Football Governance Bill [HL]

Lord Birt Excerpts

Report stage
Monday 17th March 2025 Lords Chamber

Moved by

[Lord Birt]

58: Clause 57, page 47, line 5, leave out “following conditions” and insert “conditions in subsections (3) to (6)”

[Lord Birt (CB)]

My Lords, in truth, my family, unlike that of the noble Lord, Lord Parkinson, does not have to look back 70 years to find any trace of silverware, but I congratulate him and Newcastle on a thoroughly deserved victory yesterday.

If anybody doubts the intensity of fans’ feelings about their clubs, they should have been with me last night on a Tube train, where we were packed like sardines. For some reason, all the Liverpool supporters had gone home and I found myself in a carriage completely composed of Newcastle supporters. The sheer joy was manifest, as well as the sweetness and kindness of the Geordie nature, including taking pity on a disappointed Scouser.

Amendments 58, 59, 64, 65, 67, 72 and 77 in my name, and in the names of the noble Lords, Lord Burns and Lord Pannick, and the noble and learned Lord, Lord Thomas of Cwmgiedd, together define a wholly new process for determining fund flow from the Premier League down to the EFL in the event that the backstop measure is triggered. A wholly new approach is needed because the current process defined in the Bill is in almost every respect unfit for purpose. I will touch on why as I explain the alternative proposal that I and my colleagues place before your Lordships today.

Step 1 in the negotiation process that we have designed is the amassing of evidence in the “state of the game” report to inform the negotiation about every material aspect of the English game, including evidence about all the circumstances affecting the health and effectiveness of clubs in the major English leagues, including: a breakdown of their sources of revenue; how they invest and manage their finances; the balance between their equity and their debt; and evidence of how the English league performs financially and on the pitch compared with other European leagues. This is not an exhaustive list. Evidence should be the first building block of a sophisticated fund flow negotiation. Yet the Bill as it stands does not mandate an up-to-date “state of the game” report to begin, or to form part of, the backstop process.

Step 2 in our design is the appointment of a panel of three, experienced in mediation and arbitration, to manage the negotiation between the Premier League and the EFL. With all parties in the room, the panel would interrogate proposals and ensure that all relevant issues are surfaced, explored and bottomed out.

Step 3 would establish clear criteria against which the panel can assess the proposals coming from each league. The criteria that we lay out in our amendments include: maintaining the global appeal and competitiveness of English football; ensuring competitive balance within individual leagues; enabling well- managed clubs to rise up the football pyramid without risking financial instability; and ensuring long-term investment in stadium and facilities. Remarkably, the Bill as it stands is all but devoid of criteria to apply to determining the appropriate level of fund flow down the English leagues.

Step 4 is a process of binding arbitration spread over 100 days, with proposals from both leagues presented in defined stages. For example, after 75 days both sides table their final offers. If no agreement is reached by day 85, the panel makes the determination and announces it before day 100. In the original Bill, negotiation was planned to last only 28 days, a wholly inadequate timeframe for such a complex and critical negotiation. Also, in the current Bill, if the two sides fail to agree, a completely different group, the so-called expert panel—uninvolved in the process up to that point and with no exposure to the dialogue and debate thus far—must choose between one of the two deals; this is the so-called binary mechanism.

The expert panel cannot amend, adjust or find middle ground. In practice, for both leagues it is a game of Russian roulette. I guarantee that the binary mechanism in the Bill will incentivise gaming, not collaboration, compromise and the building of consensus. Seasoned professionals steeped in mediation and arbitration shake their heads in disbelief when this process is explained to them, not least because this is not a negotiation between two remote monoliths; rather, it is between two sides of the same family, where each year, in the top two leagues, six clubs out of 44 move from one side of the family to the other.

Our proposal for the backstop process is based on up-to-date evidence, the application of clear criteria, pro-longed dialogue and challenge, and a final determination by wholly engaged mediators if agreement is not reached. None of these factors is present in the current Bill.

We can applaud the remarkable success of the Premier League but I am not blind to the problems in English football. I trust that regulation will address them. For example, there are strong arguments for parachute payments. We have just heard some of them. However, the competition within the Championship needs to be assessed. There are good arguments for increasing the quantum of solidarity payments flowing down from the Premier League to the Championship but how those funds will be invested—in stadia, for instance—needs to be identified. Fund flow also needs to be considered in the context of how the Championship is managed.

In the last season for which data are available, the top club in the Championship had revenues five times greater than the bottom club—not a recipe for fair competition. In 2021, Championship clubs spent 125% of their revenues on wages, which is not a sign of good management. One-third of the teams that are currently in the Premier League were promoted from the Championship in the past 10 years. This is evidence of the system working. However, Burnley has been promoted to and relegated from the Premier League three times in the same period. The reasons for the recent yo-yoing of clubs up and down between the two leagues need to be understood.

I cite these examples to illuminate the complexity of the issues that the regulator will have to address, and which should be an integral part of that process for determining fund flow down the leagues. I hope that these examples also illustrate that a far more sophisticated backstop process is needed to address them than is contained in the Bill.

The fingerprints of both main parties are on the design of the backstop process. I hope that both will recognise that there is a far better way. I beg to move.

[Lord Burns (CB)]

My Lords, I congratulate the noble Lord, Lord Parkinson, on Newcastle’s win yesterday. As a season ticket holder of Sunderland in the late 1950s, I had to live through the humiliation of Newcastle winning three cup finals, in 1951, 1952 and 1955. I got my own back when I got to Wembley for the finals in 1973 and 1974. In 1973 Sunderland beat Leeds and in 1974 Liverpool beat Newcastle—rather convincingly. Putting aside my advancing years, I have to say that yesterday I was supporting Newcastle and delighted with them, probably for the first time in my life.

The noble Lord, Lord Birt, has explained some of the problems in the proposed final offer mechanism in the Bill and has presented an alternative proposal. I do not propose to go into the details but want to make some general points and emphasise the extent to which the criteria for any decisions on the distribution of revenues must be much broader than has been indicated so far.

During the debate, many noble Lords have reminded us how our integrated football pyramid is a very important part of our football arrangements; hence it is essential that the leagues work closely together. This is crucial. It is crucial when it comes to negotiation, particularly about the distribution of revenue. As the noble Lord, Lord Birt, said, we are dealing with two parts of the football family. Indeed, over time, many teams will move between the leagues. We therefore need a constructive mechanism to resolve differences that will work over several periods in the future.

The main point I want to make is that whatever process is in place, the criteria for making the choice between final offers should be as clear as possible and it should be relevant to the issues facing the football pyramid. Amendment 72 seeks to provide additional clarity on this. I too am grateful to the noble Baroness, Lady Twycross, for the number of meetings that we had to discuss this, at which she listened very carefully.

--- Later in debate ---

[Baroness Twycross (Lab)]

There are currently no plans to move the timing of Third Reading in your Lordships’ House, but I commit to ongoing discussions with the noble Lord, Lord Birt, and others, who have been extremely considerate in the time they spent discussing their concerns about the current model with me, the Bill team and others. We wish to continue those discussions in the spirit I described previously.

[Lord Birt (CB)]

St Paul, Messi—the compliments have been flying around. For the avoidance of any doubt, despite having two of the leading lawyers in the country on the team, no fees were paid during the preparation of these amendments.

I have to say that if was not a party to this debate, I would have been sitting listening with my jaw dropping open at the quality of the contributions from right across the House. I am genuinely grateful to everybody who spoke—without exception. Forgive me if I particularly mention my noble and learned friend Lord Thomas. If I had been the Minister, I would have said, “I am going to give up straight away”, because his arguments were so completely devastating and convincing.

I am surprised and disappointed by the Minister’s response, which I had not expected. As she knows, I had no desire to divide the House. I had hoped, given the strength of the arguments she has heard, that she would adopt a more conciliatory and supportive line. I ask her, if she does not mind, recognising that time is not on our side and the Bill is going to go to another place: is she willing to accept my colleagues and I and others from around this House having a meaningful debate about the re-engineering of the backstop, in line with the arguments heard from all over the House today? It is possible that I am not clear on what it is that she is saying.

[Baroness Twycross (Lab)]

I apologise to the noble Lord if I was not clear. I am very keen to continue to have ongoing debate and dialogue with the noble Lord and his co-sponsors of the amendment, in a similar vein to the conversations we have had up until now. I apologise if I did not make that clear in my speech. That is absolutely the intention, but unfortunately, I cannot commit to bringing something back before Third Reading.

[Lord Birt (CB)]

Obviously, I do not expect the Minister to commit, but she has always been very generous in the past at inviting people in for talks. Let us be honest, there have been some changes to the Bill, although not many. Does she think there is a reasonable chance that we can fundamentally re-engineer the backstop process?

[Baroness Twycross (Lab)]

I am really sorry but I cannot commit to that, but I can commit to the ongoing discussions.

[Lord Birt (CB)]

I am afraid that I do not think the Minister gives me any choice. I will test the opinion of the House.