Football Clubs in Administration

John Penrose Excerpts

Wednesday 6th July 2011 Commons Chamber

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose)]

I echo Members’ congratulations to the hon. Member for Plymouth, Moor View (Alison Seabeck) on securing this very important debate. She has made very clear her passion for the local football team, as indeed has my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile). He also showed that he is heavily involved, and whether or not he is an avid football fan he is clearly a powerful advocate for the club.

As both local MPs said, everyone believes that a deal on Plymouth Argyle’s future has been completed today. The BBC Sport website states, however, that the agreement is conditional on the Football League’s ratification. The hon. Lady said that she has some concerns about all the criteria that the Football League may consider during ratification, so the process is not technically or entirely complete, and it is theoretically possible that the league will take a different view, but we will have to wait and see. It is very much up to the football authorities to make that decision one way or another.

I must apologise, because Members will have doubtless noticed that I am not the Minister for Sport and the Olympics, who is in South Africa doing something, I am sure, terribly glamorous and wonderful, but he has asked me to stand in for him, and I will endeavour to respond appropriately. I know that he will be following this debate very closely and will take a close interest in the reports on it.

Both Plymouth Members mentioned the fact that the Culture, Media and Sport Select Committee is completing an inquiry into the governance and regulation of professional football clubs. Its inquiry, which the Government have welcomed and given evidence to, is considering a range of issues that affect the way our national game is run, and the focus of the inquiry is on strengthening the financial health of the game.

We all look forward to receiving the Committee’s report—the Government certainly do—and its recommendations in due course, after which the Minister for Sport and the Olympics will set out the Government’s official response. He has mentioned it several times, and he is very keen to do so just as soon as the report is in.

May I echo the praise that both local MPs have showered on the fans, players and staff of Plymouth Argyle for their continuing efforts in keeping the club going? It is a perfect example of what the Prime Minister calls the power of the big society, whereby local communities come together to tackle common causes and unite behind a theme. Plymouth Argyle can be added to a long list of football clubs—Leeds United, Portsmouth and Crystal Palace to name just a few—that in recent years have fallen into serious financial trouble.

There is a worrying statistic that since 1992 more than 40 of the Football League’s 72 clubs have been insolvent at one stage or another. I should confess at this point that, although I of course support my local club in Weston-super-Mare, historically I have supported Ipswich Town as a “tractor boys” fan, and it had a little financial difficulty a few years ago, so I guess that it counts as one of the clubs in that statistic.

It is of course important to differentiate, as the hon. Member for Plymouth, Moor View did, the elite clubs in the premier league that command the most money and can therefore pay their players the greater salaries from clubs such as Plymouth in the lower divisions that operate on a far tighter shoestring. The latter rely on local businesses, sponsors, hospitality and so forth for their revenues to a much greater extent than premier league clubs.

If football today is as popular with supporters, advertisers and broadcasters as it seems, there are legitimate questions about why so many of our clubs face the prospect of having to sell their grounds, and why they cannot afford to pay players and staff or repay debts owed to local businesses. Those are the questions that the football authorities, which are entrusted to administer the game and our clubs, must continue to address seriously, as both MPs from Plymouth have pointed out.

When the Football League chairman, Greg Clarke, gave evidence to the Select Committee, he admitted as much in saying that debt is the

“single biggest problem for football”.

He believes that if football clubs ensure that debt is genuinely sustainable, issues such as transparency of ownership, which has been mentioned, supporter buy-in and co-operative ownership will fall more easily into place.

[Damian Collins]

I was at the Select Committee when Mr Clarke gave evidence. He also stated that he could not find a moral case for keeping the football creditors rule. Nevertheless, it remains the position of the Football League that it should stay. Does the Minister, like me, find that regrettable?

[John Penrose]

If the football authorities find it unacceptable and regrettable, the Government probably do as well. This is something for football governance to take on first. The Government will seek not to intervene if football puts its own house in order. Mr Clarke has made his position very clear, and that should be a very powerful voice.

The football authorities deserve credit for the rules they have introduced in recent years in the areas of financial regulation and club ownership. There are now an early warning system with HMRC in relation to tax returns, transfer embargoes that help curb club spending, new salary control measures in the lowest two leagues, a new means and abilities test that requires proof of funds from prospective owners, and a strengthened owners and directors test. It is welcome that in May, all 72 Football League clubs voted in principle to adopt UEFA’s new financial fair play rules from 2013, which will require clubs to spend only what they bring in. The Government obviously support those moves. Of course, situations such as that in Plymouth demonstrate how much more may need to be done. They also demonstrate that prevention is better than cure. It is far better to avoid going into a company voluntary agreement or insolvency if possible.

We believe it is for the football authorities to continue to challenge themselves to see whether they should tighten their rules further to ensure that clubs do not fall into administration in the first place, in precisely the way I have just mentioned. Equally, the clubs have to take greater responsibility. Supporters should not have to bail out the club because of bad financial management by owners and directors, as both local MPs said.

The stark reality is that for any company or organisation, not least a football club, emerging successfully from administration is likely to be painful and difficult. The focus must be on doing everything possible to avoid clubs getting into such problems in the first place. The Government’s hope and expectation is that as part of the wider process of the Select Committee inquiry’s recommendations, the football authorities will take steps to deal with such challenges themselves. If they do not, all avenues of course remain open to the Government, and we are prepared to look closely at how best to make those changes.

[Alison Seabeck]

Can the Minister give a reassurance that the Government will not just sit on this matter? I have heard him say that the Government will look at it. This is very important and we do not want another club to go down this route. I urge the Minister for Sport and the Olympics to have further meetings with those involved.

[John Penrose]

I can reassure the hon. Lady that my colleague the Minister for Sport and the Olympics is particularly exercised about the matter. He is on record as saying, in the Chamber and elsewhere, that he feels that football governance in general is in need of a serious overhaul. I know that he is prepared to be quite activist if he needs to be. Clearly it would be far better for all concerned if football could get its act together and put its own house in order first. That would be better for fans, and for everybody involved in both playing for and running football clubs, than to have a politician intervene. He remains willing to intervene, and will do so if necessary, but it would be a last resort.

I repeat my congratulations to both local MPs on the interest and clear care and passion that they bring to their job on this issue. Everybody will echo their concerns and their hope that the announcement today marks the beginning of a successful new chapter in Plymouth Argyle’s history.

Question put and agreed to.