Football Governance Bill (Third sitting)

Brendan Clarke-Smith Excerpts

Committee stage
Thursday 16th May 2024 Public Bill Committees

[Stephanie Peacock]

Q What action has been taken in the last five years by existing governance structures to improve diversity in football? Has it gone far enough?

Sanjay Bhandari: There are lots of really worthy initiatives and lots of good intentions, but the road to hell is paved with good intentions. Good intentions are not enough. Intentions do not change outcomes. It is outcomes that we want, and it is actions that change outcomes, not intentions and rules. There have been lots of things: the Premier League equality standard is a really good development; the football leadership diversity code had noble ambitions. But those are all members’ organisations with members’ rules. The rules can be changed by the members. They are not regulators: they are administrators. The leagues are just like your local golf club management committee. If the members of the golf club do not like the rules, they will change them if they think the members of the management committee are overstepping or overreaching, and that is the position we are in.

As an example, when we were creating the football leadership diversity code, one of the weaknesses we saw was that you do not have whole-workforce transparency. All you are doing is looking at the new hires. Say you hire five new people, and one is from an ethnic minority and two or three are women, you look like you have met the football leadership diversity code standard. But you have 500 employees. You have no idea how representative your entire workforce is. We feared at the time that that would be the weakness, and those fears have come to pass. Why could we not get the mandatory workforce transparency that we asked for during that process? The clubs would not agree to it. It is the golf club members agreeing the rules of the committee. That is why you need third-party regulation, to impose that from above.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

Q Good morning. A lot of the Bill talks about financial regulation, and the diversity and inclusion part of it has not played such a big role so far. Things such as quotas have been spoken about in the past. From your perspective, would you be in favour of quotas for people on boards or being interviewed for managers’ jobs? Do you believe they should be part of regulation? Or should it be left to the game?

Sanjay Bhandari: Just before I answer that, I should have said thank you for the opportunity to speak and for inviting me. I thank the Minister and the teams for their support and engagement throughout the last three years.

I think quotas are actually illegal in this country, because positive discrimination is illegal under the Equality Act 2010. You can have positive action, so you can have differential investments in talent, and leadership and talent programmes, but you cannot have quotas. What you can have is representation targets, but in practice, the way people may execute them is to see them as quotas, which can be quite negative. Ultimately, it is down to the regulator. It is down to the current flavour of what is going on in governance.

I was in one organisation where we set targets that actually helped to increase its performance. We were 17,500 in the UK and 300,000 globally, and in the business units that executed best on diversity, we could point to a one-point difference in margin. We could go to our partners and say, “Would you like more profit?” Funnily enough, they quite like that.

It depends on the particular issue. There are still some very stubborn areas of under-representation in English football. Black people make up 40% of players and 14% of the coaches qualified with a UEFA A licence, but only 4% of coaches. There is something going wrong in the recruitment system. South Asians are the single largest ethnic minority in the UK, but they make up only 10% to 15% of players at grassroots level, 0.5% of professional players, and 1% of the academies from age six. That is not acceptable. There is something going wrong in those recruitment processes. Those are the kinds of things that call out for targeting.

[Matt Rodda]

Q Thank you for your evidence this morning. Could you give us some examples of good practice by particular clubs?

Sanjay Bhandari: We see clubs like Brentford, which I worked with when it was recruiting independent non-executive directors. I helped to support that process. Having non-executive directors on the board is something that other people may talk about.

The Premier League is doing some good work trying to develop black coaches. An organisation called BAMREF has been working very effectively with the FA and Professional Game Match Officials Limited on developing the pipeline and pathway for Black and Asian referees and female referees. In many ways, that is one of the best examples of interventions that are connected across football, with a pathway to try to change the way the workforce looks. It is a relatively rare example. Football is a team sport, but not off the pitch. We are really not very good at teaming across, but that was a rare example of good teaming.

--- Later in debate ---

[Matt Rodda]

Q As you said, there have been some serious problems with owners, not least at Reading. Do you feel that the Bill does enough to tackle that, potentially, through the regulator? Also, do you feel that there is enough of a fan’s voice in the process of raising concerns about owners?

Sarah Turner: It is a good start, but there is probably more we can do. I do not know if the owners and directors test is a duplication of the ones that the EFL will do or whether it will hand that over to the independent regulator. We think there needs to be some real-time tracking of what is going on at clubs because they are continuously overspending and risk-taking. We think the regulator should be taking an overview all the time of what is going on, rather than just at the beginning when they purchase.

Alistair Jones: I concur on real-time accountability around accountancy. From looking back at 2016 when we were purchased, it would be—quite simply; I am a simple man—a great case study to look at. If we could look at West Bromwich Albion, when they were purchased in 2016, and use that as a case study, what if the same company came and purchased West Brom now? Would it still be allowed? If that were the case, quite frankly there would be no point in doing it because it has proven that it was a poor opportunity to buy the club.

Tim Payton: In our evidence, we put forward the importance that the independent non-executive director can have. Following up from what you heard from Sanjay, we think that it would be powerful having in the Bill the need to have two INEDS on the board of each club, and the regulator obviously could then set the guidance and framework. Of course, we already have that in the corporate governance code, which is set out in—I think you mentioned—the Companies Act. Where I see it linking across to other areas of the Bill is the INED under the corporate governance code already has a lead responsibility to consider stakeholders, and of course the stakeholders in football are the supporters.

When we look for improved fan engagement, we do not just look at the fan engagement standard, but to the INEDs on the board being there to ensure that effective fan engagement is taking place. Good INEDs are an early warning system to many other things going wrong. The Minister will be aware of the improvements that have come to national governing body governance through the corporate code. He inherited all that from the pioneering work that Tracey pushed through. I really hope we can have the same framework for the football clubs under the IFR.

[Brendan Clarke-Smith]

Q Supporters’ trusts vary quite widely; I used to be involved in one at Notts County many years ago. Many of them come to the fore when a club is in crisis or needs to be saved. We have been out with the buckets before. In some cases, supporters’ trusts get involved with the actual ownership of the club, and sometimes they are shareholders. Do you feel that a regulator could have helped with that process in the past? Is there a role in the future for helping supporters’ trusts if they want to get more involved? Might there also be the potential that they have some quite onerous requirements? Obviously, I am looking at some of the financial things that are talked about, and a lot of supporters’ trusts are volunteers, so they do not always come from those sectors. Do you feel that a regulator can help supporters’ trusts when they have that level of involvement with the club?

Sarah Turner: I think they probably can, but the FSA do a fantastic role in that. Your first port of call would always be to go to them, but the independent regulator may go over it on the financial side.

[Brendan Clarke-Smith]

Okay. Alistair?

Alistair Jones: I agree. The FSA does a fantastic job for independent supporters’ trusts. It is more fitting for us to report into an FSA sort of body rather than directly into an independent regulator, if you want my honest opinion.

Tim Payton: The Arsenal Supporters’ Trust used to own shares in Arsenal and used that association to have a role in the governance. Unfortunately, we were squeezed out. Under companies law, somebody reached 95% and compulsorily took the shares off us. I do not see a practical way of going back to us being shareholders in the club any more, so I very much look to the Bill to, in effect, give us shadow ownership and powers going forward. I hope we see this Bill on the statute book and that it will help supporters have a more meaningful say in their clubs.

Alistair Jones: It is very difficult to give you an all-encompassing answer, because we have 12% of shareholders, represented by Shareholders for Albion. If it had not been for them telling people about the issues we have, it might have been a very different story for us at West Brom. So it is a very difficult to give an all-encompassing answer.

[Anna Firth]

Q I would like to ask about the distribution of broadcast revenue, particularly to the National League. Currently, for every £1,000 that a Premier League club gets from broadcast deals, a club like Southend gets just 57p. Given that the Premier League and the upper leagues benefit from the entire football pyramid, not just their member clubs, do you consider that to be a fair distribution? I think Sarah would be my closest ally here.

Sarah Turner: It is not, is it? It cannot be a fair distribution. The whole system and pyramid is not fair. That is one thing we would like the independent regulator to be looking at—how money could be distributed down. At Reading we looked at some of the players that have come forward and are starring in the Premier League, and they were made in the National League and the EFL—so yes, we think so.

Alistair Jones: I could not agree more in terms of the distribution, and it is not just because we are at the top of the Championship or in the Premier League. We believe that it cannot be right. There is no way that the top 20 clubs can have so much power in this country over the 72 below. It has got to change. We can point to the FA Cup replays being scrapped for rounds one and two. That was decided by the Premier League, and they are not even entering it until the third round. How can that possibly be right? It has to change.

Tim Payton: The Arsenal Supporters’ Trust is also your ally, because why did we fight the Super League so hard, together with the supporter groups at all the other big clubs? We wanted to fight the self-interest. What is football if Southend cannot dream of coming up to the Premier League? Football is about us all working together. It strengthens the pyramid, promotion and relegation, and the jeopardy. Everybody must be able to dream in football.