Football Governance Bill [HL]

Lord Bassam of Brighton Excerpts

2nd reading
Wednesday 13th November 2024 Lords Chamber

[Lord Bassam of Brighton (Lab)]

My Lords, it is an honour and a privilege to speak in the debate on the Football Governance Bill, which is fundamentally a good Bill and one that the Government should be proud of. We should give thanks in that pride to the previous Government for doing much of the hard work in preparing it. I also personally thank the Minister for her careful introduction to the Bill and the Premier League, the EFL, Fair Game, Women in Football, the LSE, Civitas, the LCP, the FSA and the PFA for their informative briefings. I apologise to anybody I have missed out.

Many of us have waited a long time for this Bill and then, of course, we get two Bills in a year. Both major parties have edged towards increasing the level of regulation of our beautiful game. Some say that we do not require it, others that existing regulation does not go far enough. But, for those of us who have been watching football for a long time, the current system is failing both clubs and fans and is no longer financially sustainable.

The desire for a degree of regulation to make the game more sustainable has a long history. Back in the 1990s, Labour had a mini-manifesto for the game. Once elected, our efforts were of necessity focused on countering disorder and hooliganism. Tackling racism and violence were a priority for me in my role as the football hooligan Minister back in the late 1990s, and our actions were key to ensuring that we were able, as a nation, to continue participating in international tournaments.

In 2019, both the Tory Party and Labour made a commitment to football regulation in their manifestos. As we know, to their credit, the new Tory Government invited Tracey Crouch to lead the fan-led review, and this in turn led to a White Paper and, earlier this year, the first iteration of the governance Bill. Now it falls to Labour, as ever, to complete the job. The post-election gap has enabled the improvement of the Bill in several respects, including the regulation of the financial distribution payments system across the football pyramid and the issue of parachute payments. Changes relating to fan engagement and the equalities, diversity and inclusion provisions are also welcome, as is the shortening of the time for the production of the first “state of the game” report, which will help put football on a more sustainable financial footing.

While we produce some of the world’s best clubs and fantastic football, the Premier League is becoming a closed shop, dominated by the money generated by TV rights. The top of the league is the preserve of a few clubs, primarily the richest. The rest of the Premier League is made up of clubs trying to get into two of the three European competitions or struggling to retain their place in the Premier League. In 2022-23, 25 clubs, 20 Premier League clubs and five EFL clubs, received 92% of the distributable revenues of the English game, £3 billion, while the other 67 clubs shared just 8%, £245 million. The football regulator’s task will be to ensure that there is a more equitable distribution of football revenues across the pyramid.

Football must remain a sport about risk, reward and fair competition. The current relegation payments scheme prevents this. In the last seven seasons, two of the three promoted teams from the Championship have been those relegated the season before, bolstered as they were by their financial protection following relegation. Back in 2010-11, parachute payments were just £30 million. By 2020-21, they had grown to £233 million, an eightfold increase at a time when wages had merely doubled. In the Championship, the non-parachute payment clubs are forced to overspend on players to compete effectively for promotion, creating a risk of bankruptcy, relegation and often a long, painful recovery period. We need the regulator to come up with a system that softens the financial blow of relegation, but in a way that does not distort competition. Change will need to be gradual and carefully managed, so that club viability and competitiveness are preserved, and the strength of the leagues protected.

I welcome greater fan engagement and the protection of the heritage and culture of clubs. The devil will be in the detail on how best to achieve this. The prevention of breakaway competitions will, of course, benefit players and clubs at a time when I think we are reaching the limit of what extra competitions can bring to the game.

Finally, where would I like to see improvements and changes? The first “state of the game” report will set the tone for the future development of the regulator. The last Bill gave the regulator three years to complete this work. That was too long, so I am pleased that it has been reduced to 18 months, but see no reason at all why it should not be six months or perhaps, at most, a year. Shadow staff, already in place, will have access to data and football market intel sufficient to hit the ground running. There are urgent issues to be resolved and, if they want to demonstrate change by the time of the next election, the Government would be wise to listen to those supporting faster progress. A shorter period for the initial report would justify a longer gap before the second.

In relation to the regulator’s scope, I am strongly sympathetic to bringing the clubs in the top two women’s leagues into the regulatory framework. The rapid growth in women’s football brings with it the same issues and risks, and with this Bill we have an opportunity to address these before they become a problem. It might also help tackle discriminatory behaviour and the macho culture that can impact on the game. It does seem odd, having strengthened the EDI commitment, to then exclude the women’s game from the regulatory framework. Access to even a small element of the solidarity payments produced currently would be transformational for the game.

Similarly, we should look to include the regulation of all clubs in National League North and National League South. It seems odd to regulate one-third of the National League clubs and leave the sixth tier unregulated. Some of these clubs are significant community assets and businesses with turnover figures of £4 million, £5 million and £6 million a year. More fans are turning to watch grass-roots football, and here again is an opportunity to ensure consistency in our approach at all levels.

I have a small but significant point for the Minister. Can we ensure that, among the statutory consultees, we include the players’ union, the PFA? Try having a football match without its staff.

The Minister will no doubt have read the press coverage of the Fair Game report pressing for changes and the strengthening of the Bill. I am sympathetic to many of these, some of which I have referred to. I hope she will continue her already-begun engagement with Peers so that we can improve the Bill as it goes through its Lords stages.

The Government are to be congratulated on the progress so far. This Bill is a bit like a Brighton and Hove Albion substitution at half-time: a potential game-changer. It works. When I reflect on how close my club was to going out of business for the want of effective regulation in the mid-90s, I do not want to see other clubs and their fans put through that experience. It is my belief that this legislation, with its owners and directors test, a licensing and financial control regime, and a commitment to a system of fairer competition and financial fair play, will go a long way to putting an end to the era of irresponsible club ownership.

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[Lord Markham (Con)]

Like other noble Lords, I begin with a declaration of interest—maybe a bit of a confession—in that I have been a Chelsea season ticket holder for the last 20 years. I also still feel a bit stiff from playing for the parliamentary team against the Army in the Remembrance Day game yesterday. Please do not ask me the score.

I join the noble Lord, Lord Parkinson, in thanking the Minister for her inclusive approach to date. I am sure that will stand us in very good stead as we get into a lot of what I think we would all accept are the quite tricky issues in Committee. I also thank noble Lords for their contributions. As ever, they show how fantastic this House is in breadth of experience. Talking to us tonight have been club directors, former FA chairs, Sport Ministers, sports media experts, supporters’ clubs’ chairmen, and rugby referees—all passionate fans, even if some of us are misguided about our choice of clubs. I will not point those out.

We are all here because we know that, as Bill Shankly famously once said, football is not a matter of life or death; it is much more important than that. I prefer the more fitting phrase that football is the most important of the least important things. Why? It is because, as we all say, it captures our hearts and that often overrules our heads. To paraphrase the noble Lord, Lord Bach, during those 90 minutes all of us feel like brothers together in a community.

We would all agree that football clubs are a unique place. I agree with the noble Lord, Lord Addington, that they are more than just a business. They are part of the social fabric of a community and a force for wonderful social good. That is why I believe there is a general consensus among all the stakeholders—the supporters’ clubs, the FAPL, the English Football League—that there is a role for the football regulator in some of those basic protections. I mean clubs not moving away, as in the MK Dons example, the names, shirts, logos, the fit and proper owners’ tests, and the breakaway league threat—although I note my noble friend Lord Maude’s point that it was the English fans that killed it, unlike those in the other countries.

We also need to be careful in any area where the heart often overrules the head. The noble Baroness, Lady Morris, gave a cautionary tale. We all know that fans can be a fickle bunch. As the noble Lord, Lord Ranger, said, more than anything, fans care about the success of their club. If you ask those Chelsea fans whether they cared about their owner being a Russian, they probably cared the most about being very successful during that time. As the noble Lord, Lord Ranger, asked, how quickly will today’s regulator be seen as tomorrow’s VAR—not the solution to the problem?

The general consensus here is that the regulator should be light touch. The high degree of concern is for overreach—very eloquently put by the noble Lords, Lord Hannan, Lord Jackson and Lord Moynihan—and mission creep. Just in today’s debate, I noted at least eight new powers that noble Lords have suggested, and this is just the start of the process. As the noble Lord, Lord Jackson, pointed out, the £140 million of cost we are talking about for this regulator does not feel like a light-touch situation.

The biggest area for mission creep and the biggest potential involvement is the financial regulator being more and more involved in football financials. As noble Lords have said, the Premier League is the UK’s clear stand-out industry—number one in the world. Unlike any other industry, there is no doubt that it is number one. As mentioned, the Premier League is the richest and the Championship the sixth-richest, richer than the Netherlands, Portugal and Belgium. That has benefited all the clubs and all the tiers; it has led to investment in grass-roots facilities right the way through the game, as the noble Baroness, Lady Jones, mentioned.

The Premier League is the most attended worldwide of all football leagues; the second-most attended, as mentioned, is the English Football League. That is all founded on media rights value. I confess that, like the noble Lord, Lord Birt, I have some experience in TV media rights, having founded a pay TV company and been involved in many sports deals and seen worldwide the power of football. I have had pay TV businesses in Thailand tell me that they are going to have a big increase in subscribers the following year because they have won the English Premier League rights.

Why is the English Premier League so popular? It is because it has so many competitive games. Spain, Italy, Germany and France each has two or three top clubs. We would probably argue over which, but I can think of at least eight big clubs in the Premier League. As pointed out by noble Lords, we have many clubs—the Bournemouths, Leicesters and Brightons of the world—that have come in and shown real upward mobility and won competitions. That volume of competitive games really drives the viewership and the pay TV subscriptions, which drive the TV rights money, which funds everything else we are talking about here.

Fundamental to that, I believe, and if you speak to the Premier League, is the parachute payment element of it all. As the noble Baroness, Lady Evans, said, come February, any club that does not have the comfort—for want of a better word—of a parachute payment will suddenly be thinking that it has to cut back on wages and sell players because it will be in financial oblivion if it gets relegated the following season. It is not just the bottom three clubs but the bottom six, seven or eight that will be in danger of that. All of a sudden, you have a third of the games remaining, probably even more, and they become uncompetitive. The value that the world TV companies are paying for disappears.

Now, things are always a game of two halves. If you speak to the English Football League about this, which I have, it says that the flip side of these parachute payments is that relegated clubs are much richer and that two-thirds of the promoted clubs depend on those parachute payments. That distorts competition in the EFL. As the noble Lord, Lord Birt, said, the Premier League is the most generous in the world in terms of the big solidarity payments, which enables, among other things, the English Football League to be the sixth richest. So, in absolute terms, the English Football League is very rich. However, the English Football League would say that the issue is not about absolute wealth but about relative wealth: because it does not have nearly as much money as the Premier League, it is harder for it to compete.

Among all of this, we are asking the regulator to step in. That is the danger from all this, because we are asking this regulator—unlike any other regulator that I am aware of—to get involved in the redistribution of money from one entity to another. All the other regulators might talk about payments that they have to make, but they do not talk about taking money away from part of the industry and giving it to another part. Yet we are asking the independent regulator to wade into exactly that issue—the use of those powers—like some sort of super-referee. That is the danger, and I believe that we will get some unintended consequences.

There seem to be some elements in some of the detail that will actually prevent deals being done. We will put restrictions on deals being for more than five years. Again, the Premier League will say that if it is longer than five years, it is prepared to pay over more money. Is that not the basis of a potential solution? Maybe it is, maybe it is not, but surely it is not the role of the regulator to put in red lines that could stop those sorts of agreements coming in. I share the concern expressed by the noble Lord, Lord Hayward: surely, if you have only the objective of sustainability and not the objective of the success of the Premier League or the Football League, the predisposition of the regulator must be to think about redistribution between clubs in terms of sustainability, rather than their overall success. Should one of the objectives not be the success of the Football League and the Premier League?

Most of all, anything that reduces the competitiveness of Premier League and Football League games will decrease viewership and TV rights. That is a danger, because the Premier League has no God-given right to be number one. Spain and Italy used to be number one. As the noble Lord, Lord Grantchester, said, the European Champions League has absolutely been set up to try to compete with the Premier League. We really do not have a God-given right and we need to tread very carefully. At the very least, as the noble Lords, Lord Goodman and Lord Taylor, said, we should consider sunset clauses as part of all of this.

Clause 7 says that the regulator must exercise its functions in a way that avoids impacting the sporting competitiveness of any club against another club. Is that not exactly what the parachute payments are doing? They are eliminating competition in the lower half of the clubs towards the end of the season. Is that not exactly what UEFA is concerned about? It says that any member association might

“be suspended if state authorities interfere … in such a significant way that”

the association

“may no longer be considered … fully responsible”.

[Lord Bassam of Brighton (Lab)]

The noble Lord seems to be obsessed with competition at the bottom end of the Premier League towards the end of the football season. What about the distortion in the English Football League as a product of the parachute payments that he accepts have a distorting effect?

[Lord Markham (Con)]

That shows why the subject needs to be considered in detail in Committee. Leagues are deciding payments between themselves and their clubs. We are asking about the regulator and about trying to change that structure—the competition between the clubs and the different leagues. As part of that, there is the risk that UEFA will be concerned about this, so will the Minister meet UEFA to try to get its approval in advance? The last thing any of us want is England being banned from the Euros because we have a Bill which oversteps the mark.

This has been a very good discussion. There has been a lot of passion, as we expect, and a general agreement that there is real social good. But we have the UK’s number one industry here and we need to tread carefully to make sure we have a light-touch regulator without the mission creep and the unintended consequences. I look forward to those discussions in Committee.