Football Governance Bill

James Wild Excerpts

2nd reading
Tuesday 23rd April 2024 Commons Chamber

[Lucy Frazer]

We understand that parachute payments have a role to play. There is provision in the Bill to deal with parachute payments, but that provision relates to the consideration on a club-by-club basis in the licensing regime itself.

[James Wild (North West Norfolk) (Con)]

When clubs like Norwich City are promoted to the Premier League, those parachute payments give them the confidence to invest, which drives competition in football. Are they not a good thing that we should be supporting?

[Lucy Frazer]

We believe that parachute payments have a role to play, although I know people have concerns about distortion. Under the Bill, if there is any issue relating to the finances of a particular club, particularly by reference to the parachute payments it might have received, the regulator has an ability to look at that within the licensing regime as a whole.

--- Later in debate ---

[James Wild (North West Norfolk) (Con)]

I declare an interest as a Norwich City supporter and a King’s Lynn Town FC fan. As has been mentioned, it is fitting that on St George’s Day we are talking about our national game, which is loved by millions of people in our country. As we have heard, the premier league is also the most watched league in the world, and last year the EFL had the highest attendances for more than 70 years, with over 21 million supporters passing through turnstiles, so football is a great success story. It is in that context that we consider the Bill and the proposals to create a new regulatory structure for the game. As the explanatory notes set out, football was

“previously not regulated by statutory provisions”

and the measures are “unique” and “unprecedented”.

My first point is the one that I made a year ago when the Government published their response: we need to ensure that this is a truly proportionate regime and be mindful of the success of the game. That means having a light-touch regulator, which Ministers have committed themselves to. The Government response set out that the regulator would operate an advocacy-first approach to regulation, meaning that it would use constructive engagement rather than formal intervention wherever possible. However, that could be better reflected on the face of the Bill in the objectives and duties of the new regulator, otherwise the risk of mission creep is more likely to materialise. We have heard a number of contributions already this afternoon in which the regulator is being actively encouraged to expand its scope even before it has been set up.

I support the objectives of financial soundness and resilience, as well as safeguarding the heritage of football—the ground, the crest, the shirt colours and the name of a club are all part of its DNA. Incidentally, Norwich City can boast the oldest song in world football: “On the Ball, City.” I will not sing it. Football is competitive—it is about promotion, play-offs and passion—so the regulator must also understand the essence of the game and not reduce it to a dry, technical analysis of profits and losses, and impose a banking-style straitjacket on clubs.

As a member of the Regulatory Reform Group—I see the chairman, my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland), entering the Chamber as I speak— I welcome the principles set out in clause 8. However, they can certainly be strengthened to deliver that light-touch regime that is so important. The scale of the task that we will be asking the regulator to undertake will be considerable. It will have to review detailed business plans of 116 clubs and reach agreement on them.

In addition to the mandatory licence conditions, the regulator can impose discretionary requirements on any or all of those clubs. Such requirements would have to be bespoke, and they would then have to be monitored. Clearly, that comes at a cost, which has not really been discussed in the debate so far. The impact assessment estimates that the new regime could cost £132 million over 10 years. Admittedly, there is a lot of uncertainty, because we do not know precisely what conditions the regulator will put in place. That is money spent by clubs on football that in future will be spent on the costs of regulation. The national league is not the only one that has warned about the risk of the burden on smaller clubs. On licensing, the regulator must avoid duplicating existing requirements and ensure that it adopts a proportionate approach to the levy.

Clearly, a key driver of the legislation is money and how revenues are distributed through the pyramid that is so essential to the health of the game. This has been agreed on a voluntary basis to date, and it would be better if football came forward with its own solution. However, if that does not happen, there is part 6 of the Bill, which sets out the backstop mechanism. Either the Premier League or the EFL can trigger it, and if mediation does not work, a committee of experts drawn from the regulator’s panel will consider final proposals from both.

I have to confess to finding the decision process curious at that point, as rather than looking at each proposal and then adjudicating and determining what is the best overall approach, which could be between the two proposals put forward, the regulator can only opt for one of them. In any negotiation, if both sides feel a bit disappointed with the deal reached, it is likely to be fair. In this scenario, however, only one side will win, so I ask the Minister: why create an expert panel and a regulator if they are not able to apply their own judgment? Given the importance of that provision, I hope the Minister will outline the Government’s thinking. What consideration has been given to how that could be gamed, and will he look again at those provisions as the Bill goes forward?

On revenues, I will briefly focus on parachute payments, which are important elements in enabling clubs promoted to invest and, yes, to take calculated risks so that they can compete. If parachute payments were removed, clubs like Norwich City that are run sustainably and can get promoted—I am optimistic for the play-offs this year—would not have the confidence to invest, knowing that if they go down this path and get relegated, there would be no smoothing of their income. I therefore support the approach in clause 55.

Finally, I return to where we began, with the fan-led review. During covid, clubs were not able to let fans in, and King’s Lynn Town and others had to take sports survival loans—£13 million of them were issued—and their repayment threatens the viability of some clubs. As we look at financial resilience, I encourage the Minister to consider allowing clubs to convert, say, up to 49% of the loans they have taken out and give them to supporters’ trusts as shares. That would create a legacy of community ownership, which would be very worthwhile and would reduce the burden on clubs.

To conclude, football is an important part of our national character, and as the Bill proceeds it is essential that the regulator works with the game, the clubs and the league to ensure that football continues to flourish.