Coventry City Football Club

Bob Ainsworth Excerpts

Tuesday 12th March 2013 Westminster Hall

[Mr Bob Ainsworth (Coventry North East) (Lab)]

Thank you, Mrs Main, for presiding over this debate, which gives us an opportunity to discuss an issue of such concern to the city of Coventry, to local people and, most particularly, to Sky Blue fans.

Coventry City football club has been in deep financial difficulty for many years. Five years ago, when it had lost its ground, Highfield Road, and most of its assets, the club was sold to the hedge fund Sisu 20 minutes before the administrators were due to take over. Sisu specialises in acquiring distressed assets, and under Sisu the club’s ownership is multilayered, opaque and partly offshore in the Cayman Islands. It is claimed that Sisu has lost £43 million over the period, but nobody can be sure as substantial management fees of millions of pounds are passed between the layers of ownership and debentures seem to protect unknown investors.

A bitter battle has waged for the past year over the rent and ownership of the Ricoh arena, where the club play. The club’s owners have been on a rent strike. They say they are fighting for a more realistic settlement for a league one club, although Arena Coventry Ltd, which is jointly owned by Coventry city council and the Alan Edward Higgs Charity, believes the agenda has been to destabilise the company and thereby gain control at a fire-sale price. A much lowered rent has been offered, but the dispute continues.

Meanwhile, the fans and the people of Coventry despair as the club’s owners threaten to liquidate the business or move the club out of the city. I am grateful to the Football League, which yesterday, ahead of this debate, issued a statement reiterating its position:

“Any application to move the club to a stadium outside the city would need to be considered by the Board of the Football League. In doing so, the Board would require the club to demonstrate that it had a clear plan for returning to Coventry within a prescribed timeframe.”

I hope the Football League’s rules will therefore not allow Sisu to do anything like what was done to Wimbledon football club.

The Football League has a reform of governance programme under way, on which I would like the Minister to comment. However, the Football League, which is within the democratic control of the clubs themselves, can only do so much. Do the Government believe that will be adequate to address the challenges faced by Coventry City football club and the game?

Although the dispute between the parties over the rent level has been in the public domain for many months, and much innuendo and allegation inevitably surround such disputes, one key aspect has not had any public exposure. If we are to go forward, it must be flushed out. The football club’s owners are seeking to challenge the validity of the original rental agreement made back in 2002, and are using that challenge in an attempt to discredit the city council’s motives for paying £14 million to Yorkshire bank in December for the stadium’s debts. I cannot see what right the club owners have to issue threats on that front as they bought the club more than five years later. They had the opportunity for due diligence, and I would hope that the principle of caveat emptor meant something in that case. If the hedge fund is allowed to reopen the issue, it will be a blatant attempt to profit at the expense of those who built and paid for the stadium: in part, the people of Coventry.

[Mr Jim Cunningham (Coventry South) (Lab)]

My right hon. Friend has obviously done considerable investigation into the matter. I have the impression that the parent company, Sisu, bought the football club to acquire the stadium; that is my view, although I have not gone into it in depth. Has he considered a way forward? Is it worth while exploring arbitration? He will know better than I do; he has dealt with the matter a lot more than I have.

[Mr Ainsworth]

I will come to exactly that point later in my speech. It is a potential way forward that has been put to the club owners in the past few days.

To return to the issue of whether the owners will be allowed to reopen the agreements that existed long before they arrived in the city and took over the club, Martin Reeves and Chris West of the city council and Arena Coventry Ltd dismissed the threats as “desperate stuff”. However, in my view, the club owners must be prepared to justify their threats and allegations publicly or drop the issue if we are to find a way forward. I challenge them to do so.

The Sky Blue Trust, which represents fans, now has more than 800 members, an indication of the growing amount of alarm among fans. I thank the trust for helping and supporting me to prepare for this debate and for all the work that it has done over the past few years. The club has made a proposal that I put to the club owners yesterday: binding arbitration conducted by a well-qualified local man, Dr John Beech, who has a PhD in business strategy from Cranfield university and more than five years’ experience examining football finance.

Board member Mark Labovitch indicated his enthusiasm for that course of action. However, the response that I received today demonstrates how difficult it is to deal with Joy Seppala and her team. It seeks to turn the proposal of binding arbitration into an opportunity to investigate Arena Coventry’s finances and set the agenda for the arbiters. Of course, there is no suggestion that the football club’s finances or ownership structure should be subjected to investigation.

[Mark Pawsey (Rugby) (Con)]

I congratulate the right hon. Gentleman on raising this important matter. The fortunes of top sporting clubs are key in any community, and the fortunes of Coventry City are important to my constituents in Rugby, as Coventry City is their closest league club. In Rugby, where some of us play a game with a slightly differently shaped ball, we had an issue with the administration of our top rugby club, the Rugby Lions, and it took some time for the sport’s administrative body to get involved. Does he believe that the football authorities are currently sufficiently involved?

[Mr Ainsworth]

I accept what the hon. Gentleman says. I will raise the general issue of the need for new governance in football, which I think applies to other businesses, and certainly to other sporting businesses. We will have to see what the Minister says, and whether he can give us any comfort with regard to pressure that the Department might be putting on the authorities or discussions that they might be having with them to ensure that the arrangements are sufficient to the task in hand.

Before I leave the issue of arbitration, I find it astonishing that Mr Labovitch, a member of the football board, should have sent me this e-mail a few minutes ago about the offer to arbitrate:

“Bob, I forgot to mention one (hopefully obvious) point: arbitration should all be conducted in public, no hiding behind claims of ‘commercially sensitive’”.

This from a company deliberately structured to prevent anybody from seeing what its business is, where the money is moved and who the eventual beneficiaries are. It is cheeky beyond belief.

The Sky Blue Trust has campaigned for fans to be given a stake in the club. In the past, club owners have said that they will do so, but when asked to make a firm offer, they have come up with 5% to 10% at a discount at some undefined future date, with no representation on the main board. The trust feels that such an offer is of absolutely no value, as it will not provide the transparency necessary for good governance.

I am also grateful to the enormously impressive Supporters Direct, which points out to anybody who will listen—this goes right to the point made by the hon. Member for Rugby (Mark Pawsey)—that this country’s record of football governance is not good. Some 92 clubs have gone into receivership in the past 20 years. In Germany, where fan ownership is the norm, not one Bundesliga club has experienced insolvency since the league’s creation in 1963. Are the Government happy with English football’s governance? Banking regulation has failed us spectacularly. Are not the same issues—lack of accountability, greed and lack of transparency—a problem in football too?

The Ricoh arena has massive potential to benefit the most economically deprived part of Coventry. It is directly connected to the motorway network and will soon be connected to the railway. Many in the city have worked hard to bring what used to be a derelict, contaminated site back into economic use, and the city is open to plans that will bring more benefit.

Many of us accept the need for a realistic approach to the lease and management issues if the stadium is to reach its full potential. Changes would be supported with the right partner at the right time. But Sisu is not entitled to bully its way into control of an asset that it did not provide, build or pay for. It must prove that it is not simply a predator with greed running through its DNA before it can expect such treatment.

The football club is a valuable part of our city’s life. In an age when communities struggle for relevance, it has the capacity to motivate people and give them collective spirit. This dispute has gone on for far too long and needs to be brought to a conclusion. I fear that Sisu, despite its words and slick presentations, has no interest in such things.

[Jason McCartney (Colne Valley) (Con)]

I am a Huddersfield Town fan, and my club is very much at the heart of my community, raising hundreds of thousands of pounds for the Yorkshire ambulances. Mark Robins has recently moved to Huddersfield Town as manager, so us fans feel a close kinship with Coventry City, and we went through our own financial problems in the previous decade. Also, only on Friday night, I spent the evening at a charity dinner with Brian Kilcline, who lifted the FA cup for Coventry City in 1987; I told him about this debate and he, too, sent his best wishes to all Sky Blue fans. Good luck with the quest to save the club for the community.

[Mr Ainsworth]

I thank the hon. Gentleman. For Coventry, 1987 was the pinnacle so far of what can be achieved by a football club on behalf of a city, and it was the entire city; whether football fans, rugby fans or whatever, they were lifted for such a long time by that magnificent occasion, and we want to see many more of them. We all fear, however, that we will not see such occasions unless there is a new settlement, a new realism and a new acceptance of community responsibility by the owners of the club, with a constructive approach to settling the dispute that they appear to have deliberately prolonged. They are not stupid—we are dealing with clever people—so one has to assume that their motives are not good for the community, the city or the club and its fans.

Will the Minister respond to the need for the reform of governance and for transparency in our national game? Has he looked at the reform programme of the Football League, and does he believe it adequate to the challenge faced by the game? My reading is that it would not have helped us to any great extent with the existing problems in Coventry, but if the Minister can say otherwise I will be pleased to hear it. Have the Government looked at the licensing proposals of Supporters Direct? Could those proposals provide sustainability and accountability for what is overwhelmingly our biggest national sporting game?

To the club, I say that there has been a reduced rent offer. If the owners want to be taken seriously, the time is long past for them to respond clearly by accepting or putting a definite counter-proposal, rather than the deliberate obfuscation and delay, for whatever motives, that has gone on for month after month. A reasonable response to the proposition for binding arbitration, which my hon. Friend the Member for Coventry South (Mr Cunningham) mentioned, would have been an opportunity for the club to win trust. If it had accepted the proposition, it would have seen the supporters’ trust, me and I do not know how many others prepared to join it and say that that was a reasonable way forward; my hon. Friend raised the issue independently today, so he would have been minded to get behind such action. In its response, however, the club has failed absolutely to grasp the opportunity to get with the parts of the community that care so much about the football club and economic development in the city. Instead of all the deliberate talk, innuendo and attempts to destroy reputations that have gone on, the club should come clean about its threats over the 2002 rental agreement. If we had some kind of straight response from the owners, even at this late stage, some good will would rally to their cause. They must start to examine the behaviour that we have seen for far too long.

--- Later in debate ---

[Hugh Robertson]

I have no statutory power as a Minister to intervene. The hon. Gentleman, however, is not asking for that; he is asking if I could use my good offices to effect a solution. As long as my powers and the limitations on what a Minister can achieve are clearly known, I have enough respect for the Opposition Members present, in particular the right hon. Member for Coventry North East whom I have dealt with over many years, to say simply that if there is a stage at which my intervention might be helpful, I am happy to do so. The danger is that that card, once played, might be the final card, so it might be better to try some other avenues first.

[Mr Ainsworth]

I would be wary of asking the Minister to become involved in mediation, because the proposal has been made by the club, and there are grave worries that it may be just part of the prevarication that has gone on for some time, whatever the motive.

[Hugh Robertson]

I thank the right hon. Gentleman for that helpful intervention. I leave the matter with him, but if he thinks I can do something to help, I am happy to do so. I suspect that a more obvious target might be the chairman of the Football League, who is supposed to be independent in these matters.