Football Governance Bill (Third sitting)

Damian Collins Excerpts

Committee stage
Thursday 16th May 2024 Public Bill Committees

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

Q You mentioned the requirements for the club licensing conditions in schedule 5. Looking at that schedule, it seems to me that the corporate governance statement that clubs will need to produce could be where they make some sort of statement about meeting their wider obligations to the organisation and the people who work within it. Is that what you were referring to?

Sanjay Bhandari: Yes. Schedule 5(7)(2) says:

“‘Corporate governance’, in relation to a club, includes”—

so it is non-exhaustive, and you could argue that it includes equality, diversity and inclusion. Some of the things included are

“the nature, constitution or functions of the organs of the club…the manner in which the organs…conduct themselves…the requirements imposed on organs of the club, and…the relationship between different organs of the club.”

That is probably the area where you might amend it.

If you go back to the September 2023 Government White Paper response, there is a list. Paragraph 65 on page 30 talks about the principles of governance and a wide range of responses, and then it lists the kinds of issues that were regarded as principles of governance, which include:

“independent non-executive directors; integrity; equality, diversity and inclusion (EDI); sustainability; fan representation and stakeholder engagement; training on appointment; following best practice with regard to board constitution and decision-making processes; communication and transparency; and promoting clear guidelines and processes.”

The benefit of adding clarity to schedule 5(7)(2) is that we also have to remember what environment we are in. I have worked in lots of environments, and football is the lowest of low-trust environments. If something is not explicitly in there, there is a fear that it means it is not going to be covered. Our submissions were in response to noises we were hearing that there was going to be an attempt to artificially fetter the power of the regulator. Our view is that if there is going to be a regulator, it should be a standard regulator with the standard inherent powers that any regulator would have to perform its functions and deliver on its objective, in the same way that any other regulator would, so to artificially fetter it to reduce the power to deal with equality of inclusion would be wrong in principle.

[Damian Collins]

Q The language you quoted from the schedule is largely lifted from the Companies Act 2006. What you set out is what you would expect from any other corporation looking at a corporate governance statement, so it should apply to a football club as well.

Sanjay Bhandari: It should. We are doing a project with the University of York, and we are up to 40 pages of a review looking at lots of different regulators in comparison to other industries, and saying, “What should be in that code for football governance, which we will deal with along with the regulator once constituted?” If the provision stayed as it was, though, we would argue that it includes equality, diversity and inclusion, because it is a non-exhaustive list and it falls within some of the subcategories.

It would be difficult, if it was in the corporate governance code under the Companies Act, to say that it is not included. The fear, as has been expressed by other people giving evidence, is that football is a low-trust environment and that is why you are getting this response asking, “Is this a way of wriggling out?”

[The Chair]

There is time for one more question.

--- Later in debate ---

[The Chair]

I have six colleagues who want to ask questions, so can we make them brief, please?

[Damian Collins]

Q This is principally to Tim Payton because it relates to your written evidence, but if the other witnesses have anything to add I would be happy to hear that. Tim, you recommended an amendment to clause 55(2) on the redistribution of broadcast revenue, so that the regulator’s role is not just to consider broadcast revenue for redistribution but all revenue for Premier League clubs. Could you explain a bit about why you made that recommendation?

Tim Payton: Specifically, at the moment it mentions Premier League broadcast revenue, and that does not address where the game is moving. I picked up the widespread dismay on Second Reading and on Tuesday about the loss of FA cup replays. Why are FA cup replays going? Because the European competitions are expanding. The European revenue that will come in is not captured by the relevant revenue clause, because it goes directly to the clubs. Similarly, FIFA is going to expand the Club World cup, and the big clubs are earning more and more from commercial revenue. I know there is a heated debate about whether you have parachute payments within that clause and how it is triggered, but it is almost an irrelevant debate to us until you address the relevant revenue.

The clause also does not future-proof the Bill because at the moment if you move to individual broadcast selling, which is what the large clubs want to do, the clause is meaningless because there is no revenue left to be redistributed. I think a simple wording change could make it much more effective.

[Damian Collins]

Q Do you agree that, as Steve Parish said on Tuesday, the clause as drafted puts a far greater onus on the smaller Premier League clubs, for whom the Premier League broadcasting revenue is a much greater proportion of their income?

Tim Payton: The way Premier League broadcast revenue is distributed is fantastically collective. I think it is 1:1.6, so it really helps to keep a competitive balance, which of course Richard Masters was stressing the importance of to all of you. But the regulator is in effect having the powers over the wrong bit of the broadcast income. It is Manchester City, Manchester United and Arsenal’s revenue that must be included, so that we have a progressive system of redistribution, but also a check on where the game is heading.

[Robin Millar]

Q In the previous evidence sessions, we have had explained to us—in quite graphic detail at times—the differences between the leagues, the different challenges they face, the different ways that fans experience the game and so on. First, I am keen to hear from the fans’ perspective what you think those risks are across those leagues. Secondly, are you happy that the Bill addresses those risks, for example, in the way that clubs fail?

Alistair Jones: For the EFL, the precipice between the bottom of the Premier League and the top of the Championship is massively disproportionate to wherever it has been before. The simple fact is that over the 72 football league clubs, there is £450 million of losses just last year alone. That cannot continue—everything has to be sustainable.

For me and for Albion fans, a fairer distribution of wealth and a fairer redistribution of Premier League income would make that difference less between the 20th team and the 21st team in the country. At the moment, over £50 million of turnover is written off more or less overnight, and that is dependent on whether parachute payments are consistent. Also, the lack of competition is a big worry. The bottom three of the Premier League were the top three that got promoted last year, and they have just swapped places. It is more than likely that two of the three will be promoted this year.

Sarah Turner: We would like parachute payments to come under the independent regulator because we think it does make it an unfair competition. You are striving to reach the promised lands, so you will throw everything at it, and it makes owners gamble and spend recklessly, which is what has happened to Reading and many other teams. It is an unfair competition because you are pushing yourself so far to get there. We were relegated because of a points deduction to League One, and we are striving to get back up to the Championship.

Tim Payton: We are here because of the European Super League and the furore. I was in the meeting with the Prime Minister where he said he would “drop a legislative bomb” on it. What I hope you are all doing is passing legislation that means we do not need to throw bombs around but we have a good defensive mechanism in place. The two big threats to the heritage and competitive balance of the Premier League are all the revenue being earned outside of that in the UEFA and FIFA competitions and, as I said before, the relocation of our games. I would urge you to look closely at the suggestions we have made for tightening up in those areas.