Football Governance Bill (Second sitting)

Damian Collins Excerpts

Committee stage
Tuesday 14th May 2024 Public Bill Committees

[Shaun Bailey (West Bromwich West) (Con)]

Q I want to touch more on the point about the proportionality of the Bill. I am looking at the part 5 duties. Do you think that this strikes a balance between regulating clubs like yours and making sure there is a framework, and allowing you to run your clubs in the way you need to? Darryl, if we take Solihull Moors as an example, you are a club that has come out of a merger, effectively, with other clubs and you have had to be agile in how you have done that. If you look at the journey you guys have been on, how do you think that you would have been impacted if this framework had been in place at the time?

Darryl Eales: The interesting thing for me is that the Bill does nail a few points that are very, very important from my perspective. The stadium and the club should be umbilically linked. There should be, for every club, something that prevents owners from separating out the ownership. In our division this year, Gateshead did not make the play-offs, because they did not have tenure of their ground. To me, that seems to be fundamental. Where I echo Steve is that I think there are an awful lot of information requirements in the Bill. When I talk about proportionality, the reality of life at our level is that it will be us doing those things, and without being too rude, I have better things to do with my life than fill in forms.

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

Q I was interested in what you said about artificial pitches, Mr Thompson, because in my constituency I have Folkestone Invicta, in the Isthmian League. From what I can see, the Bromley FC model is the sort of model, from a financial sustainability point of view, that a lot of clubs in tiers five, six and seven should be following, because you have not only community use, but paid use of the site every day of the week, rather than a match every fortnight. Do you think that this should be looked at as part of a sustainability issue rather than a football competition issue? Actually, the sustainability of clubs going up into the Football League might necessitate that they have those sorts of facilities, which they monetise throughout the year, and their removal is not just a flat cost but something that compromises their commercial performance across the board.

Steve Thompson: Sutton United are a prime example from a couple of years ago. They went up and had to dig up their pitch. It was very much part of their community and their academy structure. Bromley are in the slightly fortunate position in that they have some land behind the stadium, where they are going to transfer the artificial pitch to, but it will still cost them several hundred thousand pounds. The annoying thing is that Sutton played Arsenal in the FA cup a couple of years back, and Arsenal, who are in the Premier League, happily and readily played on Sutton’s artificial pitch when they were at the National League side—no complaints. Every year, EFL clubs in the FA cup will play on artificial pitches, so that does not seem logical.

There are some arguments about how good the football is on such pitches and things like that, but the majority of young players at the top level now are coming through the EPPP—elite player performance plan—academies, and they all play on artificial pitches. It does not make sense. We have had this happen to four clubs in the past few years, and it is stopping other clubs that have the ambition to be promoted considering putting down an artificial pitch. That might help their community and their academies, but they think, “We can’t do that, because we can’t afford to put it in and then dig it up again.” Supporters are almost turning around and asking, “What’s your ambition?” The ambition of most clubs is to win their league, whatever league they are in, and to go forward.

That brings up another thing about academies at our level, and making certain that clubs at our level get the proper compensation for players that they have developed. At the moment, there is not that—National League clubs are not allowed to register a 16-year-old. Such things are not addressed in the Bill. Whether they should be, I do not know.

[Damian Collins]

Q Obviously, the principal job of the regulator will be financial sustainability. Briefly, do you think one of the issues that we have is this? We have inherited a structure for how football is organised that puts clubs into certain divisions. You could say that there are financial issues at almost every step, as we go up and down, and that clubs in the bottom half of League One and in League Two probably have more in common with the National League clubs than they have with those in the Championship. Do you think there should be common rules that reflect clubs that are effectively community clubs? They will probably never be Premier League clubs, but they need a different kind of model of sustainability.

Steve Thompson: Since 2001, when the second promotion place was introduced, some clubs have gone up and down, but before the end of this season just gone, 40 different clubs will have been promoted, and 29 of them are still in the Football League and one is in the Premier League—Luton Town. For teams that are struggling in the Football League, when they get relegated, the National League is a fantastic league for them to reorganise and to come back. There has been a number of them: Stockport and Wrexham, to name two. The football pyramid needs the National League. We have developed lots of players on loan from the Premier League, the Championship and other Football League clubs, and we are there to help support clubs.

Darryl Eales: To pick up on what Steve said, for me, the distribution of economics is completely inequitable between the two leagues above us and our league—so much so that other than the promotion from the Championship to the Premier League, the next most valuable promotion is from the National League to League Two, which I think drives Steve’s point, but we are entitled to only two promotion places. Fans, when I talk to them—from every club—say, “We don’t understand this.”

[Damian Collins]

Q It is inherent in what you said that the financial sustainability rules in the National League are more effective than those in Leagues One and Two.

Steve Thompson: We were the first league to introduce reporting to His Majesty’s Revenue and Customs. About 20 or 25 years ago, a lot of football clubs were basically using HMRC as a bank, and HMRC was reluctant to take football clubs to court. The National League—the Football League has followed us—introduced the rule that HMRC reports to the league if a club is behind with its HMRC or VAT payments, and the league will immediately put them on a registration embargo, which concentrates people’s minds. Since then, we have not had a problem, because when a manager comes and says, “I want to sign a new player,” and you say, “You can’t, because you haven’t paid HMRC,” they look a bit silly. We have quarterly reporting to our league and an annual licence with the FA. That is why I worry that this will just be another layer of bureaucracy.

--- Later in debate ---

[Matt Rodda (Reading East) (Lab)]

Q You have spoken so eloquently. I am looking at this from the perspective of my local club Reading, which has had very serious problems with the current owner. The previous owner was absolutely wonderful in creating a positive culture. My question is: how do we find more owners with the right intentions and motivation, and help them to play a bigger role?

Sharon Brittan: I completely agree with that. Even in the five years that I have been involved, I have seen better owners coming into the game because the EFL has changed the rules. You cannot having a bankrupt owning a football club, and you cannot have somebody who has been struck off; the rules are much more stringent. I do not want to talk about the numbers, and I do not like talking about them, but the problem we have is that in five years we have put a huge amount of money into the football club. Any sensible businessperson probably would not do that, because they would look at it and say that it does not make any financial sense.

Ian Mather: In direct answer to your question, I would say that it is the numbers. If an owner can look at a football club and think, “Broadly, if I run that club properly and well, with the income I get from running a football club and the sustainability payments from the Premier League, I can roughly break even. I may want to be ambitious and build a new stadium here, or improve the training ground, but broadly I can balance the books.” If you cannot balance the books, or worse, the books get more unbalanced each year, you are reducing the pool of people who can buy into being a football owner.

Sharon Brittan: I agree with Ian.

[Damian Collins]

Q I think I have to ask this, given everything you have said in your very compelling evidence. How has Ipswich Town managed to do what you called the “near impossible”?

Sharon Brittan: Isn’t it fabulous? That is what I love about football: the near impossible can happen.

Ian Mather: I would also answer it by saying that a North American pension fund has provided—

Sharon Brittan: I did not want to say that!

[Damian Collins]

Q You are saying that they had external investment that helped them to compete? Obviously, Luton has gone from League One to the Premier League, as has Brentford. What is the secret behind that? Is it the ownership money?

Sharon Brittan: The Premier League has allowed 13 of our precious 20 football clubs to be owned by Americans. Lose one more and they make the vote. How has that been allowed to happen? The Premier League stops the FA cup replays without even consulting us. How has that been allowed to happen? The Premier League is not fit for purpose, in my humble opinion.

[Damian Collins]

Q But the three clubs I mentioned—Brentford, Luton and Ipswich—is it simply about owners putting in enough money to be able to compete, and without it they cannot? Is that really what has happened?

Sharon Brittan: If this Bill goes through, I would love to fast-forward three years and see where Bolton Wanderers are. Then, you guys can see where a football club gets to when it is run properly in the right way, with the right people doing the right job in an honest, transparent and reasonably sustainable way. There is money, and obviously that helps.

Ian Mather: It is largely to do with money.

Sharon Brittan: But that is their good fortune.

Ian Mather: And Luton has come down again. You need money to drive success, and there is quite a clear correlation between league position and how much money you have, which explains why Cambridge United keep on cheating relegation. We are roughly around where we should be, and it is about the money.

Sharon Brittan: I am looking to get longevity of success; I am not looking to bounce around the pyramid. To get longevity of success, you have to create a culture that people buy into, so that they stay on the journey with you. So far, it looks like we are delivering, but we will see. I think that there are so many unscrupulous things that happen in football. Let us try to prevent those things from happening so that we can enjoy the game and the jeopardy.

[Damian Collins]

Q I wish you well—I think you said the Premier League in three years for Bolton? I think that was the target you set yourself there for people.

Sharon Brittan: Please do not quote me as saying that! If we get rid of the parachute payments, that might be possible. Thank you—I am really appreciative.

[The Chair]

Order. I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank our witnesses on behalf of the Committee.

--- Later in debate ---

[Damian Collins]

Q I want to ask Steve Parish first, and then I would welcome your comments, Tony. Steve, you referred to the danger of domination by the big clubs—I think you rightly alluded to the fact that in some ways the Premier League is a two-tier league. Is that not made worse by, effectively, a competition that sets its own rules and organises itself?

Within the Premier League board, you have all those big clubs. Would it be more effective to allow some of the enforcement and supervision of the league’s rules to be done by an independent regulator that is, if you like, separate from the politics of football? It is set up by Government, it is not open to being lobbied or cajoled, and it is not making decisions on the regulation of clubs that it has to trade off against other decisions that are taken by Premier League clubs about how they organise the affairs of their league.

Steve Parish: If the Bill looked at the whole of football, that might be the case, but we are looking at it in a very myopic way. We are not looking at all the European revenue, the growing scope creep of European fixtures, the increase in the size of UEFA club competitions, or the gerrymandering of coefficients, so that even if we qualified, we would not get anywhere near as much money as a club that has been in the league three years previously. Within the Premier League itself, the top clubs have got—what is it?—four times our income. That is probably going to head towards five or six times our income.

The Bill, very narrowly, looks only at the Premier League media money. Actually, the Premier League is the most egalitarian by distribution in Europe by far. Where it is heading to right now is 1.8:1. Although that is worse for Tony and me, this is still by far the fairest league in Europe: in Germany, the ratio is about 3:1—the top club to the bottom club. So actually, in terms of distributing the revenue that it gets, the Premier League has done a very good job of making it fair and maintaining competitive balance.

The problem is that such huge revenue is now pouring into these clubs from European competition, and from the commercial deals that that gives them, that it is creating a massive distortion. What I fear this Bill will create is a permanent top six or top seven and then a kind of washing machine of clubs that will rotate between the two divisions below. That may well be what some people want as a vision for football. It is not mine. Mine, like Sharon’s, is to try to get into the Premier League and stay there. I accept it comes with jeopardy every year. I accept there are three relegation places. I accept that everybody is trying to stay in the league and it is highly competitive. But the aim, I think, of most clubs is to try to stay there, ladder up and improve.

[Damian Collins]

Q Tony, do you have anything to add to that?

Tony Bloom: Obviously I have had many years in the Championship and League One, and we have had many discussions there. The relationships between the Football League and the Premier League, I think, have got a lot worse since there was talk about regulating football. Overall, although there have been difficulties over the years, it has worked very well. But ever since the Football League has realised that there is going to be a regulator and, “If we can’t get a deal, there may be something from that,” things have not worked out so well, so I think there are, again, unintended consequences.

I think it is much better for football—the Football League, the Premier League, the National League and the FA—to work things out itself. Without it being perfect, I think the fact there have been three liquidations since 1992, despite the fact that, as you say, so many clubs are in financial distress—most clubs lose a lot of money every single year—is a very good result. You can look at other businesses. I know we do not want to compare businesses to sport; it is a completely different stratosphere. But I do worry about what will happen if you put in lots of extra regulation and lots of extra cost for the clubs, even though I am sure the Premier League will pay the vast majority of the regulator bill. I am just worried about future investors. That is absolutely critical.

[Damian Collins]

Q If we passed an amendment to the Bill that made parachute payments illegal and they were scrapped, how would that affect your preparations for next season?

Tony Bloom: I think it would be disastrous for the Premier League. The Premier League has done an amazing job to make it far and away the strongest domestic league in the world, and that is where we want it to stay. It is so important for this country. If that was to happen, then outside the biggest five or six clubs, which may think their chance of relegation is tiny, the clubs could not invest the money in players. And then what would you have?

In countries like France, with Paris, and also with Juventus and Munich, there is domination between the top one or two clubs and there is frequently only one winner in the league. The middle and bottom clubs would not be able to invest, and the differential between the top clubs and the middle and bottom clubs would be so big that it would not be so competitive. Then people would not want to watch it; the broadcast money would not be there; and we would veer towards Spain, Italy, Germany and France. I think it would be an absolute disaster. Clubs could not invest because of the worry about relegation. As it is, with the parachute payments, clubs still have to sell players, typically. Often, they get into serious financial problems even with the parachutes.

[Mr Betts]

Q I have a couple of issues to put to both of you. You have said that everything works well. I think most people would be in disbelief at hearing that statement, because we all can see problems in football right the way through. Individual clubs have had them. There are problems right through the leagues in terms of funding and insolvency. Both your clubs nearly got to the point of extinction. Can you not see the need for regulation to stop grounds being sold away from clubs and to stop clubs going into administration repeatedly and facing those problems?

Steve Parish: The reality is that all around Europe and probably the world, football is a billionaire or millionaire-funded industry. That is the reality of it. It does not make money anywhere in the world. We are not unique: this is not a country where uniquely we lose money in football. It is not a business with a profit principle; it is a business with a winning principle. Whatever rules you put in place, people’s desire to win will always trump their desire to make money. So the problem is that if you restrict our league so much that we are taken out of that game, you very quickly could make us very uncompetitive in terms of a European landscape.

--- Later in debate ---

[Stephanie Peacock]

Q Competition arrangements, such as the FA cup fixtures, do not fall within the scope of the Bill. Do you think that is the right choice, and why? Feel free to take this opportunity to add anything on the changes to FA cup replays and why they happened the way they did.

David Newton: The short answer is no, we do not believe that competition format matters should be an aspect for the regulator to consider. In Dame Tracey’s report summaries, competition format was not part of that, and I think we feel that competition format matters should remain the province of the football authorities, whether that be ourselves or the leagues. There are specific football-related matters that should remain in our ambit, and this is certainly one of those we feel quite strongly about.

[Damian Collins]

Q One of the comments on the Football Bill is that it does not particularly mention players, and that the scope of the regulator is purely financial and about financial sustainability. The clubs also, as part of their licensing agreement with the regulator, have to produce a corporate governance report. Do you think the Football Association would have any objection if, as part of that governance report, the regulator asked clubs to demonstrate not only how they are financially sustainable but how they met all their other obligations?

Football clubs are not only licensed by the regulator. They are licensed by the Football Association as well. There are articles of association of the Football Association, which place responsibilities on all clubs. Do you think it would be good and proper due diligence for clubs to have to demonstrate through their corporate governance reporting how they meet all their obligations within football—to the FA, to their players and to the welfare standards they are expected to follow?

David Newton: It is an interesting point. It is not one that we have necessarily considered in detail. I do not see any reason why, in good corporate governance practice, you would not refer to your corporate governance standards with all employees, whether they be players or not. From that perspective, on the face of it, it would seem a reasonable assessment.

[Damian Collins]

Q Would you want some assurance that the job of the regulator in this regard might be to request the information and check up on the clubs, but not to have a role in setting the welfare standards, which would be the remit of the competition organisers and the FA?

David Newton: I guess it depends what you mean by checking up on the clubs. We have quite a strong structure of engagement with the players: the players’ union, and the Professional Football Negotiating and Consultative Committee, on which both leagues and we sit with the PFA to discuss on a quarterly basis every aspect of players’ employment by clubs. We would certainly consider that to be the appropriate avenue for those things to be dealt with. I would not necessarily advocate the regulator having formal step-in rights in respect of players as you have outlined, but reporting standards on employees I can see.

[Damian Collins]

Q That was perhaps not the best use of words. I meant if information was brought to the regulator, or if it had reasonable grounds to be concerned; its primary job would not be to check on those things, but it could relay that information back to you as the FA, which has investigatory powers of its own. It is more a question of whether, in principle, you think that those sorts of standards should be incorporated into the corporate governance standards that the regulator should set. That would simply be good practice.

David Newton: I guess it depends on what you mean by good standards. If you are talking about things like national minimum wage or employment rights, then absolutely, those things would be expected. In football, we have our own structures, as you say, for dealing with player-related disputes, or players not being paid—the leagues have very strong rules on that—so those things are dealt with in the structure. Sharing of information with the regulator will obviously be something that may come into focus, once it is up and running, because it is important that there is not duplication of requests for information and that those information requests are shared efficiently.

[Mr Betts]

Q It has been mentioned that the remit of the regulator and the legislation is on things that do not matter to the FA, but do to the fans, such as the FA Cup. One of the objectives of the regulator is to safeguard the heritage of English football. Do you not think that the FA Cup is part of that heritage?

David Newton: Absolutely, the FA Cup is an essential part of our football heritage. We reflect that and take the FA Cup extremely seriously. It is a fantastic competition. Everyone cares passionately about it within the FA, me as much as anyone else. Prior to Dame Tracey’s report, we had already established heritage assets in protection of club playing names. Since the report came out, we have also established rules in the FA on club crests and club colours, so we are very aware of heritage responsibilities in that respect.

--- Later in debate ---

[Dame Tracey Crouch]

Q Yes, the world of sport did not fall apart by having more women on boards. Going back to the game, when Charlton were relegated, one of the first things they did was ditch their women’s team. That is not unique; other clubs have done exactly the same. Should the club’s licensing requirements state that clubs have to continue their investment in the women’s game regardless of where they are in the leagues?

Jane Purdon: This is such a tough question, because that money has to come from somewhere, and what do you cut? Do you cut funding to your academy? It is so tough. The real answer is that we have to get women’s football independently standing on its own feet and turning a dollar in its own right.

[Damian Collins]

Q Following on from the previous question, I have asked different witnesses about the corporate governance statement that clubs are required to make. I think you touched on that. Do you think it would be appropriate for clubs to have to consider how they meet their wider obligations as part of that corporate governance statement? I think it would be relevant to the regulator if a club was seeking to meet its financial regulatory standards by trimming back on other things it should be doing.

Jane Purdon: I think transparency is a great thing, as is transparency in sport. If you have ever read the code for sports governance, it kind of flows through that. We said to the sport governing bodies who were not as well resourced as many football clubs, “Tell the world what you are doing. Even tell them when you don’t hit your targets and then explain what you are going to do, because it breeds trust.” Against that, we do need to be proportionate and make sure that we are not asking organisations to report for the sake of reporting, and that there is real value that comes from the onerous work that reporting involves.

[Damian Collins]

Q Would you have a problem if it was merely a requirement for clubs? Clubs have certain obligations they are expected to meet by their competition organisers or by the Football Association, and as part of corporate governance they have an explanatory statement about how they do that?

Jane Purdon: In the legislation there is provision to say how you are meeting this code of practice. I do not have a problem with that in theory. As with all these things, the devil is in the detail, but I think that is right. I have talked about not making it too onerous, but on the other hand it can be a very simple measure to engender trust, and fan trust as well.

[Damian Collins]

Q One final question. The commercial development of women’s football seems to be on an exciting path of growth. Where you have Premier League clubs that have men’s and women’s teams, do you think the club should be regulated—or do you think that they should be regulated separately because they are competing in different competitions?

Jane Purdon: As I say, Women in Football does not have a position on this, so I have to be quite careful. If I am brutally honest, my personal opinion—and this is not shared by all by Women in Football colleagues—is that I am not convinced by the intellectual case for an IFR at all, particularly financially. I would need to be persuaded on that one. Maybe it is something we need to think about going forward in the game, and look at the fact that the two teams, the two set-ups, sit in one legal entity. The plus side is when you have a club like Chelsea or Manchester City, which get it and back its women’s team and provide the spectacle in the women’s game that we are used to seeing in the men’s game, that is fabulous, but there is risk as well. Maybe how we manage that risk is something we need to take forward.

[Damian Collins]

Q I suppose ultimately, however it is done, we would want the same standards to apply to everyone. Clubs that have a men’s team and a women’s team should be regulated in the same way as clubs that just have a women’s team.

Jane Purdon: There is a proportionality. One of the other bodies I chair is PGAAC—the Professional Game Academy Audit Company—which is the academy quality assurance body. It is a joint venture between the FA, the Premier League and the EFL, and there is proportionality in what we do. We quality-assure all the academies, and we have just started doing the girls’ game as well. We are not taking what we apply to Manchester City to what we apply to a League Two community organisation that happens to run a girl’s elite training centre. It has to be proportionate and you have to make sure that you are adding value all the way.

In fairness, for full disclosure, I have spoken to people in the women’s game who disagree and say that if this if this is coming in for the men’s game, it ought to come in for the women’s game. I look at things like the owners and officers test, which we have written to the Committee about, because we think there are real problems in the drafting. I think that is going to be incredibly onerous for clubs. If you then put that into the women’s clubs as well, many of them who are running on much lower resources, it is an unintended consequence of bureaucracy to what end.

[Robin Millar]

Q I am an MP from north Wales. The Football Association of Wales told me that girls drop out of football at teen age. That is the big cliff edge, and it is principally to do with facilities that are available, as it is a time when that is particularly important. What do you think are the biggest barriers to women participating in football?

Jane Purdon: By the way, hearing where you are from, may I sound a note of congratulations to Wrexham FC? I saw it had an attendance of 9,500 for one of its women’s games—wonderful.

What are the barriers? We need the role models. We have those. Our Lionesses are wonderful. We need infrastructure. We need more, more, more, more, more. It is as simple as that. We need more pitches, we need more people, we need more coaches. I sometimes say to people if you want to know what needs to happen in future, take a walk around your town and count up all the football pitches you come across—the ones down the park, the ones in the school, the ones for the professional football club. Now double that. If we are serious about opening up football to the other half of the population, it will look something like that. So, yes: more, more, more.

There has to be some rate of organic growth in this. We cannot do everything at once. Many of the people looking at this, the people at NewCo, the people at the FA and, in fairness, the Sport Minister, have taken a good interest in this. There is good work happening, but we have a long way to go.