Football Governance Bill

Damian Collins Excerpts

2nd reading
Tuesday 23rd April 2024 Commons Chamber

[Lucy Frazer]

The Bill identifies a number of things that we know are important to fans, including heritage assets such as the colour of shirts, badges and the location of a club’s stadium. We know that those are the things fans care about. The Bill ensures a proportionate approach, because we know that engagement with different fans at different clubs, which have very different measures in place, will require us to take a proportionate, case-by-case approach. The regulator must ensure a level of engagement with fans, particularly on the issues that I am identifying, but we also want to ensure that it works for the clubs. Therefore, it will be for the regulator to ensure that a proportionate approach is taken.

I was about to go on to discuss that aspect, because we will be setting a minimum standard of fan engagement, and requiring clubs to seek the approval of their fans for changes to those things I mentioned in order to comply with the strong existing protection for club names. We know that most clubs have a strong relationship with their fans, consciously engaging them in decisions about the club’s heritage. However, there have been some notable exceptions, as we have seen at Cardiff City and Hull City, whose fans have had to battle to bring back or keep their club’s colours, badge and name.

As I said, the regulator will also protect fan interests with the requirement for clubs to seek its approval for any sale or relocation of their home ground. The stadium a club plays in is not only of significant value to fans; it can be the club’s most valuable asset, and it is only right that a club seeking to relocate has to demonstrate that such a move would not significantly harm the heritage of the club.

[Damian Collins (Folkestone and Hythe) (Con)]

The regulator is asked to balance the financial sustainability of the club with heritage concerns and to make an either/or decision, under its purposes. In that scenario, could the regulator decide to allow a club to move if it felt it was best for the club’s future sustainability, even if the fans objected?

[Lucy Frazer]

Yes, that is right; the regulator has to take into account the views of fans and look at the proposals. If it considers the proposals to be good, that change can take place.

Under the new regulator, fans will no longer face the prospect of seeing their club signing up to ill-thought-out proposals, such as the European super league, which several Premier League clubs tried to join in 2021. The House was united in recognising that those proposals for the new competition were fundamentally uncompetitive and would have undermined the football pyramid, against the wishes of fans. This regulator will prevent that kind of closed-shop league from ever getting off the ground.

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[Lucy Frazer]

As my hon. Friend knows, the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), and I have spent time looking at the issues in rugby, and continue to do so. We are setting out what we hope will be a strong financial framework for football. This is being watched closely by other countries that are looking into what they will do in football. Of course if other sports want to look into this, they can.

I move on to the backstop power. Obviously, broadcast revenue is a hugely important source of income for clubs up and down our top-tier football leagues, but the current distribution of revenue across the top five divisions is not sufficient, and football has not been able to come to a suitable new arrangement. Not only does that contribute to problems of financial sustainability, but it can have a destabilising effect on the sport. To avoid that in future, the regulator will have new, targeted backstop powers to help ensure a sufficient flow of money. However, those powers are intended only as a last resort, and can be triggered only if certain conditions are met. The backstop mechanism has been designed with the industry and leading experts to give football incentives to reach a timely compromise, thereby delivering the right outcomes while minimising costly regulatory involvement.

The final part of the regulator’s job is improving the corporate governance of clubs. We will establish a football club corporate governance code, and will require clubs to report regularly on their corporate governance, setting out how they have applied the code and why that is suitable for their circumstances.

[Damian Collins]

The language in the Bill reflects the language on corporate governance in the Companies Act 2006, but there “corporate governance” includes the relationship that a board of directors has with not only the component parts of the business, but the employees. Should it not be inherent in the Bill that the corporate governance code should suggest how clubs can maintain high player welfare standards?

[Lucy Frazer]

We looked closely at precedents elsewhere, particularly in regulatory fields, when forming the basis of the Bill. We have always been conscious that we are regulating in a commercial space, and that football clubs are businesses. The premier league is world leading. We are regulating because football clubs have failed to solve these issues themselves. What we do not want to do through this Bill is over-regulate, including in areas in which we would not be regulating but for this Bill. We are trying to strike the right balance. That is why the Bill, notwithstanding questions that have been put to me in this House, focuses on financial regulation. Importantly, it does not interfere with the game, or with how players are looked after. The leagues have a role to play, and they should be primarily responsible for running the game.

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[Damian Collins]

The Bill is reasonably clear that the regulator considers not only those rules, but any other rules that it wishes to write into the rulebook. This will give us for the first time ever a subjective test set by the regulator, which can be enforced with statute backing it up.

[Thangam Debbonaire]

The hon. Gentleman seems to be saying that it is a subjective test. I was asking whether there are any objective tests, because I think that is important in terms of fairness. Where are they objective, where are they subjective? Concepts such as competency can be interpreted both objectively and subjectively, and I would appreciate the Minister’s clarification of what he views as the Government’s position.

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[Damian Collins (Folkestone and Hythe) (Con)]

It is a great pleasure to follow the hon. Member for Sheffield South East (Mr Betts), who has done much work on this issue, and to follow the wonderful speech earlier from my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch), who has done such fantastic work on the important fan-led review. It builds on work done over many years by Members and Committees of this House.

When I was a new MP, I took part in the 2011 football governance review undertaken by the Culture, Media and Sport Committee, which was chaired by my right hon. Friend the Member for Maldon (Sir John Whittingdale), and this issue has been a recurring theme of interest for the House. The reason is that when clubs get into distress, it becomes evident very quickly that the competition’s primary interest is protecting the competition, not individual clubs.

When a club goes into administration, it can be too late to solve the problems. The actions of the league are to protect the integrity of the competition and to complete the season, rather than to save the individual clubs. Because the leagues are effectively governed by the collective views of the chairs of those clubs, they are often not very sympathetic when one of their own gets into trouble, particularly if they think the clubs have got into financial trouble because they have been overspending or, as the leagues would see it, cheating in some way. As we saw with Bolton and Bury—Bury failed financially and were expelled from the league, and Bolton very nearly were—and as we have seen with clubs like Derby, had there been an intervention and had it been made clear that the clubs were already playing and trading in breach of league rules, as they stood, the situation could have been avoided. There could have been an earlier intervention, rather than waiting until the last minute when nothing more could be done.

It is in response to those concerns that the fan-led review was triggered and this Bill has come forward today. We have seen numerous cases of bad ownership. Massimo Cellino acquired Leeds United a few years ago, and the football league did not think he was a fit and proper person, which demonstrates that there was no fit and proper person test. If a person was qualified to be a company director in the UK, they had as much right to be a director of a football club as any other entity, and he defeated the football league in the courts. We desperately needed a test in which somebody could stand up and say, “We are not convinced by this person’s track record. They cannot own the club.”

Coventry City were owned by an investment fund at one point, and nobody knew who the investors were. Leeds United were owned by somebody we did not know, and Sheffield Wednesday were almost bought by somebody who did not exist. It was the wild west, and the Bill seeks to address this by having a regulator that is required to license clubs and has the power to say to a potential owner, as Ofcom does to broadcasters when it is not happy with how they execute their licence, “We are not convinced that you have met the tests, so you can’t be the owner of this club,” or, “You must demonstrate and prove who you are if you are investing in this club. And we must have a robust business plan that demonstrates that you can run the club sustainably, meeting its requirements for this season and future seasons.” That does not require the regulator to invent new rules for football. It simply requires an independent body to enforce the competition rules that already exist. If we had that transparency and that ability to tackle rogue owners, many of the game’s problems would be resolved.

I do not believe that this form of effective regulation will deter people from investing in English football. If anything, it will encourage them. If someone is looking to buy a club in the championship or league one, with the hope of investing in that club and getting it into the premier league, having proper governance and enforcement of the rules will attract better owners into English football, which will be good for everyone.

I seek the Minister’s advice on a few specific points. As I said to the Secretary of State, the Bill’s structure is very interesting. The primary purpose of the regulator is to ensure sustainability, alongside which it has three objectives to consider: soundness, resilience and heritage. In making a determination, the regulator should always act in a way that is sustainable and that supports at least one of the three objectives.

This raises a question where, say, a club does not own its own ground. The ground might be owned by a private third-party entity that is seeking to push up the rent by an extortionate amount that the club cannot afford to pay, so it has to move to a new ground. The fans might be against the move, and the heritage test might say that the club should not move, but the soundness and resilience tests would say that, no, the club should move. The Secretary of State said earlier that the regulator could set aside heritage concerns and make that decision.

The regulator needs to establish some guidelines and principles that it will follow in making such decisions, so that there is proper consideration and so that it does not always defer to the financial case but considers the other points in the round. It is important that the test for directors is subjective and that the regulator can say when it is not satisfied, rather than the test simply being a tick-box exercise in which people may own a club if they can demonstrate that they do not have live convictions for particular offences. The regulator should have a robust power to say no.

The licensing conditions say that a club has to produce a corporate governance report, and the Companies Act 2006 sets out the sort of criteria that a company has to include in its report. And the Bill’s explanatory notes say that a corporate governance report should cover

“the nature, constitution or function of different parts (‘organs’) of the club; the manner in which those parts conduct themselves; the requirements imposed upon them; and the relationship between them.”

That would exclude the players and any relationship, responsibility or obligation that the club has to them. I agree with Ministers that the regulator should not be writing welfare standards and policies for football, but it could act as a guardian in making sure they are being properly enforced. It could use its investigatory powers, if it feels that there are grounds to investigate, to make sure that welfare standards are being properly maintained. This is important because where this idea has failed in football and other sports in the past, it has been because of the power structure within a sporting organisation, whereby the coach and team doctor often have huge influence over the athletes and it is difficult for people to know where they can safely blow the whistle. A backstop guardian, through the regulator, on welfare standards would be totally consistent with the requirement on the clubs to produce a corporate governance statement to the regulator every year. I urge the Minister to consider that.

[Several hon. Members rose—]