Football Governance Bill (Fifth sitting)
Ian Byrne ExcerptsTuesday 21st May 2024
(5 months, 2 weeks ago)
Public Bill CommitteesRead Full debate Football Governance Bill 2023-24 View all Football Governance Bill 2023-24 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 21 May 2024 - (21 May 2024)
Stuart Andrew
At the end of the day, we want to ensure a standard approach to regulation to ensure that we secure clubs in the future. As I say, I hope that as the regulator starts getting up and running, the leagues will see that there is no need for duplication and will make decisions accordingly. Ultimately, however, it is up to them to make that decision.
Question put and agreed to.
Clause 15 accordingly ordered to stand part of the Bill.
Clause 16 to 18 ordered to stand part of the Bill.
Schedule 4
Threshold requirements
Ian Byrne (Liverpool, West Derby) (Lab)
I beg to move amendment 4, in schedule 4, page 93, line 3, leave out from “has” to end of line 6 and insert—
“(a) adequate means by which to consult its fans about relevant matters, and
(b) structures and processes for effective engagement with its fans and takes the views of its fans into account in making decisions about the relevant matters.”
The Chair
With this it will be convenient to discuss the following:
Amendment 16, in schedule 4, page 93, line 4, leave out “consults” and insert—
“has structures and processes for effective engagement and consultation with”.
Amendment 8, in schedule 4, page 93, line 4, after “matters,” insert—
“including any proposal by the club
(i) to play matches in a competition to which the notice requirements in section 54(7) and (8) apply, or
(ii) to play home matches at a ground other than the club’s home ground, before giving notice of that intention to IFR under section 48(1),”.
Amendment 5, in schedule 4, page 93, line 17, at end insert—
“(4) The club’s establishment and continued delivery of such fan engagement must be independently assessed ahead of it being awarded a full operating licence and in the event of the breach of relevant licence conditions or provisions of this Act.”
Amendment 17, in schedule 4, page 93, line 12, at end insert—
“(2A) The IFR must—
(1) consult the Football Supporters’ Association on defining what constitutes effective fan engagement and consultation by clubs and,
(2) issue guidance on measures to be taken by clubs to ensure effective fan engagement and consultation and lay a copy of that guidance before Parliament within six months of this Act coming into force.”
Schedule 4.
Ian Byrne
It is a pleasure to serve under your chairship, Mr Sharma.
I welcome the line in the Bill that gives use the opportunity to secure the grounds. The Independent Football Regulator must grant approval for a disposal only when it is satisfied that the carrying on of the activity will not undermine the financial sustainability of the club. However, we would also like to see—certainly from the perspective of fans—a consultation of the supporters and the community.
I speak from experience: Liverpool supporters stopped the club relocating from Anfield to an out-of-town ground in Speke. That would have been utterly disastrous for the heritage of the club, as I mentioned to the English Football League chair, who was chair of Liverpool at the time. Also, Everton supporters stopped Everton moving from Goodison, again to an out-of-town stadium, in Kirkby, with a huge Tesco attached. Again, we are talking about something that would have been disastrous for the heritage of the football club, and we would not be seeing Bramley-Moore come into occurrence, potentially as one of the greatest stadiums in the world.
I am saying that to the Minister because that was football supporters changing the direction of travel. I warmly welcome that line on the Independent Football Regulator, but it would be fantastic if we could also consider what the amendment proposes, which is about ensuring that the community and supporters are talked to during any process about the movement of grounds.
Stephanie Peacock
Schedule 4 sets out the threshold requirements on clubs, which I will address before moving on to the amendments. The requirements cover sustainable resourcing—both financial and non-financial—and fan engagement. Before I address each of those areas in turn, I confirm that I welcome each of all the requirements as a whole.
The first condition is about financial resources. At this point, it is important to set out some context on football finances and regulation. As the Secretary of State said on Second Reading, clubs will not and should not be required to break even under the requirements. Ambition, investment and, indeed, a level of risk are fundamental to football and the pursuit of success. That is what makes the game so exciting and varied, something football fans never want to lose.
Owners Steve Parish and Tony Bloom emphasised that in their evidence to us, with Steve Parish saying of football,
“It is not a business with a profit principle…people’s desire to win will always trump their desire to make money.” ––[Official Report, Football Governance Public Bill Committee, 14 May 2024; c. 59, Q94.]
Ian Byrne
The issues addressed in amendment 8 are paramount. FIFA is already talking about opening the door to games being played in another country, and the league seems to be making moves to play games in the USA. Unfortunately, that is the direction of travel that could come to our doorstep. Consultation with supporters and supporter bodies through the IFR will be hugely important if the Premier League decides that it wants to start playing games abroad, because that is a slippery slope for the heritage of football in this country.
Stephanie Peacock
I thank my hon. Friend for those comments; I am sure that the Minister was listening. I will come to the issue of playing games abroad in future Committee sittings, but I hope that the deterrent of the regulator’s enforcement, as well as the fact that the prohibition will apply whether or not a club is licensed, will be enough to dissuade clubs from making such plans anyway. A club that is willing to participate in a prohibited competition is a club that is willing to risk losing its licence, which would release it from the fan consultation requirements anyway.
The amendment is right to highlight that fans are not currently given a say in the Bill on changes to where their home matches are played. We will come to that point later, when we look at further amendments that give fans a say on stadiums.
Stuart Andrew
Schedule 4 introduces the threshold requirements that clubs will have to meet to be granted a full operating licence. These are the three main areas of the regulator’s club licensing regime, which build on the freestanding duties and the mandatory conditions. Meeting the threshold requirements will mean that the regulator is satisfied that the club can currently and will be able to continue to operate sustainably in its financial, non-financial and fan engagement areas.
Although the threshold requirements are principles set in legislation, what each club must do to meet those requirements will not be the same. For example, what constitutes appropriate financial resources for a Premier League club will be very different from a League One club. A club might already meet the threshold requirements—for example, through naturally good operations or by complying with competition rules—in which case, the regulator will not need to intervene directly. If a club does not, the regulator can apply discretionary licence conditions to bring it up to the required threshold. That structure will allow for a proportionate system with requirements tailored to individual clubs, rather than the approach taken by the industry to date of blanket rules catering to the lowest denominator but applying to all.
The threshold requirement for financial resources means that clubs need an appropriate level of financial resources to support their long-term financial sustainability, accounting for their circumstances and risks. For example, that might include which competition the club competes in, its financial relationship with its owners, and the wider economic context in which it operates.
In particular, the regulator should take into account the club’s financial plan and its contingency plans for dealing with financial shocks. For non-financial resources, a similar requirement and process applies. “Non-financial resources” refers to things such as internal controls, systems and policies, as well as the information and people that the club has at its disposal. Although not financial in nature, those are important resources for any well-run club, so they need to be adequate. When assessing whether the resources are appropriate, the regulator might consider the skills and experience of the senior management and its corporate governance arrangements.
The threshold requirement for fan engagement requires that clubs adequately consult and consider the views of fans when making decisions relating to certain specified matters. As we heard from the FSA on Tuesday, this is the first time that there has ever been a requirement for fan engagement to this extent. The relevant matters are listed in the Bill and cover key off-pitch decisions, which the fan-led review highlighted as important to fans across the specified leagues. The threshold requirement is designed to work in tandem with the fan consultation mandatory licence condition. Through that condition, all clubs must regularly consult a representative group of supporters to discuss the relevant matters listed in the Bill, and that must be in place by the time a club receives a provisional licence.
Appropriate fan engagement will look different at every club and will partly be based on the size and complexity of the club’s fanbase. The threshold requirement has been designed to allow the regulator to recognise the inherent variation between clubs while ensuring that standards are raised where necessary.
Ian Byrne
Is the Minister confident that independence will be hardwired into engagement? Regarding the fan advisory boards, there are several examples of Premier League clubs flooding them with club employees. For engagement to work, it has to be completely independent so that we can hold the powers that be to account.
Stuart Andrew
The hon. Gentleman is absolutely right and I give that reassurance. If fans feel that the body that is currently being consulted is not truly representative, the independent regulator can have a look and, if necessary, apply discretionary licence conditions.
Fans, as everybody has said, are the foundation of any club. Putting in place a supporter engagement threshold requirement recognises that they must be consulted on key issues that affect their club. The requirement for clubs to have adequate means to consult their fans and to take fans’ views into account allows the regulator to consider the outcomes of fan engagement and whether the appropriate processes are in place at clubs and are being utilised.
Importantly, the regulator will be able to take enforcement action, such as censure statements, where it deems it appropriate following non-compliance with the licence conditions relating to the fan engagement threshold requirement. That is just one of the factors that results in a robust fan engagement requirement on clubs.
Amendments 4 and 16, however, seek to add something that is already captured in the legislation, with the difference in legal effect of “adequate” and “effective” being negligible. There does not seem to be a way in which a club’s fan consultation could be determined to be adequate without the structures and processes for effective engagement in place. Although the Government understand the intent to make sure that the fan engagement provisions in the Bill are strong, I can provide reassurance that that is the case already and I therefore hope that the hon. Member for Liverpool, West Derby will be able to withdraw his amendment.
Turning to amendment 8, I have been clear that the Government agree with the need for many clubs to engage with their fans on more issues. We expect that the issues of joining a new competition or not playing matches at their home ground would already be captured by the “relevant matters” of
“(a) the club’s strategic direction and objectives;
(b) the club’s business priorities;
(c) operational and match-day issues;”
and matters relating to “the club’s home ground”. It is therefore already implicit in the “relevant matters”, so to add this amendment would be duplicative.
Stuart Andrew
I think I understand the hon. Gentleman’s question, but my understanding is that that will be looked at on case-by-case basis. I want to ensure that I have exactly the right line for him and I would not want to give any misinformation, so I will write to him, if he will allow it.
On amendment 5, the hon. Member for Liverpool, West Derby is correct that fan engagement in football clubs is an integral part of football and capturing that in the Bill is essential. Regarding the specific amendment, I assure him that the fan engagement threshold requirement and the wider licensing regime already captures what the amendment is describing. As the Bill is drafted, before a club receives a full operating licence, the regulator—which is independent—will assess if the club has adequate means to consult fans and to take their views into account on a range of issues in the Bill. The test for a full licence, which is set out in clause 18, is such that a full licence cannot be granted unless the club meets the threshold requirements, including those on fan engagement.
Once a licence is granted, the regulator will continue to monitor the club’s adherence to all the threshold requirements, including on fan engagement. For the avoidance of any doubt, the regulator’s general duties in clause 7(4) explicitly require that. If the regulator identifies that a club is no longer meeting the fan engagement threshold requirement, the regulator can take relevant action to bring the club back to meeting that threshold requirement. Given that those elements are already a feature of the licensing regime, I hope the hon. Member will not move his amendment.
On amendment 17, the FSA has been extensively consulted from the fan-led review until now. I am incredibly grateful to Kevin Miles and all those at the FSA for their support—the amount of help and support that they have given to this process has been extraordinary. The Government expect that the regulator will continue that engagement with the FSA, and it is often likely to be a relevant stakeholder on fan engagement. It is therefore not appropriate for the legislation to bind the regulator unnecessarily, but I hope that that makes it clear that we expect the FSA to be consulted where relevant.
As currently drafted, the Bill is future-proofed so that the regulator may always consult the most appropriate stakeholders in relation to and at the time of a particular decision. The regulator will be best placed to establish what adequate fan consultation looks like in practical detail, given its position of oversight and understanding of each club’s fan base. Adequate fan engagement is not a one-size-fits-all, as the hon. Member for Barnsley East mentioned, and limiting it to a strict definition would water down the intention for clubs to be able to take a bespoke approach. The legislation has deliberate, in-built flexibility so that fan engagement expectations can be tailored to a club’s size, fan base and individual circumstances.
On the topic of guidance on fan consultation, it will be for the regulator to determine the most effective course of action in relation to producing and publishing any formal guidance, the contents of guidance and the timing of publication. As we heard on Tuesday, this is a key area for the FSA, and the Government expect that the regulator will work at pace on any required formal guidance, working throughout with appropriate stakeholders, including the FSA. Setting a legislative requirement for that may risk rushing the regulator’s work in the space without sufficient time for necessary consultation with those stakeholders, or force the premature publication of guidance to the detriment of its quality. I therefore hope that the hon. Member for Barnsley East will withdraw her Bill—sorry, her amendment. [Laughter.]
Stephanie Peacock
We are all in agreement that one-size-fits-all is not appropriate, and that certainly was not the thinking behind the amendment. We certainly do not want to make measures more prescriptive; it is about ensuring that whatever means clubs choose to consult their fans are effective and focused on outcomes. We certainly do not want to rush the regulator; the text of the amendment says “within six months”. Although I am happy not to press amendment 16, I will push amendment 17 to a vote.
Amendment proposed: 17, in schedule 4, page 93, line 12, at end insert—
“(2A) The IFR must—
(1) consult the Football Supporters’ Association on defining what constitutes effective fan engagement and consultation by clubs and,
(2) issue guidance on measures to be taken by clubs to ensure effective fan engagement and consultation and lay a copy of that guidance before Parliament within six months of this Act coming into force.”—(Stephanie Peacock.)
Question put, That the amendment be made.
Rachel Hopkins (Luton South) (Lab)
It is a pleasure to speak in this debate on an important Bill. I would like clarification on a few points with regard to schedule 5, particularly—following the excellent remarks made by the shadow Minister, with which I wholeheartedly agree—paragraph 7(4), which states:
“Before publishing a code of practice or any alterations to the code, the IFR must consult…the Football Association, and…other such persons as appear to the IFR to be representative of persons likely to be affected by the code.”
Can I seek assurances from the Minister that fans and fans’ representative groups will be included as people who are likely to be affected by the code? They will take a deep interest in the corporate governance of their clubs, which is why we are here with this piece of legislation. Similarly, I would like to press for clarifications on reporting on equality and diversity and inclusion matters, which are a really important aspect of good corporate governance. Once again, I add my support to the remarks made by the shadow Minister.
Ian Byrne
I wish to support the excellent remarks by the shadow Minister, who gave a very comprehensive overview of why we need amendments to the Bill. There is a real worry, as I have outlined, that the clubs will seek to dilute the power of the supporter’s voice by filling the boards full of stooges, shall we say. We need some sort of system to ensure that boards are appointed through a democratic and independent process. Supporters trusts are a ready-made option. There are over 130 of them in the football world. They are democratic, independent organisations that have the trust of the wider supporter base, mainly. It would be foolish not to utilise that expertise and the system that is already in place.
If a club has not got a supporters trust we need to have some sort of oversight to ensure there are independent fan voices holding clubs to account, which will be a crucial part of the independent football regulator. We have got to ensure that those boards are fit for purpose and, as I said, not diluted by clubs that want to disempower supporters and supporter voices.
Damian Collins (Folkestone and Hythe) (Con)
I want to repeat the point I made on Second Reading about the corporate governance statement, which is part of the licensing condition. I think this is incredibly important—indeed, it will be important for the regulator, because it is part of the conditions of issuing the licence.
My right hon. Friend the Minister has said that the regulator will issue of a code of practice. It is important that we are clear what, in passing this legislation, Parliament intends this code of practice should contain. Competition organisers already require clubs to demonstrate many of the requirements discussed in this debate. For example, the Premier League’s own governance statement says that the Premier League handbook acts as the rulebook for all member clubs, which includes the clubs having to demonstrate
“minimum standards of governance and operation on a wide range of areas, from safeguarding and supporter relations to broadcaster access, stadium infrastructure and club academies”.
By asking for this sort of information, the regulator would merely be repeating requests which the clubs have to fulfil for their competition organisers anyway. I agree with the evidence we received from Kick It Out, which said that it would be extraordinary that such a corporate governance statement would not include the club’s policies on equality, diversity and inclusion. I do not think we would necessarily be asking for the clubs to do more work than they do already. We would simply be asking that their own policies in these areas be clearly set out in the corporate governance statement they give to the regulator. That would mean that the regulator would have the power to hold the clubs to account for those policies. If necessary, the regulator could even audit or investigate clubs if it felt they were in breach of those conditions, which would almost certainly be a breach not only of the pledges they have made to the regulator but of the rules of the competitions within which they play.
Stuart Andrew
I will begin with clause 21. Where needed, discretionary licence conditions will be used by the regulator to bring a club up to the required level of compliance with the threshold requirements. That means that the regulator is satisfied that the club can currently, and will continue to be able to, operate sustainably in financial, non-financial and fan engagement areas, as per the regulator’s objectives. Those conditions will be in addition to the standardised mandatory licence conditions and, when applied, will be tailored to the club’s specific circumstances and identified financial risks. If a club already meets the threshold requirements set by the regulator, the regulator will not need to attach any discretionary licence conditions. That means that it can be light touch where appropriate, and need not directly intervene if the desired outcomes are already being met. Discretionary licence conditions could also be used to protect and promote the financial resilience of the football system. The conditions would be used to resolve risks that might not threaten any one club significantly, but their potential aggregated, correlated or multiplied effects may pose a significant risk to large parts of the football system, or the pyramid as a whole.
Clause 22 sets out the scope of the regulator’s powers to attach or vary a discretionary licence condition. Under the financial resources threshold requirement, discretionary conditions may only relate to one of four areas including debt management, liquidity requirements, and overall cost reduction, or they might restrict a club’s ability to receive illicit finance. The fourth area is integral and enables the regulator to restrict the club’s ability to access funding that it has reasonable grounds to suspect is connected to serious criminal conduct. It will empower the regulator to limit illicit finance, which is inherently unsustainable for a club.
Under the non-financial resources threshold requirement, conditions may only relate to one of three areas: internal financial controls, risk management, and financial reporting. As outlined in the previous clause, the regulator can also attach discretionary licence conditions to advance its systemic financial resilience objective. That objective is specifically to address systemic risks, or structural issues, by applying conditions to multiple clubs or even to all licensed clubs. Clause 22 limits the scope of discretionary licence conditions to only conditions that relate to debt management, liquidity requirements, and overall cost reduction.
To future-proof the regulated regime, the Secretary of State will have the power to amend the areas to which discretionary licence conditions may relate. However, that can be done only if the regulator makes a request in writing to the Secretary of State, having first held a consultation, explaining why an amendment is needed by reference to the purpose of the Act. That will limit the risk of unwanted, politically motivated scope-creep in the future.
Clause 23 sets out the procedure for attaching or varying financial discretionary licence conditions on clubs. The procedure outlined in the clause ensures that clubs and competition organisers are notified and given the appropriate opportunity to engage in advance when the regulator considers a discretionary licence condition is needed. Where appropriate, the regulator will seek to allow the relevant club and league to address identified issues and risks so that it does not have to intervene formally. That may produce a better regulatory response and outcome. The football industry may be best placed to address specific issues within the overall context of a league’s regulatory framework.
Ian Byrne
I thank the Minister for what he has said so far. I want to touch on a point for the clubs and, certainly, for supporters, having spoken to those of both Everton and Nottingham Forest, regarding profit and sustainability rules and the tariff that was served on them. At the moment, there seems to be zero confidence in the Premier League’s ability to govern that system and there are many calls—in fact, I got about 14 last night—from supporters right across the board who are asking why the independent financial regulator is not taking control of the whole profit and sustainability issue, any breaches and then levying the punishment to clubs in a manner that people think would be fair and transparent and, as I say, a process that they have a belief in. At the moment, they undoubtedly do not have that and that is a real worry.
It would be remiss of me not to touch on Manchester City winning the league yesterday and congratulate the club on that. However, there are 115 charges hanging over the club’s head and there is lots of disquiet around the whole process. It would have been welcome if the Minister had considered whether that should sit with the independent financial regulator to restore faith in the whole process, which, unfortunately, is not there.
Stuart Andrew
I understand what the hon. Gentleman says, but there is a balance about football having its rules and independence. We have to honour that in terms of relationships with UEFA and FIFA. However, we are ensuring that there is a regulatory regime that I hope will start to improve confidence among fans, as the hon. Gentleman describes. When it comes to the specific area under focus, if the regulator feels that the league’s proposition does not meet the objectives it needs to fulfil its duties, it can decide that it will still impose its own. The regulator will have to be satisfied that what the league is proposing will meet its required objectives.
Before any action is taken by the regulator, there will be a period where both the relevant leagues and clubs can make any representations and in which the relevant league, as a competition organiser, can also give a commitment to take action in lieu of the condition being attached or varied, as proposed by the regulator. Where the regulator is looking to attach financial discretionary licence conditions to a club, it must go through the relevant procedure to do so, as outlined in clause 23.
Clause 24 sets out further details on one key aspect of the procedure: a final, formal opportunity for competition organisers to offer a self-regulatory solution to a problem identified by the regulator so that the regulator does not have to step in. That is known as the competition organiser making a commitment in lieu of a financial discretionary licence condition. The clause is another important aspect of the regulator’s approach, which emphasises engagement and working with the industry to minimise formal intervention where possible. The regulator will still have powers to step in if the issue is not resolved, but it provides the chance for a competition organiser to present a football industry-led solution to an identified risk.
The regulator can accept a commitment if it concludes that that commitment should achieve the same results as the proposed discretionary licence condition and it does not conflict with the regulator’s objectives. If the commitment proposed by the league will not achieve the regulator’s desired outcome, the regulator can reject it—to repeat the point to the hon. Member for Liverpool, West Derby—and retains the power to intervene directly by imposing the discretionary licence condition.
Ian Byrne
For clarity, if the disquiet continues around the Premier League’s handling of the financial sustainability rules and the punishments it has meted out, and if the independent regulator believes it is not a fair and transparent system and that there are holes in the system, it can intervene.
Stuart Andrew
My understanding is that if the 2007 Act is updated with a new crime, it will still be relevant to the Bill. However, I want to be absolutely sure, so I will write to my hon. Friend, and if I am wrong I will correct my homework.
By requiring new owners to undergo the regulator’s test, clause 28 will better mitigate harm to clubs by stopping unsuitable custodians.
Football Governance Bill (Sixth sitting)
Ian Byrne ExcerptsTuesday 21st May 2024
(5 months, 2 weeks ago)
Public Bill CommitteesRead Full debate Football Governance Bill 2023-24 View all Football Governance Bill 2023-24 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 21 May 2024 - (21 May 2024)
Stuart Andrew
I understand the point that the hon. Gentleman makes. We have had this conversation several times on the replays, and I understand that point. As I have said before, not drawing on the merits of the decisions that have been made, I understand some of the challenges that those organisations have in terms of a very crowded field and in terms of competitions.
Ian Byrne (Liverpool, West Derby) (Lab)
It is always a very crowded field in the FA cup replays. I am sure that the Minister has seen the news, today I think, about Tottenham players getting on the plane to go to Australia for their end-of-season friendly. Is that not a smack right in the face of player welfare and ensuring that players are okay? That is why the FA cup replays were allegedly taken off the table.
Stuart Andrew
As the hon. Gentleman knows, the purpose of the Bill has been tightly focused to feature those particular issues. We have a fine balance to ensure that we do not upset or get into challenges with UEFA and FIFA, and it is for football to make some of the decisions that it has made, but I would expect that, as the provisions in the mandatory conditions say, clubs will consult their fans on decisions on match days.
The extension to clubs regulated in the past 10 years will stop them circumventing the rules by withdrawing from existing competitions in order to join a new breakaway competition. The regulator is expected to prohibit competitions on the basis of the predetermined, proportionate and transparent framework based on the prescribed factors set out in legislation. That will provide up-front clarity to the industry and means that new competitions will not just be prohibited outright. That is important to ensure that the regulator does not unduly stand in the way of innovation in the market—for example, like when the old First Division became the Premier League in 1992.
The clause requires the regulator, when deciding whether to prohibit a competition, to consider several factors, including whether the competition is merit based, operates on the basis of fair and open competition, jeopardises the sustainability of English football’s existing competitions or the clubs in those competitions or harms the heritage of English football. Of course, football belongs to its fans, so the regulator will also determine and consider the views of fans in England and Wales before prohibiting a competition. As the national governing body for football, the FA will be consulted before the regulator prohibits any competition, and the regulator will also consult anyone else it considers appropriate. I commend the clause to the Committee.
Stuart Andrew
I thank the hon. Lady for her contribution. On the ruling that she mentioned, my understanding is that it will be considered, but I want to make sure I have that right, so if she does not mind I will write to her.
The regulator will not be able to take action until it is fully operational. It would be inappropriate to give it backdated powers in relation to competitions, as clubs cannot comply with preapproval requirements after an action has been taken, so I hope the hon. Lady understands the position we are in.
Question put and agreed to.
Clause 45 accordingly ordered to stand part of the Bill.
Clause 46
Duty not to dispose etc of home ground without approval
Ian Byrne
I beg to move amendment 3, in clause 46, page 38, line 15, at end insert—
“(6A) Before the IFR grants an approval under subsection 6 it must—
(a) consult the supporters of the body in question, the relevant competition organisers and persons representing the local community with which the body is associated; and
(b) have regard to the views expressed by those consulted.”
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Amendment 29, in clause 48, page 39, line 20, at end insert—
“(4A) A regulated club must take reasonable steps to establish that the majority of the club’s fans in England and Wales do not consider the arrangements to constitute significant harm to the heritage of the club under subsection 4(b).”
Clause 48 stand part.
Ian Byrne
It is a pleasure to serve under your chairship, Ms Nokes.
Clause 46 is welcome, but I have real concern because, although we are again talking about supporter engagement, there is no mention of a requirement or even a power for the independent football regulator to consult any other parties about the disposal of the ground—often a community asset. If the Minister is not prepared to accept the amendment, which would allow supporters, local stakeholders and competition organisers to be engaged before any such disposal takes place, will he explain why? What powers does he believe are available to the independent football regulator to ensure that supporters, local stakeholders and competition organisers have a voice in any decision made about ground disposal?
Stephanie Peacock
Football stadiums have immense value. First, they have value to fans, who have precious memories going back generations of standing in the same spot watching their club through the lowest lows and highest highs. In many ways, a stadium is one of the strongest ties a club has to the local community. A club’s staff, players and owners might change, but the pitch remains.
Secondly, grounds also have a financial and fundamental value. They are often among the club’s most valuable assets. In well-run clubs, that is positive, but where a club is already financially unstable, home grounds can become vulnerable to sale in a way that seriously undermines the club in the long term. In some cases, they are sold in a desperate attempt to make a return on losses, and in others they are sold by those purposefully wishing to strip a club of its assets before leaving it behind to collapse. Indeed, there are numerous examples of clubs in financial trouble selling their stadiums to give owners some collateral on their investments or to circumvent profit and sustainability rules. Troubled Sheffield Wednesday sold Hillsborough to its owner for a profit of more than £38 million, covering its pre-tax losses of £35 million. Both Reading and Derby sold their grounds in a similar fashion. But a stadium can be sold only once, and without a stadium in their possession, clubs risk not being able to play at all.
We are familiar with the story of Wimbledon FC, whose home was forcibly moved to Milton Keynes in 2003, resulting in the club being renamed. Finances aside, that decision was devastating for local fans, who felt their club had been stolen from them and their community, as we heard in the evidence session. Given that the regulator is a body specifically established to both ensure the financial sustainability and protect the heritage of English football, it is right that it should have a responsibility to ensure that stadium sales do not undermine a club’s future.
There are of course many circumstances in which a club’s selling its stadium and relocating is a sign of progress and positive investment. Tottenham fans, for example, are now enjoying the benefits of a brand-new state-of-the-art ground, while the club is widely considered one of the best in the country. That kind of investment should in no way be discouraged, let alone blocked. The regulator must therefore be equipped to tell the difference between two very different kinds of proposed transactions—those that propel a club forward and those that seriously undermine a club’s long-term financial sustainability or heritage.
With the expertise the regulator will have, I understand why the Government have decided that it is best placed to grant approval on stadium sales and moves. However, I also acknowledge the concern that the FSA and many fans have about their lack of voice in the decision-making processes in both clause 46 and clause 48.
Amendments 3 and 29, tabled by my hon. Friends the Members for Liverpool, West Derby and for Sheffield South East, give us the opportunity to discuss the role that fans might play in understanding what a stadium change might mean in terms of the fans, heritage and local community. It is of course the fans who will suffer if their team no longer has anywhere to play, and it is fans who best understand the precious heritage and memory that grounds carry for them and their community.
Clause 48 seems to be based on an understanding of that point to some extent, given that the regulator is explicitly tasked with paying attention to whether a relocation of home games would cause “significant harm” to the heritage. However, as Fair Game points out, it would be curious if the regulator were able to understand the implications for heritage without consulting fans. Will the Minister explain how that might work? On what basis will the regulator make a judgment if it is not through understanding the impact on fans?
Combined with the lack of consultation rights in clause 46, the result is that fans are currently given absolutely no voice on matters to do with stadiums, even though they are the ones who will travel there, buy tickets and offer their support. I understand that the regulator is best placed to make a final decision, but it is unclear to me why fans cannot form one of the inputs that the regulator might consider.
The Government’s White Paper said that the regulator should
“have a remit to consider the implications for club heritage of any proposal, the views of fans and the club’s historical connection to its locality.”
Will the Minister share with us what has happened between the publication of the White Paper and the Bill to cause the Government to divorce the idea of heritage from fans? It must be clear why fans have not been given any say in this process. I hope the Minister will elaborate on that point today.
Finally, I want to examine whether the Bill will be able to prevent some home matches being played abroad if that damages heritage. This is not a purely theoretical proposition. Just a few weeks ago, Tim Howard wrote for a national newspaper about why Premier League games being played in the USA was “inevitable”. FIFA has also reportedly begun the process of allowing league matches to be played overseas. When Tim Payton of the Arsenal Supporters’ Trust gave evidence to the Committee, he warned that the movement of games abroad could be the next catastrophe the size of the Super League.
Clause 48 has the potential to provide assurances that this kind of action could only be taken by clubs with the approval of the regulator, should it be seen to damage heritage. However, the wording does seem to be geared more towards permanent relocation rather than the issue of clubs wishing to play single games, or a small subset, away from home.
Will the Minister confirm whether approval only needs to be sought by clubs wishing to play all of their home games elsewhere or whether it also applies to clubs wanting to play a handful of games elsewhere? In particular, will the regulator be able to have a say on league games being played abroad, and if so, would fans be given a say in the process? Given the salience of this issue with fans, it is important that we are clear on how the clause would apply.
Stuart Andrew
In schedule 4, paragraph 4(3)(a) on page 93, it says “the club’s home ground”. It is there.
The regulator will examine each transaction in the context of the regulated club’s individual financial circumstances. That should provide sufficient comfort for fans or other proposed stakeholders that the proposal does not adversely affect the financial sustainability of the club. The additional stakeholders to be consulted will not have a financial interest in the transaction. Amendment 3 would impose an additional level of bureaucracy and complexity to the process. It would also introduce a potential delay in completing a transaction, which is often time-sensitive, and it may have adverse implications, such as the buyer pulling out or renegotiating terms. That could undermine the sustainability of clubs. For the reasons I have set out, I am unable to accept the amendment.
Turning to clause 46, a home ground is often one of the most vital and valuable assets that a club can own. However, home grounds are sometimes used as collateral for debt or even sold off entirely to raise money. Although there can be sensible financial reasons for clubs to do that, both courses of action may result in a club’s financial position seriously deteriorating, or it having no ground to play at. Selling the home ground also potentially seriously weakens the club’s balance sheet. Likewise, using the home ground as collateral for a loan might make financial sense depending on the use of the cash raised, but it may also saddle the club with too much debt or high interest costs.
The clause therefore places a duty on clubs that own their home ground to obtain the approval of the regulator prior to any sale or use as security in a loan or liability. The regulator will consider the risk of the proposed transaction to the club’s financial sustainability and block any potentially financially damaging sale of a club’s home ground. The provision applies not only to regulated clubs, but we are also extending it further to capture clubs that are not currently regulated but have been within the last five years. The regulator must be satisfied that the club has taken reasonable steps to ensure that a team play their home matches at the ground prior to its sale or use in a loan—that is, that football club continues to be playing at the ground. That protects against potential bad actors who might otherwise choose to pull their team from the league and no longer be a regulated club so that they can asset-strip and sell off the ground to make money.
Turning to amendment 29, the Government believe that the safeguarding of club heritage and the voices of fans is vital. We expect the regulator to consider whether a club has adequately engaged with its fans in reaching its decision on whether to approve a relocation. However, there will be a number of additional factors for the regulator to consider when assessing whether a proposed home ground relocation will significantly harm club heritage. Those may include the history of the club, distance from the original home ground or the views of others in the local community. Although fan views will be an important consideration, the Government believe that the regulator should be able to take an holistic view of any proposal. I therefore hope that the hon. Member for Liverpool, West Derby withdraws his amendment.
Turning to clause 48, home grounds play an important role in the history of a club, and are often the club’s most valuable asset. Relocating home grounds permanently to areas that have no connection to the heritage and history of a club can have a significant impact on those supporters and the local area, as we saw when Wimbledon moved to Milton Keynes. This clause is aimed at stopping that from happening again.
However, the Government do not want to stifle development that brings value and aligns with the heritage of a club. The impact of a home ground relocation on both fans and the club is why we are legislating for the regulator to preapprove any proposal in this regard. As set out in subsection (4), the regulator must be satisfied that the proposed relocation would not undermine the financial sustainability of the club, or significantly harm its heritage. Clause 48 makes the important and necessary recognition of the vital role that home grounds can play in communities, and adds an extra layer of protection to them.
I commend the clause to the Committee.
Stuart Andrew
The regulatory framework is not a zero-failure regime. Therefore, it is possible that football clubs may enter administration despite the best efforts of the regulator. We would of course, hope that this is rare. There already exists a legal framework for companies—and that includes football clubs—to enter into administration, which is detailed in the Insolvency Act 1986, and in many cases this existing framework has enabled clubs to go into administration and re-emerge as solvent clubs. It should be noted that those clubs often re-emerge in a lower league as a result of the sporting sanctions placed on them by the competition organisers.
Given that the existing administration regime seems to work well in relation to appointments initiated by creditors, it is not necessary for the regulator to cut across that process. However, there are occasions where the administration of a club is not initiated by creditors but by the club itself. A club can appoint administrators directly, and so does not require a court to sanction the appointment in advance. In those circumstances, there have been occasions in which some stakeholders have had cause to question the relationship between the insolvency practitioner appointed as administrator and the football club.
That is why, in those specific circumstances, the appointment of an administrator requires the regulator’s approval to ensure that the process is transparent and to avoid conflicts of interest. Such approval should give all stakeholders, particularly fans, more confidence in the system and more confidence that the outcome is the best available, in the circumstances, for the individual club.
The requirement to seek approval from the regulator for the appointment of an administrator applies to clubs that have a licence, and those that should have a licence but for whatever reason do not, as well as clubs that were formerly regulated within the previous five years. That is included to ensure that clubs are not deliberately run so that they are no longer in the leagues that the regulator has oversight of, to then take advantage of being an unregulated entity to appoint an administrator without approval of the regulator.
I commend the clause to the Committee.
Stuart Andrew
A club’s name, home shirt colours and crest are intrinsic parts of its heritage, and therefore the decision to materially change any of them requires considered thought and consultation. The clause requires a club to establish that a majority of domestic supporters approve any material changes to its badge or predominant home shirt colours. In practice, we expect that to take place through a formal survey of fan opinion, as happened last season when Bristol Rovers supporters opposed the final proposal put to them, resulting in the club halting the redesign of its crest.
The clause also requires clubs to get Football Association approval prior to changing the name their team plays under. The view of supporters is a significant factor in the FA’s final decision, but it may also need to balance wider considerations, such as the effects on other clubs in the pyramid, and the relationship between the club’s current name, the proposed name and the locality with which it is traditionally associated.
Ian Byrne
On the scope of the independent regulator, Liverpool football club tried to trademark the name “Liverpool”, which caused absolute outrage among Liverpool and Everton supporters and market traders. The local community fought back, and the supporters of both football clubs came together. Is something like that within the scope of the regulator’s ability to influence?
Stuart Andrew
That is a very good question, and I feel my officials thinking, “Not another letter!” If the hon. Gentleman does not mind, we will write to him. I apologise to my officials, who have enough on their plate, but I want to make sure I am not saying something that is not correct.
The existing FA rule has been used to prevent name changes that have been proposed in the past against the wishes of fans, as happened at Hull City, for example. Codifying that as a legal duty will mean that there are additional powers to ensure that clubs do not make changes without proper approvals and to respond to instances of non-compliance. I commend the clause to the Committee.
Mr Betts
The point I was going to go on to make was that I am not suggesting that parachute payments should never be allowed under any income redistribution. That is not the case. My amendment does not say, “No parachute payments”. It says that parachute payments can be considered as part of the overall distribution of finances within the game.
The Bill as drafted states that parachute payments are exempt from consideration at the backstop stage—full stop, end of story. Everything else, including media income, can be considered, but not parachute payments. That seems strange, given that the Minister has repeatedly said that the independence of the regulator needs to be preserved and recognised, and yet on this key issue its hands are being specifically and absolutely tied. That just does not chime as an appropriate situation for the Government to get themselves into compared with everything else that they have said about the Bill. The regulator needs to be independent and have discretion, but on this issue it is not allowed to have the freedom to look at the situation, particularly with regard to the state of the game report. If the regulator believes that it is necessary to revisit the issue of parachute payments in order for income in football to be distributed properly and appropriately, and for it to be sustainable not just for individual clubs but for the whole of the football pyramid, this proposal is a significant mistake.
We must recognise that 80% of what the Premier League gives to the EFL is in parachute payments to a handful of clubs. When the Premier League talks about its generosity to the game, it is talking about generosity to a handful of clubs that have just been in the Premier League. That is not a real position. When we look at the distribution of the media money overall, we find that 92% goes to 25 clubs—namely, the Premier League clubs and five others that have been in and out of the Premier League in the recent past. That is not sustainable, and if a reasonable and fair distribution of money should be agreed in the future, the regulator must have the power to take that into account.
I have also said to the Minister that we ought to look at not just the importance of parachute payments to the clubs that receive them. I do not think that anyone I have met who has talked about this issue has said, “You cannot have parachute payments.” They say that it must be looked at in terms of the totality of the game and the distribution of money. I would understand, very quickly, that a club going up into the Premier League faces an enormous difference between the wage bill it had before being promoted and the wage bill it will need once promoted, and it must have some reassurance on what happens if it gets relegated. That is an understandable situation, but we must also take into account the impact on the finances of clubs in the same division as the relegated clubs and their ability to compete.
It has been said over and over again that Championship clubs are getting completely overstretched, because the holy grail of promotion to the Premier League means that clubs try to extend their budgets beyond what is reasonable. Owners put in large sums of their own money, often beyond what is reasonable and sustainable, in order to compete with clubs with parachute payments, and the difference is enormous. Parachute payment clubs will come down with budgets three times the size of those of many other clubs in that league, so in order to compete clubs often do fairly stupid things to try to ensure that promotion becomes a possibility.
My amendment says that the regulator ought to take account of those issues. It is not reasonable to say to the regulator, “The only thing that matters is parachute payments to protect clubs that get relegated and you should have no regard to the impact on the clubs already in that league.” I hope that the Minister will consider this seriously. It is obviously a concern across the House, as was reflected on Second Reading.
I know that my hon. Friend the Member for Barnsley East on the Front Bench has a slightly different way of addressing the issue, but the wording in her amendment 31 relates to what I have just said. Yes, parachute payments and the impact on the clubs that receive them must be taken into account, but the impact on other clubs that must compete with them must also be taken into account. The position under the Bill as drafted is that that cannot happen, because it is fixed as it is and cannot be changed by the regulator.
The Minister will probably say that the leagues themselves could come to an agreement and change it. What happens if they do not do that? There has not been much evidence of the leagues being able to reach an agreement for a long period of time now—that is why we are here debating this Bill. In the end, it is down to the backstop. That backstop, the regulator, needs to have the flexibility to address these very important measures.
Ian Byrne
Does the format of how parachute payments are directly paid not imperil the Independent Football Regulator’s key objectives, which are to protect and promote the financial soundness of regulated clubs and financial resilience? The imbalance in parachute payments is driving clubs into making decisions that they would not usually take.
Mr Betts
Absolutely. I just made the point about the enormous difference in budgets that Championship clubs now experience because of that. Of course, when we look at this season of the Championship, three out of the top four clubs have received parachute payments. Yes, other clubs, such as Ipswich, have done remarkably well without them, but clubs are always trying to compete with those clubs receiving the payments. Last year, two of the three clubs that came up had parachute payments, and it is now almost becoming a cycle of clubs getting parachute payments, going back up, then sometimes being relegated, and then getting another lot of parachute payments. That really is not a sustainable position for the clubs receiving those, for the clubs that are trying to compete with them, for the competitiveness of the game, or for the sustainability of the pyramid as a whole. I hope that the Minister will reconsider this because it is an issue that really needs addressing.
Football Governance Bill (Fourth sitting)
Ian Byrne ExcerptsThursday 16th May 2024
(5 months, 3 weeks ago)
Public Bill CommitteesRead Full debate Football Governance Bill 2023-24 View all Football Governance Bill 2023-24 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 May 2024 - (16 May 2024)
Stephanie Peacock
I am grateful for the opportunity to discuss the appointments process for the regulator. I was pleased to hear the Minister’s comments just now and those by the hon. Member for Gosport (Dame Caroline Dinenage) on Second Reading; she confirmed that the Culture, Media and Sport Committee will be holding a pre-appointment hearing with the chair of the regulator once there is a preferred candidate.
The first chair will have a formative role in shaping the regulator at a time when implementation will be key to success. However, on the whole, the Bill has provided limited information about how candidates for roles will be vetted. This is an incredibly important process to consider, not only due to the sheer importance of many of the decisions that these experts will be making but because we must be very careful not to import the same industry groupthink that has caused us to need an independent regulator in the first place.
There is no point in setting up an independent regulator if it is run by those who can offer no real independence from existing football governance structures. To ensure the strength and independence of the regulator, therefore, we require more detail in the Bill about appointments, as well as due diligence on behalf of those making the appointments in practice. The schedule does offer small bits of guidance in this area. It states that a person can be appointed only if their appointer is satisfied they do not have a conflict of interest, and that is an important start.
However, as Fair Game points out, the schedule is not comprehensive enough to provide the necessary assurances that the board will be free from such conflicts. Indeed, as the Bill stands, it does not say that a person cannot be on the board if they have a conflict of interest; instead it is more subjective, giving the power to the appointer to make the determination that they are satisfied there is no such conflict. I am simply not sure that that is strong enough.
Ian Byrne (Liverpool, West Derby) (Lab)
What the shadow Minister is saying is so important at the moment, because there is a complete lack of trust and faith in the game. That is why we are sitting here today. We heard from the evidence sessions that that lack of trust is hardwired in the National League, the EFL and the Premier League, so ensuring that everybody who loves the game sees the independent regulator as something to be trusted and as completely independent is so important. That is one of the key reasons why we are here today.
Stuart Andrew
We have had this discussion many times, and I look forward to further debate on this as we go through the Bill. The hon. Gentleman will know that we also have provisions in the Bill for the regulator to look at those sorts of issues through the licensing conditions. I look forward to going into that in a bit more detail with him when we get to that part of the Bill, but I am acutely aware of his interest in that specific issue.
The third objective is on safeguarding the heritage of English football. Since the game was first played more than 160 years ago, football clubs have been an integral part of local communities and the lives of their supporters. The identity of each club is unique and often entwined with the identity of its fans and the history of the local community. Clearly, financial collapse is a risk, but so is the potential for clubs to become unrecognisable to their fans and communities.
Ian Byrne
That is a really good outline of why heritage is important. The Minister has talked about communities and football clubs. Maybe two words were missed out: “working class”. We have to ensure that working-class representation in the game stays within the game, as part of the heritage. I ask the Minister to include ticket pricing in that, because if we price working-class fans out of the game, we lose the lifeblood of the game.
Stuart Andrew
I never thought I would get into a discussion about class when talking about this Bill. My view is that football is there for everybody, and I absolutely recognise the roots of it in various parts of the country. Of course, particularly in the hon. Gentleman’s part of the world, there is a close association. I know we will come on to ticket prices later, but I hope the clause provides reassurance that the things that are important to fans—the identity of their club with their community, the colours, the names and so on—are an integral part of the work that the regulator will do to protect them.
Stephanie Peacock
We are not suggesting that they will all be able to contribute to every element. I gave an example where, for example, football clubs are in the early stages of suffering financial problems and issues. Often, the groups that I refer to are the first to recognise and realise that. We are simply attempting to make sure that the legislation is as strong as it can be and that the regulator has the most thorough and useful list of people to work with constructively.
[Sir Christopher Chope in the Chair]
Ian Byrne
My amendment 2 builds on what my hon. Friend has just spoken about. The principles are all fine, but there is a glaring omission. We are here today because of supporters. It was the supporters that defeated the European Super League. If the reports are true, the then Prime Minister met the chief executive of Manchester United and there was not much of a furore around the European Super League politically. That suddenly changed when the fans rose up from every single club that was involved, much to the consternation of the owners —I know this personally. They thought that the fans of the said clubs would be delighted at the riches that were going to be pouring into their clubs and at ensuring their success, but that was not the case. It was the supporters of the six clubs and also the pyramid that rose up and defeated the European Super League.
Robin Millar
The hon. Gentleman and I see eye to eye on this, but it would be remiss of me not to point out, from the Government Back Benches, that the Prime Minister at the time was well aware of the objections and concerns that were felt across our constituencies.
Ian Byrne
That is a fine point. I am not excluding anybody, because there was outrage across the piece. Setting this regulator up is welcome, but it must have supporters at its heart. The regulatory principles should include supporters, so I hope the Minister takes on board what we have outlined and adds that one word, which would make a huge difference. It would reinstate trust in the whole process if supporters were listened to.
Mr Betts
I was thinking of moving my amendment from the Chair and then I could have directed the Minister to agree with it. [Laughter.] This proposal would feel very strange, as Ben Wright from the PFA said this morning, without the two groups of people who are absolutely key to football. We can manage without owners and directors, but we cannot manage without fans and players, and they are not mentioned in this part of the Bill. Will the Minister give us some comfort at least about how that particular point will be addressed?
Stephanie Peacock
I appreciate the Minister’s response. He said that it could be quite burdensome to engage with every stakeholder, but that is not what this amendment seeks to do; it aims to lay out what we see as the most important ones. That includes players and fans, without which we could not be here. I think the Minister said that that is implicit. Why not make it explicit? Going back to that argument around burdens, the Bill mentions engagement so far as is “reasonably practicable”, so there is already that safeguard for the regulator. For that reason, I would like to press amendment 9 to a vote.
Ian Byrne
The Minister spoke about a stakeholder list, but actually the amendment was just about supporters. They asked for that single word, “supporters”, just to be on the face of the Bill. I think it would make a huge difference to supporters across the land if it was enshrined in the regulator’s principles. I think it would genuinely make a massive difference, so I do hope the Minister considers that at the next stage.
Stephanie Peacock
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 9, in clause 8, page 5, line 33, at end insert—
“(iv) football fans,
(v) football supporter organisations,
(vi) any local community groups that the IFR considers relevant,
(vii) employee groups and unions with members employed by football clubs, and
(viii) professional football players and their representatives.” —(Stephanie Peacock.)
This amendment expands the list of those whom the IFR must engage constructively.
Ian Byrne
On the point about supporters not dictating ticket prices, in 2013 the supporters came together and fought for a price cap on away ticket prices, because clubs, left to their own devices, were pricing them out of the game. I think the Arsenal-Liverpool game in 2013 was the tipping point—I think that was £68. It was felt that that was unsustainable, and that was happening right across the football pyramid. Supporters came together, campaigned and got the Premier League to sit down with them in a room and acknowledge that it was getting too expensive, and a £30 price cap was then designated. The atmosphere of games was a unique selling point for the Premier League. It was willing to price supporters out, and it was supporters who brought it to its senses.
Stephanie Peacock
That is a good example that highlights that well-run clubs will want to hear from fans on the issues that matter most to them. Of course, the ability of fans to attend games is incredibly relevant to the financial sustainability of every club. Match-day revenue is a crucial pillar of club finances, and of course getting pricing right will require much more than fan input alone, but I believe that at the very least fans deserve to have their voices heard on the matter, and they have something to offer clubs in return.
Stuart Andrew
I absolutely recognise that issues such as ticket pricing are really important to fans. Indeed, match days, as others have said, would not be what they are without the fans. The Government believe it is important that clubs consult fans on key off-pitch issues that impact supporters, including operational and match-day issues. These provisions, and the wider provisions for fan engagement, will ensure that fans have a voice on the issues that are most important to them, but it would not be appropriate—the hon. Member for Barnsley East was alluding to this—for the regulator to be a fix for all of football’s woes. Rather, it will be set up with a tightly focused and defined scope and purpose, to tackle the specific market failures that carry a risk of significant harm to fans and communities.
Ian Byrne
I do not think the supporters expect the regulator to fix ticket prices. What they are expecting the regulator to do is to ensure that the clubs go into dialogue with the supporters, so that they can understand the difficulties that supporters may have in relation to affordability. Also, as we heard during the evidence sessions today, many decisions are being made by clubs instantaneously, or within hours, and with zero consultation, which is a cause of massive discomfort. We heard about Arsenal and Tottenham football clubs getting rid of concessions. My own football club, Liverpool, made a decision to increase ticket prices with zero consultation. That is what needs to stop. These are important things. I link this to the heritage element: if we price football supporters out of the game, we lose the heritage of football.
Stuart Andrew
I absolutely understand the hon. Gentleman’s point. It is why, on page 93, the Bill specifically says that the “relevant matters” include
“matters relating to…operational and match-day issues”.
I encourage the clubs to speak to the fans about these very issues.
The Bill is very focused on sustainability in order to protect the long-term future of clubs, in the interests of the fans and the local communities. That means that the regulator will not intervene directly on issues outside this scope—including match scheduling and ticket prices. Issues of that kind are for football to address. It is well within the gift of the leagues and the authorities to intervene if clubs are not getting it right.
The purpose of the state of the game report is to allow the regulator to better understand the finances and economics of the industry and its individual clubs. As industry experts said on Tuesday, the state of the game report will allow the regulator to look forward as well as in the rear-view mirror. In turn, that allows it to deliver on ensuring the sustainability of clubs. To specifically require the regulator to consider ticket pricing and match scheduling as part of the report would detract from that purpose.
Football Governance Bill (First sitting)
Ian Byrne ExcerptsTuesday 14th May 2024
(5 months, 3 weeks ago)
Public Bill CommitteesRead Full debate Football Governance Bill 2023-24 View all Football Governance Bill 2023-24 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 May 2024 - (14 May 2024)
Dame Tracey Crouch (Chatham and Aylesford) (Con)
I want to declare that I was chair of the fan-led review that led to this Bill.
Ian Byrne (Liverpool, West Derby) (Lab)
I sit on the management committee of the Spirit of Shankly football union for Liverpool football club.
Damian Collins (Folkestone and Hythe) (Con)
I am a trustee of The Sports Trust in Folkestone, which has previously received funding from the Football Foundation.
Stuart Andrew
Q
Kieran Maguire: As far as the National League is concerned, I think the average losses were £970,000 a year. There are no cost-control measures as far as the national league is concerned, so that is why we have seen the recent arrival of owners who have transformed individual clubs, because they have been allowed to achieve effectively unlimited levels of loss. That potentially has implications when those clubs are promoted to League Two, although again they have tended to do very well.
The National League has been intriguing, and certainly issues arose with governance during covid, such as the grants that were given to support those clubs, which proved to be quite contentious. Like both the Premier League and the EFL, there appears to be some form of civil war taking place within—or between—clubs. We talk about the Premier League, the National League and the EFL, but I do not think there is a collective viewpoint within those institutions themselves from an individual club basis.
Dr Philippou: From a financial profile point of view, the National League shows very similar financial issues to League One and League Two. It is not as if National League clubs are free from problems, and the reason why they are in here is because they are pro clubs—it is professional football.
Ian Byrne
Q
Kieran Maguire: The Premier League has been successful because it has gone out to an audience and it has sold its services. There is no reason why the Premier League will not be competitive on a European basis in recruiting players, in respect of these rules. On attracting investment into the Premier League, part of the reason for its success is that we have moved effectively from a duopoly, which is where we were in 2005, to a more competitive product. In my view, if I was an investor, I would like to be able to invest in an industry where the opportunity to break even becomes greater, and I think that is more likely with the regulator than not.
Dr Philippou: We are not seeing much investment from certain areas that you would expect in most businesses. Part of that is the loss-making and the difficulty in conducting due diligence around football clubs. What we see in the Bill should fix that, and therefore we would expect to see more of a certain type of investment. Yes, perhaps there will be less investment from those who would rather not be in a more regulated environment, but that is not the overall picture.
Ian Byrne
Q
Kieran Maguire: If we look at the Premier League, when it was formed in 1992-93, 43% of revenues came from matchday tickets. If we move to 2022-23, we are now down to £1 in every £7 being generated from those. That can be slightly higher for the bigger clubs, and we are not denying that. The success of the broadcasting deals has very much meant that the broadcasting revenues are now dominant, and they now constitute more than half of the total revenues. As far as prices are concerned, it is a sensitive subject. Clubs will say, “We’re still losing money, so therefore we need to target revenue streams. We’re not getting that from broadcast, because the broadcasting rights—”
Ian Byrne
Q
Kieran Maguire: They are. During covid, we saw football matches with no fans and it was a sterile, glorified training exercise—there was no emotion. Having full stadiums is critical.
Ian Byrne
Q
Kieran Maguire: As a football fan, I would say yes. Looking at it purely from a business perspective, if you are selling 100% of your tickets at the current price, economics would say that they should be allowed to charge what they want.
Dame Tracey Crouch
Q
Dr Philippou: That is a very good question. I mean, how long is a piece of string? It depends on what you are looking at. We know what the issues are, so it depends on how targeted what you are asking us to look at is. The issues are pretty well known, so it is about how deep a dive you require—you can tell I worked in forensic accounting, with my “It depends!” But it would take months. It is not something that can be done quickly. It would require proper review to get it right, because if you are basing something on the information in a report, one needs sufficient time and access to be able to provide that information.
Kieran Maguire: The information we have put out in the reports to date has been on the basis of the financial reports published at Companies House. Therefore, we are reliant on clubs producing them on a timely basis and with a level of detail that we can make meaningful conclusions about. I used to do investigations into companies, and it is always nice to have more inside information or management information about budgets and so on, because that allows you to look forwards as well as in the rear view mirror. I think it would be a time-consuming exercise, but it is not an insurmountable one.
Brendan Clarke-Smith
Q
Mark Ives: I think that, from a National League perspective, we are in a fortunate position. We run a licensing programme, and part of our ethos anyway, without the regulator, is to properly prepare our clubs to go into the EFL, whether they come from step two, National League North or South, into step one, the national division. If you look at the history of our clubs that have been promoted into the EFL, the vast majority of them have succeeded and continue to do so—this year you have only got to look at Wrexham’s story and everything else. That touches on your issue about foreign investments. Our challenge is to make sure that clubs that come up from step two are suitably prepared, through our licensing programme, to step into being regulated.
Equally, when somebody who is being regulated falls out of step one, sometimes because they have challenges, the issue for us is to ensure that they continue to get the support that the regulator may have given. As they go into step two, it is incumbent on us—it is still our competition—to ensure that they get the same checks and balances, to try to turn around whatever issues are there and give them a chance to grow again.
Ian Byrne
Q
My question is about financial sustainability, the profit and sustainability rules, and the lack of authority within the scope of the Independent Football Regulator. All supporters want a predictable, transparent, principled, proportionate, fair and timely system. Richard, from a Premier League perspective, I think that if you speak to the supporters of the clubs—Everton or Forest—they do not feel as though they have had that. There has been lots of confusion about the whole process and how punishment has been meted out. Then there is what happened with Manchester City—115 charges, but nothing as yet. Why would we not want to protect the integrity of the process—and the Premier League and, when it comes to that, the EFL? Why would we not want to give to the Independent Football Regulator the ability to mete out punishment in a fair and transparent manner?
The Chair
Order. While cases are pending, I ask Members to be careful about naming individual clubs in matters that may be sub judice.
Ian Byrne
Noted, Sir Mark.
Richard Masters: Thankfully, the cases you referenced have concluded now, before the end of the season, which at least gives some certainty. It has been a difficult period. This season has been the first time that the PSR rules have been activated—if we may call it that—in the Premier League. It has been a difficult experience, although Rick has more experience of it, and it is a difficult situation for fans of those clubs to live with, but if we have financial rules, we have to enforce them. I think that most people accept that, if they take a step back.
The question is: does the system work? Is the system transparent? No. The question you are asking is: should the regulator not look after all that? I think that the decision that the Government have taken, which is the correct one, is that this is for football bodies to look after. They are essentially getting involved in the running of the sport and the sporting competitive issues that exist within the game. I would not support, Ian, the regulator looking after those rules. The regulator has a clear remit to look at the sustainability of football clubs.
Ian Byrne
You think it is down to the leagues.
Rick Parry: It is the boundary of where football authorities deal with the rules that govern the competition. As Richard said earlier, part of the role of the PSR rules is competitive balance, rather than the sustainability of individual clubs. There is an element of crossover, but I do think that PSR squad cost control rules, or whatever replaces PSR, should fall firmly with the leagues to operate. We agree on that.
Mark Ives: May I add to that? I think it is important. We have our own financial regulation. If there are gaps in the financial regulation, then challenge the league —tell us where you think those gaps are for us to change. I would argue, as I said earlier, that the history of the clubs at our level is that our financial regulation works. As Richard said, it is it is only as good as ensuring that those regulations are applied, and we have applied them.
Two things about applying the regulations are that it is not just about sanctions, but about helping the clubs to make sure that they do not fall off the edge. In a few high-profile cases in the National League, we have actually been able to save some of those clubs and ensure that they do not go to the wall—I will not name them, but you know who they are. We have been able to assist those clubs to make sure that they survive. To come back to what the Minister said earlier about passing some of the issues over to the leagues, this is one example where we should have total autonomy to do our thing, and for the regulator to step in if we are not doing it.
Stuart Andrew
Q
I remember when I was first appointed, the first meeting I had was with you and with other fans. It was clear from that meeting that some clubs do engagement extremely well and, as you have just alluded to, there are others that do it differently. Given that fan engagement is part of the licensing regime, do you think that that is going to be sufficient to bring about a significant impact on the quality of fan engagement that we are currently seeing across the board? That is, are we levelling up, to coin a phrase?
Kevin Miles: I very much hope so, and I am optimistic in that regard. It is the first time that we will have had a requirement from clubs to engage with the fans and, to use the Prime Minister’s words, to put the fans’ voice “front and centre” of all those discussions. I do think, though, that there are a lot of details still to be worked out about how that actually looks.
There are some clubs, as you say, that are very good, but one of the illustrations of the limitations of self-regulation has been that when the leagues have been trying to put together their own requirements on fan engagement, because it has to be voted on by their members and agreed by their rulebook, the lowest common denominator tends to be put into the rulebook. We know that there are clubs that will resist the idea. There are owners who think they have nothing to benefit from in listening to the fanbase—their customer base, if you like. We know from experience that there are some who will do everything that they can to get around this. We will need to have an underpinning of that in the regulatory system, and some monitoring of it through the club licensing system. We recognise that this is challenging, because it cannot simply be a look at what structures are put in place. The regulator will have to do more than just monitor that there is a fan advisory board notionally in place. There will have to be some evaluation and examination of the content and spirit of the fan engagement. We are not expecting a fan veto on club decisions, but we are expecting that the fan voice is not just heard but listened to and given due consideration.
Evaluating that is a more complex process. Somebody referred earlier—I think in the first witness panel—to the possibility of Ofsted-type investigations. Maybe in some cases it will require the regulator to be able to consult the fan groups to see how they think it has been done, and to make its own evaluation about whether the spirit of what is intended here is actually being carried forward. That will need to be underpinned by requirements in the licensing condition.
Ian Byrne
Q
Kevin Miles: Absolutely. If you look at that clause, you see that it is about the principles of the regulator. It currently reads that the regulator should,
“so far as reasonably practicable, co-operate, and proactively and constructively engage, with
(i) clubs,
(ii) owners, senior managers and other officers of clubs, and
(iii) competition organisers”.
We think that it is in the spirit of the rest of the Bill if a further provision is included that says “supporters and supporter organisations”. If the Bill really is about giving fans a voice at the heart of the game, the regulator should have that as part of those regulatory principles.
I cannot help thinking that this is an oversight rather than a conspiracy. Actually, the spirit of all the engagement we have had with the Department and with Ministers has been precisely that the supporters’ input into the regulation of the game would be an important component. But I think there’s a requirement for it to go on the face of the Bill in that clause.
Ian Byrne
Q
Kevin Miles: Again, what I do not want to do is put a whole shopping list of items into the Bill, because I think that is problematic. We would support some clear direction in the guidance notes about what should be required from clubs. You have identified another important issue. It is a complicated issue, and it is not likely to be solved on a club-by-club basis. However, the idea that we could face a situation where a club declines to discuss with its fan advisory board as part of its fan engagement process an issue as important and impactful as supporters being able to turn up to the games and support their team—which is so important to so many people—seems to me to be absurd. It is common sense that those issues should be part of the discussion, and it is sad to think that there are clubs that do not approach it with common sense and want to discuss it. I think it should be required.
Damian Collins
Q
Kevin Miles: Yes. One of the ideas that we are quite keen on is that, as part of the corporate governance code, there could be a requirement of clubs to have independent directors. In many other aspects of corporate governance codes, there is a particular responsibility on independent directors. Independent non-executive directors do have consideration for the views of other stakeholders in the work of a company. The idea that an INED in a football club could be required by a governance code to have particular responsibility for making sure that fans’ views are taken into consideration would be a very useful addition.
Football Governance Bill (Second sitting)
Ian Byrne ExcerptsTuesday 14th May 2024
(5 months, 3 weeks ago)
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Ian Byrne (Liverpool, West Derby) (Lab)
Q
Darryl Eales: To me, it just does not start off in the right place from a contextual perspective. It tends to be completely focused on money, rather than the English game in its broadest context. You have only to go around your own local community to see the number of kids—girls and boys—now playing on local parks that have been funded by parents or local businesses. There does not seem to be anything in the Bill that reflects the community aspect.
Ian Byrne
It is, yes.
Darryl Eales: It is quite complicated. If you asked me about sanctions—I am probably going off-piste here—I would say that financial sanctions and points deductions do not work. The only sanction that will stop clubs flouting rules is relegation—three or four leagues. Even this season—and I know this is nothing to do with this Committee—the points deductions in the Premier League meant absolutely nothing. The clubs flouted the rules, but there was not a big enough points deduction to affect their league status. I am a Birmingham City fan by background, and we had a 12-point deduction a few years ago. I thought it was a joke, because we did not get any penalty from it other than the 12-point deduction.
Ian Byrne
Q
Steve Thompson: We work with supporters and have different supporters’ groups. We also work in our community; all our clubs have a community trust, and all the Football League and Premier League clubs will have a community trust. Everybody does lots of work in the community. As parliamentarians, many of you will know that at the 2010 election there was a big British National party problem in Barking and Dagenham, and as a football club Dagenham & Redbridge stood up and made a big thing about that. A couple of months before the election, there was a big game, and McDonald’s was selling burgers for 99p, so I said, “We’ll let everybody in for 99p, with kids in for 25p.” We had the managers of small local football teams buying all the players a ticket and it costing less than a fiver.
That put out a message, and it was an important message. At the time, I was reported as saying that we are in a white working class area, as it was in 2010, that the majority of our supporters are white males, and that if there are 10 BNP councillors out of 50 in Barking and Dagenham, some of the supporters must have voted for them. We had a really multiracial team at the time: we had a Barbadian international, a South African player and a Muslim player. We had several. I turned around and said, “You’ve got to show them that you can’t be cheering on a multicultural team on a Saturday and then expect them to all go home on a Monday.” That took traction. We stood up. Darren Rodwell, who might be part of this establishment within the year, will turn around and say that “he”—unless I am in the room, in which case he will say “we”—kicked the BNP out of Barking and Dagenham. That is the power of your local football club. We can stand up and do things like that, and it is important that we can. The supporters will go with you.
Stuart Andrew (Pudsey) (Con)
Q
If the Bill goes through, there will be a statutory regulator. What discussions have clubs had with the National League about whether it will row back and allow the statutory regulator to do the work so that there is no duplication?
Secondly, the independent experts we had in this morning said that clubs are looking in the rear-view mirror at the moment and that the advocacy-first approach means that there will be a real-time approach to analysis of clubs, which would be helpful for clubs. Do you agree?
Steve Thompson: I was quite hoping that the regulator would work with the National League, the EFL and the Premier League, allow them to continue with their reporting, and step in only if there was a problem with particular clubs. It would be a much more light touch. We have discussed that before. I understand that that will be down to the regulator, but I was hoping it would be more like that.
Darryl Eales: I think the forward-looking approach is to be welcomed. I am an accountant by background, and I am very happy to share my ideas on how that approach can put more pressure on owners to be financially responsible. The only reason football clubs get into trouble is their playing budget, so there needs to be some linkage between your playing budget and the financial resources of the owner.
Stuart Andrew
Q
Tony Bloom: When I was in the Championship about 10 years ago, there were big discussions, big debates and big negotiations with the Premier League. For sure, as you can imagine, the English Football League wants to have more revenues and a bigger percentage of the Premier League revenues. A deal was done—it was not easy, but it got done.
Of course the lower league clubs always want more money. As Sharon was saying, if she gets promoted, she is going to have a much bigger bill. If there was more money going into Bolton, no doubt for that season and the season after, things would be a bit easier, but have no doubt that when more money goes into the English Football League—the vast majority of it will go to the Championship—it will go on player salaries. That is what happens, so there will still be issues. Unless you have sustainability levels where there are caps on spending, and clubs have their money there, there will always be such issues.
On your first question, regardless of the Bill, the English Football League and the Premier League are becoming much more forward thinking in the way they have the football regulations for finance. Regardless of what is happening with the Bill, that is what the Premier League and the English Football League are looking to do, which I think is a positive thing.
Steve Parish: The implication is that nothing is being done. Profit and sustainability rules were the first step in trying to control spending. People have to realise that we are subject to competition law as well, and we are being challenged on some of these things within the league. Some of the things that the majority of clubs would like to do—salary caps in some instances, which some people would like to do, or the cost caps that we are working on at the moment, which are broadly salary caps—are challengeable under competition law, so we have to get advice and be very careful that we are proportionate in the things that we undertake.
In terms of why a deal has not been done, I think it is quite simple: it is the backstop. It was made quite clear in the last panel that view of people at the EFL is that whatever deal is given to them now, they will pocket it and then go and see the regulator to get a much better one, because they do not think it will be good enough. I genuinely think that is the reason that a deal has not been done so far.
Ian Byrne
Q
The Chair
I ask the witnesses to send their responses in writing, as 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.
Dame Tracey Crouch
Q
Niall Couper: Yes is the answer. I think it is something that we need to look at, considering that—in my mind—a lot of it depends on what happens with this Bill. It is important, because it is about redistribution and giving support to a lot of the clubs that are trying to do the right thing in the right way. Again, to go back, it needs to be caveated to make sure that it is ringfenced where possible to support the grassroots pitches.
I talk to clubs like Tonbridge Angels, Maidstone United, Sutton United and so on. Those clubs will talk about wanting to have the 3G pitches and their training pitches in there so that they can be put to community use—those 60 hours a week. That is really what they want, because that is where they see the big growth. That is where your club becomes a community hub. That is where it makes the difference.
For me, the money that you talk about from the transfer levy, if you give it to those sorts of pitches and so on, is where you can make a real fundamental difference. Where it will go, I do not know, Tracey. It is one perhaps that we can talk about once we are post the Bill. It was something that I was really excited about when you proposed it—it really appealed to me. It is something that came a bit from left field, but it is something that we should look at in the months and years ahead.
Ian Byrne
Q
Robert Sullivan: It is a big challenge, Ian. When we fund a site, we will put in terms and conditions on such sites that should provide a check and a challenge on the affordability. So, if that is happening on a site that we have funded, we should pick that conversation up separately, because when we provide a grant, it comes with terms and conditions: we need to see, basically, an income and expenditure plan that has sensible and appropriate pricing policies with it.
If I may go back to pick up on Tracey’s offer—
Dame Tracey Crouch
For the money—
Robert Sullivan: For the money. I am agnostic about where the money comes from, but we have a massive challenge, and we need as much as possible going into grassroots facilities.
To make one supplementary point about what Niall said, he alighted on a really interesting example. Sutton had a fantastic 3G pitch that was doing brilliant community things, but when Sutton went into the EFL, it had to pull that pitch up. That is an interesting question, although it is inadvertent. I understand all the competition reasons why that might be the case in the EFL, but Sutton went from having a very sustainable community asset to one that was not when it moved up into the EFL pyramid. That is an issue that I would potentially raise as well.
Oral Answers to Questions
Ian Byrne Excerpts(1 year, 8 months ago)
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Steve Barclay
My hon. Friend is right to highlight the fact that a number of services that GPs currently offer could be performed by pharmacists, and we are looking at that in the context of the primary care recovery plan. This is also about looking at how we can relieve some of the workload pressure within primary care, and that is why we have recruited 25,000 additional staff to support GPs. It is also why we have over 2,000 more doctors in primary care.
Ian Byrne (Liverpool, West Derby) (Lab)
Neil O’Brien
That is exactly why we are spending £55 billion this winter to help households and businesses with their energy bills. That is one of the largest support packages in Europe.