Football Governance Bill [HL]

Lord Markham Excerpts

Committee stage
Wednesday 18th December 2024 Lords Chamber

Moved by

[Lord Markham]

172: Clause 22, page 15, line 3, leave out paragraph (c)
Member's explanatory statement
This amendment removes the ability of the IFR to restrict a club’s overall expenditure.

[Lord Markham (Con)]

My Lords, I shall speak also to Amendment 173A in the name of my noble friend Lord Moynihan and Amendment 173B in the name of my noble friend Lord Hayward.

The amendments in this first group carry on from our discussion on the licensing regime on the previous day of Committee. The amendments rightly deserve their own group since they relate to the specific financial conditions that clubs will be required to abide by as part of their licensing conditions. My Amendment 172, which is in the name also of my noble friend Lord Parkinson, would remove Clause 22(3)(c). That provision permits the regulator to restrict the overall expenditure of a regulated club. We do not believe the regulator should be able to attach a discretionary licence condition which places an overarching restriction on a club’s expenditure. This is surely an overreach of the regulator’s financial powers. The point has been made on many occasions, not least by the Minister, that the aim of this Bill is to ensure the financial sustainability and resilience of football clubs. How would telling a club how much money it may spend aid it in achieving that goal?

The key thing here is not expenditure but profit. Spending £50 million on a player might sound like a lot, but if that player is worth £60 million, I think we would all call that good business. An expenditure cap could stop that happening. If the goal is financial sustainability, surely the focus needs to be on profit or cash, not on expenditure. It is almost like a manager of a football club saying, “Look, it’s not just good enough that you go out and win today. We want you to score in the first half, then the other team can equalise and then we need you to score the winner in the last couple of minutes of the game”. It is trying to micromanage and overengineer. No one can ever do that.

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[Lord Moynihan of Chelsea (Con)]

My Lords, I hope the Minister will bear in mind that the repeated statements “For every winner there is a loser”, “The Premier League is in terrible danger” or “Football is in terrible danger” just ignore the fact that football is tremendously successful in this country. If for every winner there is a loser, there would have been no progress in the last 20 years. There has been progress and enormous success. We now have the greatest football league in the world. The statement that “Your biggest asset is only one accident on a training ground away from being worth nothing” completely ignores the fact that all football assets—all players—are insured. If, God forbid, your best player was injured irrevocably on the training ground, you would receive an enormous insurance payment, so it is just not true. The actual commercial realities of what is going on in football in this country seem to be completely mis-stated so often in this Chamber. I hope that the Minister will take heed of the tremendous success that private enterprise, unfettered by an onerous regulator, has created in the world of football in our country.

[Lord Markham (Con)]

I will sum up on a couple of new points. I always welcome comments from the noble Lord, Lord Pannick, because his forensic brain is really helpful in making sure we get to the bottom of what we are talking about. I have only just had a chance to look up Clause 22(4); this is about the regulator’s ability to restrict expenditure. It says that the regulator

“may not impose restrictions on expenditure of a particular kind or a particular transaction”.

That can be open-ended, unless the particular kind or particular transactions are defined somewhere; they could refer to anything. I do not know if the Lord, Lord Pannick, is aware of what they refer to, but perhaps the Minister could follow up on that, either now or in writing.

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For those reasons, I hope noble Lords will not press their amendments or their intention to oppose Clause 22 standing part of the Bill.

[Lord Markham (Con)]

I thank the Minister for her response and thank noble Lords for all the contributions to the debate on this amendment.

On Amendment 172 and the expenditure cap, the Minister referred to league rules on permitted losses, and that is exactly the point I am trying to make: permitted losses are different from expenditure. I completely get why you might have rules trying to prevent permitted losses, but with permitted expenditure you can spend a lot and still make a profit, and that is a good thing. Maybe we can explore further whether Clause 22(4) allows clubs, despite everything, to still spend money on players. As per the example I gave earlier, I am not quite sure that it does, but again, it would be good to consult or work on that later.

On Amendment 173A, tabled by my noble friend Lord Moynihan, as pointed out by the noble Lord, Lord Pannick, I do not think any of us could envisage the regulator not consulting the clubs and the competitions, so it seems sensible to have that in the Bill. Again, I hope the Minister will be able to look at that.

On Amendment 173B and my noble friend Lord Hayward’s point about capital buffers, this really is an area of huge concern. The Minister said, “Well, if you’re reliant on an owner, maybe they need to provide more examples of how they could cater for that financial shock if they were to die”. The trouble is, as with so many clubs at that stage, that was exactly the Brighton and Brentford model—they were reliant at that stage on the owners bankrolling them behind what was a very sensible plan. But if, God forbid, something had happened to them during that stage, clearly, they would have gone, and if they had been asked to put aside some money as a buffer against that, that would have made their plan much harder to achieve. I know it is the view of both clubs that they may well never have embarked on those plans in the first place, because it was tough enough to begin with, and having to set some money aside makes the hurdle even higher. So again, I would appreciate it if we could return to that issue.

The last point about this clause overall, which goes right to the point the noble Lord, Lord Addington, made, is that there is a fundamental difference here. He said that for every success there is a failure, and that we have to stop that speculative spending. With Brighton and Brentford, it absolutely was speculative spending. With any team that invests in players ahead of their revenue, that is speculative spending. That is the excitement of the league and of the game: there are no guarantees of success behind any of that. But if we seek to restrict that, we are seeking to restrict the whole competitive element of the game we love: football.

The reality is that we cannot point to many failures; I think there have been two since the war. I do not want any failures, but are we really trying to prevent any club trying to embark on those success stories— I hope we are seeing it again now with Wrexham, who have come very far—because we want to protect against any failures whatsoever? That is the fundamental difference we are talking about here.

We have seen examples of asset stripping, and I absolutely agree that we want to guard against it. But owners wanting to put in a lot of money in order to really get behind a club, invest in players and gain promotion—to me, that is the fundamental spirit of the game we all love. I therefore hope that we will be able to return to that issue, but at this stage I beg leave to withdraw the amendment.

Amendment 172 withdrawn.

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Moved by

[Lord Markham]

180: Clause 27, page 20, line 18, leave out subsection (7)

[Lord Markham (Con)]

My Lords, I hope that Amendment 180 will be much simpler, because is a bit niche and, dare I say it, anoraky in nature, for which I apologise. It would amend Clause 27 by removing subsection (7).

This subsection states that where a prospective owner or officer does not inform the regulator of their intention to become an owner or an officer

“as soon as reasonably practicable”,

that person must inform the regulator as soon as it is reasonably practicable. We probably understand the issue there. Not to mince my words, it is a slight tongue- twister. It is a bit confusing and nonsensical. In essence, it says that if someone has not told the regulator in the period when they were meant to, they must do so later

“as soon as reasonably practicable”.

I hope that this provision is a fairly simple one to tidy up. Again, I think we all understand the good intentions here, but I would be grateful if the Minister could clear that up. I will leave it to my noble friend Lord Moynihan to raise his amendments.

[Lord Moynihan (Con)]

My Lords, I will be equally brief in proposing my Amendments 187ZA and 187ZB. The drafting of the Bill states that if the regulator takes too long to determine applications for new owners and officers, then the applicants are treated as not suitable under Clause 32(5), through absolutely no fault of their own. This is not aligned with practice in other regulated sectors. It could have an impact on that person wider than purely their involvement in the club and be detrimental to clubs that have only one potential new owner, who is deemed unsuitable purely because the regulator ran out of time.

The change that I propose to Clause 32(5) would reverse the consequence of excessive delay, addressing the inherent unfairness in the current drafting. This is aligned with how statutory time limits on mergers work, for example. If the CMA fails to make a decision within a specified timeline, the merger is automatically allowed. These are clarifying amendments; I very much hope that the Government will see benefit in improving the legislation by accepting them.

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[Lord Markham (Con)]

I thank noble Lords for this debate and the Minister for her response. While my amendment was anoraky by nature, I think we would all agree that the other amendments tabled by my noble friend Lord Moynihan are quite serious. As the noble Lord, Lord Pannick, mentioned, this is something that happens in all other regulatory environments, and other regulators manage to cater for that in exactly the same situation.

What my noble friend Lord Moynihan is suggesting is not, if the deadline has passed, that an owner is deemed suitable for ever. They will be deemed suitable only until the regulator is able to get round and opine. It would be a pretty silly thing to do for an owner to drag their feet and be awkward, for them to be allowed to do it only to be removed a few months later. That would be a big waste of money for them, and it would be completely illogical for an owner to try to game the system in that way.

So I am afraid that do not quite understand, and I think other noble Lords share in this. I ask the Minister to go back and think more on that, because it has got to be the right case. As the noble Lord, Lord Pannick, pointed out, in a situation where the regulator is not able to pass judgement through their own incompetence, it is the owner, who might be perfectly suitable, who loses out. So I would be grateful if we could consider that further—but at this point I am happy to withdraw.

Amendment 180 withdrawn.

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[Lord Addington (LD)]

My Lords, that might be the noble Lord’s interpretation, but, ultimately, it is government that makes law.

[Lord Markham (Con)]

My Lords, just to be clear for the record, no law was passed in this instance. In a matter of days the clubs quickly withdrew from the competition because, as my noble friend mentioned, it went down like a lead balloon and fans were up in arms. The Government were nowhere near it. That was a perfect example of where the clubs and the fans regulated themselves.

[Lord Moynihan of Chelsea (Con)]

My Lords, I have a very strong recollection of this because I wrote an article the day after the proposal came, which was published, like many articles at the time, and I remember that the very next day the proposal was withdrawn. It had nothing to do with the Government. By the way, I was not a politician at the time; some would say I am not one now, but it had nothing to do with Governments or Parliaments.