an element of collective amnesia. It appears to have forgotten that it was a Conservative Party that was in government and brought forward a very similar Bill just a few months ago—a point made elegantly by my noble friend Lady Taylor. All serious parties—I include the Conservatives in that—had a commitment to introducing an independent football regulator as part of their manifesto.

Notwithstanding the length of the debate, I thank all noble Lords for their contributions. The noble Baroness, Lady Evans, made an interesting point about growth that has not been substantially covered by the notes I have. I would welcome further discussion on this point with her and am happy to meet to discuss it further.

Taking each amendment in turn, unfortunately, I have to disagree with the principle of Amendment 1 in the name of the noble Lord, Lord Parkinson, and of Amendment 4 in the name of the noble Lord, Lord Maude of Horsham. The fan-led review, led by Dame Tracey Crouch, laid bare the facts of English football today. The review is the justification for the Bill that the noble Lord, Lord Hayward, asked for, and the basis of the Bill that the noble Lord, Lord Jackson of Peterborough, asked for when he asked what problem we were trying to address. I thank the noble Lord, Lord Goodman, for highlighting Dame Tracey Crouch’s point that the game is both a success and fragile at the same time—a point reflected, in my view, in the contribution from the noble Lord, Lord Ranger.

A number of noble Lords, including my noble friends Lord Watson of Invergowrie and Lord Mann, gave other examples of where the state has intervened in football. Although, as a number of noble Lords, including the noble Lord, Lord Parkinson, said, it is undoubtedly hugely successful in many ways and has grown substantially since the formation of the Premier League in 1992, and our football is a global export that we should be proud of, the game’s financial model is broken. Too many clubs are in financial distress, fans are not being listened to, and just a few years ago top clubs attempted to break away from the Premier League to join a European super league. That move undermined the very principles of football in this country. The Bill is designed to combat these issues, identified by the previous Government.

I thank the noble Lord, Lord Moynihan, for Amendment 3 and for his contribution to this debate, not least for highlighting the cross-party support for an independent football regulator. In response to his point on hybridity, I think we will come on to this in a later group, but this is a matter for the examiners, not the Government. I am happy to discuss this and others points in the debate on the relevant group, which I believe is the eighth group. We will potentially come to that at some point in the near future.

Unfortunately, the Government do not agree with the intent of Amendment 3 to narrow the purpose of the entire Bill specifically to financial sustainability. The purpose of the Bill is sustainability, as already defined in Clause 1. I highlight to noble Lords that they will find the Government’s definition if they turn from page 1 to page 2 of the Bill. I hope this answers the query from the noble Lord, Lord Addington, about the Government’s intent in this regard. It is about a continuation of service—to continue to serve the interests of fans and contribute to the well-being of the local communities that regulated clubs serve.

I listened with interest to the contribution from the noble Baroness, Lady Brady, and all noble Lords will recognise her passion and expertise. I welcomed the passionate description from the noble Lord, Lord Goddard of Stockport, of what the Bill is about. It is about those fans and the communities. Of course, financial sustainability is an important part of this. If a club suffers financial collapse, it cannot continue to serve its fans and community. I cannot agree with the noble Lord, Lord Moynihan, that this is exactly the same as any other financial club, a point echoed by the noble Lord, Lord Addington.

However, there is more to it than this. If a club’s balance sheet remains healthy but it ups sticks, moves 60 miles away and changes its name, badge and shirt colours, that is not a continuation of service either. Clause 6 sets out the regulator’s objectives, breaking down the overarching purpose of the Bill into its component parts. That is where noble Lords will see the club financial soundness and systemic financial resilience objectives, alongside the heritage objectives. That is the right place for them, and we believe this structure appropriately conveys the regulator’s aims and priorities.

The noble Baroness, Lady Brady, asked whether all clubs in a league would have to adhere to the same rules. The regulator will be proportionate and adaptive in its approach, rather than taking a one-size-fits-all approach that requires all clubs, regardless of their level, to adhere to the same approach.

Moving to other amendments, I thank my noble friends Lady Taylor of Bolton and Lord Bassam of Brighton for Amendments 10, 53 and 63, which raise interesting points about how much funding is required by individual clubs in the pyramid. On Amendment 10, the Government understand that the intent is to explicitly define sustainability in Clause 1 as the ability for a club to meet its financial commitments for at least the next six months.

This amendment would also effectively seek to alter the purpose of the Bill by adding to the definition of sustainability in relation to English football as a whole. As I have already stated, we believe that sustainability is already appropriately defined in Clause 1. I have no doubt that my noble friends’ intention was to define the financial soundness of a club as per the regulator’s objective in Clause 6. However, here we do not believe that it is necessarily appropriate to define general financial soundness in this way. We believe that there are circumstances in which the ability to meet financial commitments for six months may be an appropriate measure, but it is a blunt one and may not also and will not also be the case.

It will be for the regulator to set out exactly what it considers constitutes financial soundness. We think this is the right approach. However, the Explanatory Notes to Clause 6 clarify that:

“‘Financial soundness’ is a measure of a club’s expected ability to continue meeting its liabilities and debts in the future, even in the face of changing circumstances … This will involve an assessment of a wide range of factors and circumstances relating to a club’s long-term financial sustainability and resilience”.


I hope my noble friends are reassured as to the benefits of this approach.

The Government also recognise the good intent behind Amendment 53, which is to clarify that the regulator should be concerned with the financial resilience and sustainability of English football. I hope I can reassure my noble friend that, in our view, the desired intent is already achieved by the wording of the regulator’s objectives in Clause 6, and the purpose of the Bill in Clause 1.

Care was taken in the exact choice of the wording. “Financial resilience” feels appropriate in relation to the wider football system, as an established concept regarding the ability of the system to withstand shocks. “Financial soundness” feels more appropriate when referring to individual clubs, as an established concept regarding the financial health of organisations. “Sustainability” feels appropriate when referring to the overarching purpose of the Bill to ensure a continuation of service. To repeat “sustainability” in this objective could risk confusing these concepts and how they interact. I again point all noble Lords to the Explanatory Notes, which provide more detail on these various objectives and, I hope, provide some reassurance on the points raised.

Amendment 63 seeks to ensure that the financial position or soundness of regulated clubs is not diminished relative to other, non-regulated clubs. In line with its objectives, this regulator will be tasked with protecting and promoting the financial soundness of regulated clubs. Therefore, I hope my noble friends will agree that it is not necessary to place this additional requirement on it to not adversely affect financial soundness.

Amendments 4A, 7A and 62 are in the name of the noble Lord, Lord Maude of Horsham, and Amendments 2, 209, 226 and 231 are in the name of the noble Lord, Lord Hayward. In response to the surprise from the noble Lord, Lord Markham, that this is included, I understand the desire to ensure that the success of English football is protected and would like to be explicit that we believe this is achieved in the Bill already. As previously stated, the Bill is largely the same, not least in the part we have been discussing this evening so far, as that published by the previous Government, in which the noble Lord served.

As part of its secondary duties, the regulator must have regard to avoiding impacts on important outcomes in football. This extends to domestic sporting competition, the competitiveness of our clubs against international clubs, and investment into football. Actively pursuing these outcomes will remain the responsibility of the industry rather than the regulator, but the regulator will avoid unduly harming them while it strives for sustainability.

On Amendments 2, 4A and 7A specifically, if, as part of the purpose of the Bill, the regulator were required to protect the success as well as the sustainability of English football, it would not be afforded the flexibility needed to solve the clear and present issues within football currently. As someone who at Second Reading admitted to supporting Oxford United—who, sadly, lost their most recent games—I feel that success would be a hard ask of any regulator.

Similarly, my noble friend Lord Mann mentioned enjoyment. I know that most noble Lords will appreciate that sometimes that enjoyment can be quite painful as well.

[Baroness Taylor of Bolton (Lab)]

It is more like suffering.

[Baroness Twycross (Lab)]

Yes, suffering—all noble Lords will suffer for their football clubs as well, at times.

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[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.