Football Governance

Mark Field Excerpts

Thursday 9th February 2012 Westminster Hall

[Mr Whittingdale]

The hon. Gentleman—he is really a friend on the Committee—encapsulates the report in a couple of sentences very well. I am almost tempted to say that he has done my job for me and finished my speech. Yes, there is no question but that we felt that at the heart of the reforms that were necessary was the game’s governance structure: ultimately, the FA. I will go on to talk about that in more detail. I did not intend to talk at great length about the management of the England football team, although that is obviously a matter of great interest and debate today. I heard the Minister’s remarks during Culture, Media and Sport questions a few hours ago, and I entirely agreed with him. I am sure that the matter will crop up again during the debate.

Before I move to the report’s main recommendations, I want to pay tribute to three people. The first two were our expert advisers: Christine Oughton and Rick Parry, who provided enormously helpful experience and wise advice to the Committee. We relied a lot on their input throughout our inquiry.

The third person to whom I should pay tribute, particularly in a debate on football governance, is our late colleague on the Committee, Alan Keen. [Hon. Members: “Hear, hear.”] Alan was the senior member of the Committee. He was a member of it before I became Chairman. Football was his passion. He chaired the all-party group on football. He was very—I am tempted to say keen—eager that we should embark on this inquiry. It was a great sadness to us that, because of his illness, he was not able to play as great a part in the inquiry as he would have liked. He is certainly greatly missed. It is only right in a debate on football that we pay tribute to him.

Some people asked why the Committee was looking at football at all, because it is a huge success in many respects. The Premier League is probably the most successful in the world. It has an average attendance of 350,000 people each weekend and about 92% occupancy. The second league—the Football League—gets average attendances of 375,000. Some £2 billion of revenue comes into the Premier League. There is no question but that the top English clubs are watched not just throughout this country, but in almost every country in the world. It is hard to go into a bar in any country and not see a screen in the corner showing the premier league. To that extent, it is hugely successful. There were those who said, “In that case, why are you bothering to spend this time looking at it? Why don’t you go off and look at other things?” But we found that there was widespread concern about the underlying state of the game. That was felt right across football and among followers of football.

Despite the huge revenues that come in, very few clubs trade profitably. The main reason for that is the extraordinary amount of money paid out on players’ salaries. The consequence is that debt has become an enormous problem throughout the game. Debt kept coming up as one of the principal issues causing concern. More than half of Football League clubs have gone into administration at some stage since 1992, and all operate on very narrow margins. The net debt of the Premier League clubs is £2.6 billion. Some people would say that that in itself may not be a problem. Indeed, there will be clubs that operate with quite significant debt, but as long as they can service that debt and trade, it is not necessarily something that need be addressed immediately. However, there is no question but that the debt is a major issue. We were told by the chairman of the Football League, for instance, that it was the issue that kept him awake at night.

There is also concern about ownership, which is not wholly dissociated from the question of debt. That, too, was something that we considered. As the hon. Member for Newcastle-under-Lyme (Paul Farrelly) suggested, we decided that if we were to address the problem, the most important thing that needed to be tackled was governance. Therefore, we wanted to establish, right from the start—this may seem self-evident, but it was not necessarily self-evident—that the FA is the ruling body of football. The FA therefore needs to be reformed if we are to get this right.

Some years ago, Lord Burns produced an extremely good report, which made a number of recommendations for reform. When we heard from him, some of his recommendations had been accepted. They included the incorporation of the FA chairman and chief executive on to the FA board, but they were still waiting to bring on the two independent non-executive directors. Progress, I believe, has been made since then.

Terry Burns told us that, if anything, he felt that he had been too timid and that he would have liked to have gone further in involving non-executive directors. Indeed, we heard from one former chief executive of the FA that he wanted an entirely independent, non-executive FA board. We felt that that was not wholly realistic. We were also clear that, as in most corporate structures, the board needed to be relatively streamlined to be effective.

After some debate, we decided to recommend that the right size for the FA board was 10, and that it should include the chairman and chief executive of the FA, the two non-executives and two more of the FA executive directors—in particular, the director of football development. Alongside them, we decided that there should be two representatives of the professional game—presumably one from the Premier League and one from the Football League—and two representatives of the national game. Although we understood the reasons why others, such as supporters, players and managers, wanted representations, we felt that that could make the board unwieldy. Therefore, we felt that we had come up with the right composition.

At the same time, we also felt that there needed to be reform of the FA council, which is an extraordinary and enormous body. It dates back many years to include representatives from Oxford and Cambridge, the three separate services and the public schools, but very few representatives of players and people who actually watch football. We therefore felt that that was something that needed to be addressed. We were also slightly concerned that the meetings started at 11 o’clock and finished at lunchtime and that some of the members of the FA council seemed to have been there for 50 years or more. We felt that there was a need to address the composition of the council, the tenure of its membership and the form of its meetings. We felt very strongly that the council should be a parliament and not an executive decision-making body.

Once those governance reforms are in place, we will be able to move forward to tackle some of the underlying difficulties affecting the game. I have talked about debt, so the next is financial management. We welcomed the introduction of UEFA’s new financial fair play rules, which will affect those clubs that have ambitions to play in European matches. We felt that the principles underlying the financial fair play rules were absolutely right; they commanded a lot of support and should be applied throughout football.

One aspect of the financial management of clubs that caused considerable concern to the Committee was the football creditors’ rule. I have absolutely no doubt that my hon. Friend the Member for Folkestone and Hythe (Damian Collins) may talk about that a little more, because he particularly pursued that issue during our discussions. Although we could see the reasons why that rule was in place, we felt that it was unfair on creditors, as they were often small firms in local communities that had supported the local team. If that team gets into difficulty and goes into administration, they have to go to the back of the queue after all the football creditors before having their debts paid. We felt that that was unfair, and I am sure that my hon. Friend will say more about that.

One aspect that I have taken a long-standing interest in and that still creates significant potential difficulties is the ruling of the European Court on broadcasting rights and territorial sales, the full implications of which we are still waiting to see. It could have a very damaging effect and it is of concern not just to certain broadcasters, but to a large number of people involved in football.

As for how we enforce the financial fair play rules and the other necessary changes, we were impressed by what we saw in Germany. Germany has a licensing model and we saw how it was used to ensure that the clubs do not trade beyond their means for long periods. We saw how they were required to follow certain rules specified by the Bundesliga. We decided that if we were to achieve our changes, we needed a national licensing scheme. The best body to administer that is clearly the FA. Therefore, the other main thrust of our recommendations was that we should move to a licensing scheme under the FA, which should address issues such as the financial management of the game, the sale of stadiums, investment in youth development and all the other areas where, understandably, concerns have been raised. It could also address ownership.

Foreign ownership in the game is not necessarily a bad thing. After we saw what Sheikh Mansour had done in Manchester City, we could understand why the fans had great banners up saying, “Long live Sheikh Mansour”. However, there are others who are less committed to the development of clubs. We also felt that the fit and proper person test, which is necessary, had not always been as effective as it might have been. Indeed, we debated long and hard about what someone had to do to fail the fit and proper person test in English football.

[Mark Field (Cities of London and Westminster) (Con)]

My hon. Friend is talking sense on the fit and proper person test, which seems to be honoured more in its breach. Going back to overseas ownership, does he feel that there should be a different regime for football clubs compared with the rest of the UK economy? If so, how does he see that operating?

[Mr Whittingdale]

The truth is there will be different regimes governing the ownership of football clubs. For this particular aspect, a slightly different regime should apply. I am not against the principle of foreign ownership. Just as I do not have a kneejerk response to foreign ownership in football, the same is true of the wider economy. To some extent, there are special factors, but I am not opposed to overseas ownership per se.

Let me pay one word of tribute. When the Committee visited Burnley FC, we were well entertained by the chairman of the club, Barry Kilby. In many ways, he represents all that is best about local ownership. He was a business man who had been successful in his community and had put back a huge amount into Burnley FC. His passion for the club was undoubted. Therefore, a strong local owner can bring great benefits.

--- Later in debate ---

[Steve Rotheram (Liverpool, Walton) (Lab)]

That is a tall order, Mr Havard. It is a pleasure to serve under your chairmanship this afternoon. I was not a member of the Select Committee at the time of the inquiry into football governance, but it is reasonable to argue from the tone of the Committee’s report and the Government’s response that the topic has been debated in a good spirit, and I wish to continue that. I am in the unique and fortunate position of being the only Member of Parliament to have two premier league football clubs in my constituency—Everton and Liverpool. I cut my parliamentary teeth leading a well-attended Westminster Hall debate on this very issue way back in September 2010.

Before I begin my speech in earnest, I want to take the opportunity to echo the comments by the Chair of the Select Committee about Alan Keen, and to send my condolences and, I am sure, those of right hon. and hon. Members on both sides of the Chamber to the families of the 75 supporters who were killed recently at a football stadium in Egypt. No matter which club we support, we are all part of the wider football family, and that loss is a football tragedy as well as a human one.

Football is one of our country’s undoubted successes, and we are the home of the beautiful game. We are also the home of the best and most competitive leagues in the world. Children from around the globe are dreaming about the chance to play football at Wembley, the Emirates stadium, Stamford Bridge, Goodison Park, Anfield, and perhaps even Old Trafford. Wealthy tycoons are dreaming of the Premier League promised land. They are attracted to English football as a way of investing their money and seeing the best players in the world play for their clubs to an extent not seen in other countries.

Despite the merits of other leagues such as the Bundesliga, La Liga, Ligue Une and Serie A, it is the premier league, and even the championship, that attracts international investors, because they continue to offer the best that football has. Roman Abramovich and Sheikh Mansour bin Zayed al Nahyan are the only two owners with an unlimited pot of money, and who are capable of injecting copious amounts into their respective clubs. Today, some clubs, such as Tottenham, are plcs and listed on the stock market. Others, such as Manchester United, Chelsea, Liverpool, Blackburn and Sunderland, are owned by professional sport investors. Others seem to be owned for the prestige—for example, Fulham, which is owned by Mohammed al Fayed. My hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) may speak about that.

However, some takeovers reinforce the point that football clubs are simply economic entities to be bought and sold like any other commodity, which completely neglects the broader social impact that clubs have in their local communities and beyond. The result for many clubs in recent times has been to chart a course that is perilously close to the brink. Portsmouth, which I think we will also hear about, ran up debts totalling £119 million, and it is still far from fiscal safety. Southend United and Cardiff City recently managed to pay their debts just before the taxman’s axe was wielded. Several other clubs have suffered administration, such as Southampton, Darlington, Crystal Palace, Wimbledon, Hornchurch and Scarborough. Leeds United, which was probably the biggest victim of all, was allowed to play in the Football League despite no one knowing who owned the club.

In 2009, the all-party group on football found that the group most under-represented in the game was those who should have the most say—the fans. One of the biggest problems with football governance is that at most levels of the game those who pay for it are excluded from the decision-making structures in clubs, leagues and even governing bodies. In pursuit of a global phenomenon, which we have achieved with the Premier League, we failed properly to regulate our national obsession.

I do not pretend that there is a simple answer, but a major problem that needs to be addressed is the fit-and-proper-person test, to which the Chair of the Select Committee has referred. It is an absolute sham. If it were not, the majority of aforementioned clubs would never have been in the position they were because of owners who abused the system and played fast and loose with football clubs that are the pillars of communities across Britain.

[Mark Field]

All too often, clubs in appalling financial difficulty grasp at the nearest straw like a drowning man. There may be only one individual who can save the club, but they may not pass the fit-and-proper-person test in a meaningful way. However, if the choice is that person or the club going bust, one understands why the former choice is made, albeit one that leads to other difficulties further down the line. How does the hon. Gentleman envisage getting round that problem if the alternative is for a club to go bankrupt and to spiral out of the league, as has happened to several former league clubs in recent years?

[Steve Rotheram]

That is exactly the point, and I am sure that my hon. Friend the Member for Hyndburn (Graham Jones) will talk about his beloved football club, and the fact that that happens too often for the problem not to be tackled. That is exactly what the Select Committee set out to do—to consider what recommendations we could suggest on a non-party- political basis to ensure that the football authorities have to take cognisance of such issues, and include football fans in the governance of their football teams.

We cannot pretend that one size fits all, because it does not. We need a proactive approach to redress the imbalance in football governance, an imbalance that has seen some owners and directors of football clubs using them like playthings that can be thrown aside when they become bored, while the fans—the lifeblood of any club—are pushed further and further away from the decision-making process. A more inclusive approach would probably not be universally popular among football’s elite. Indeed, I spoke to one senior representative of a football club who said that he did not want the lunatics to run the asylum. I am a bit fed up with seeing fans given the rough end of the stick. They are treated by some club owners as an irritant or a problem, yet they are expected to be part of the solution when those errant owners disappear, leaving the club in financial crisis.

Supporters Direct is leading a new initiative that I think deserves more focus. It builds on the ideas and recommendations made by the Committee and on the Government’s response regarding the implementation of a new licensing framework that is impartial and independent of the reformed FA board. I welcome the changes to the FA at board level.

It is crucial that impartiality is maintained because that will ensure total transparency, which, we will all agree, has been missing from the FA for some time. We must, however, give credit where it is due, and there have been welcome introductions since David Bernstein’s appointment. I hope, however, that the chairman of the FA will not rest on his laurels, and that he will do something about the current ludicrous situation that allows football managers to profit from the sale of players. Regardless of what has happened over the past 24 hours, that immorality remains, and if ever there were a conflict of interest, that is it.

There are two dimensions to the licensing framework proposed by Supporters Direct:

“Promotion of financial and social responsibility, and balancing of the supporting, commercial and social objectives of clubs.”

and

“To ensure that clubs and their assets are protected for current and future generations.”

Supporters Direct has stated:

“The framework for supporter and community engagement should provide rights for supporters on behalf of the community subject to conditions…Rights would be granted to a ‘Fit and Proper Supporters’ Trust’ for engagement with their clubs.”

Engagement would increase according to the degree of development of the “fit and proper” supporters’ trust. If such a measure were implemented, it would give fans a voice at the top table.

I believe that football fans would use the opportunity to nominate a trusted supporter to make informed decisions—it is the big society writ large. I am aware of some football clubs that would hold an election and offer season ticket holders, as well as club members, the opportunity to vote for a candidate on the basis of a quasi-manifesto set of pledges.

Supporters Direct has stated:

“The co-operative ownership of football clubs via supporters’ trusts thus offers huge benefits not only to the way that the game is run, but also to local communities.”

Although I recognise that there will always be a tension between financial and social returns, the football world is starting to realise that a greater balance needs to be struck. We are starting to see a yearning for the greater involvement of supporters in football governance not only in the UK, but across Europe.

Another proposal is for the reformed FA board to consider ways to increase the number of ex-footballers in boardrooms. Such a move would appease the grumblings of many fans who believe that directors are not “football people” but are out-of-touch businessmen. That is currently the case at Blackburn Rovers, a club that is rich in history and has fantastic loyal support.

Despite becoming a global phenomenon with a worldwide audience, football is not immune to external forces outside the control of its internal market. Lessons must be drawn from disasters such as the global financial crash. All bubbles have the potential to burst. Football needs a regulatory framework and a governance structure that is as transparent as reasonably practicable.

I am confident that there is the political will in the Chamber and the Department for Culture, Media and Sport to make progress. I hope that that continues, and that the Minister will take on board the strength of feeling on this issue.

--- Later in debate ---

[Tom Greatrex]

My hon. Friend makes an important point. I have raised it with the Minister in relation to Supporters Direct’s previous funding difficulties. It does a huge amount of valuable work and we should be able to come up with a way to enable it to continue its work supporting and guiding supporters’ trusts, often when clubs are in crisis and trusts are seeking to maintain them at very difficult times.

[Mark Field]

Although I accept that an engaged supporters’ base that can play an integral role in ongoing development is fantastic for any football club, does the hon. Gentleman recognise that it is not entirely a panacea for all problems? There have been examples of supporters’ trusts that have not worked terribly well—Stockport County, for example. Without the requisite expertise on top of the enthusiasm of a supporters’ base, it can often go horribly awry.

[Tom Greatrex]

The hon. Gentleman is perhaps in danger of straying into the territory of Ron Noades a few years ago, who said, “Fans can’t do it and probably aren’t able to do it.” I am not saying that fans should be running clubs 100%. The Chair of the Select Committee is right to say that we would not have every club completely run by supporters, but if fans are involved, they can often help to stop making the mistakes that led to the position that Stockport were in. They were in that position because of mismanagement before the supporters’ trust was able to take over. In that case, it was very difficult for the supporters’ trust to be able to rescue them. If we look at other examples, Exeter and Brentford have managed to help turn things round. My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) will no doubt wish to speak about AFC Wimbledon, where they started from scratch. We should never underestimate the ability of football fans from all walks of life, who have a club in common, to get together and make things happen.

The main point that I want to make about football fan involvement in the running of clubs is that it should not happen at the point of crisis. It should not be when everyone else walks away, or when owners have mucked it up and decided that they have had enough and walk away.

--- Later in debate ---

[Mark Lancaster (Milton Keynes North) (Con)]

Perhaps it is appropriate that I, as a Member of Parliament for Milton Keynes, have the opportunity to follow the hon. Member for Mitcham and Morden (Siobhain McDonagh). I shall be brief.

I commend the hon. Lady on the passion that she showed for AFC Wimbledon. Certainly, I would hate to see this debate descend into a rivalry between two clubs. Perhaps one thing that we can agree on is that whatever the process, we now have two thriving football clubs out of it, and perhaps we should focus on that.

In the brief time available, I want to focus on three things. First, I want to put on record the timeline of the move. Much of what the hon. Lady has said is correct, but she has failed to mention a few gaps, which I think should go on the record. Secondly, I want to celebrate the economic success that Milton Keynes Dons has brought to Milton Keynes. Finally, I fear that I have some bad news for the hon. Lady, as I will explain why her campaign to drop the word “Dons” is set to fail.

The hon. Lady was quite right: the last game that Wimbledon played at Plough Lane was in May 1991, and the club was moved as a result of the Taylor report. That was the last time the club played in Wimbledon, some 21 years ago. I cannot comment on Sam Hammam—I do not know the man—but I take the hon. Lady’s word for what happened in that period.

In July 2001, the Wimbledon board confirmed that it would pursue the relocation to Milton Keynes, 10 years after the club left Wimbledon. In August 2001, Wimbledon wrote to the Football League to seek permission to relocate to Milton Keynes, but the league rejected the request. Interestingly, at the time, Merton council, of which I believe the hon. Lady was a member, produced a report equating the task of finding a home for the club in the borough as

“achieving the impossible in a densely built up urban area”.

In April 2002, the Football League received a further letter from Wimbledon, and on 27 May 2002, the Dons Trust was formed to develop an alternative club—that was before the announcement to move to Milton Keynes was made. On 28 May 2002, the independent Football Association commission met and said:

“Our decision is that, in light of its exceptional circumstances, WFC should be given approval to relocate to Milton Keynes…We do not believe, with all due respect, that the Club’s links with the community around the Plough Lane site or in Merton are so profound, or the roots go so deep, that they will not survive a necessary transplant to ensure WFC’s survival. What is unusual about WFC fans is that they do not seem to come from a single geographical area. Indeed, the vast majority of WFC fans do not live in Merton or Wimbledon. 20% of current season ticket holders live in Merton and 10% in Wimbledon. We do not accept that WFC will die if the Club relocates”—

of course, we have seen evidence of that. The commission continued:

“The Club has been in Croydon for 11 years (almost half its Football League history). There is no stadium which is a focus for the community in Merton, and has not been for 11 years.”

[Mark Field]

People will remember that Arsenal, although now based in north London, started its life in Woolwich, south of the river. Queens Park Rangers obviously was not based in Shepherd’s Bush for quite some time. I am afraid that the logic of that argument is that it gives a green light to any would-be owner to think, “I will relocate for a few years, and then we can franchise the club to a different part of the UK entirely.”

[Mark Lancaster]

There is a strong parallel. In 1913 the owners of Arsenal, Henry Norris and William Hall, moved the club away from Woolwich Arsenal and in the following year dropped the word “Woolwich” from the name to just “Arsenal”.

In June 2002, AFC Wimbledon was formally established by the Dons Trust, and I congratulate AFC Wimbledon on its success in the past 10 years. However, as a result, crowds fell at Wimbledon from an average of 6,961 to just 2,787, placing Wimbledon FC into even further financial difficulties.

In June 2003, Wimbledon went into administration. The administrator decided that the only possibility to keep the club alive was to pursue the relocation to Milton Keynes. In the same month, Milton Keynes council stepped in and supported the community element of Wimbledon FC by employing staff who had been made redundant by the administrators and paying their salaries. The London borough of Merton made no attempt to continue the community side of club. In September 2003, the first game in Milton Keynes at the Hockey stadium against Burnley was played; I was there.

The administrator moved Wimbledon to Milton Keynes. No approach was made by supporters of Wimbledon to take the club over, and no support was given by the London borough of Merton to Wimbledon FC.

--- Later in debate ---

[Mark Lancaster]

I accept the hon. Lady’s point, but unfortunately I will seek to disappoint her on the issue with the name; we will get to that shortly. Equally, I am not seeking to offend anyone. We simply have two successful clubs now, and perhaps we should focus on the future.

[Mark Field]

Will my hon. Friend give way?

[Mark Lancaster]

I will not, because that is not fair on other hon. Members, and I have given way to my hon. Friend once already.

In July 2004, Inter MK brought Wimbledon out of administration and the name was changed to “Milton Keynes Dons FC”. That was approved by the Football League without any comment. The community staff transferred to Milton Keynes Dons from Milton Keynes council after the support from the council. Since then, we have had a fantastic new stadium, which next year will achieve elite status from the Union of European Football Associations at championship level. We have had great success at the club, winning the Johnstone’s Paint trophy and the league two title. Only today, MK Dons has been unveiled as the Coca-Cola community club of the year for the south-east.

The move has been successful, and the club is of enormous importance to the community. The introduction of professional football has supported huge economic activity, with active public policy support and partnership but no public money. We have seen inward regeneration investment of £250 million. Some 3,500 full-time jobs have been created around the site of Stadium mk. More than £10 million has been invested into the local transport and other civic infrastructure.

In addition to MK Dons matches at all levels, there have been special events in the new stadium, including two England under-21 internationals, two full internationals involving the England’s women’s international team, three Heineken cup rugby union games, including a semi-final, an Aviva premiership rugby game, and even a JLS pop concert, which I confess I did not go to. It has been a success story.

While the hon. Member for Mitcham and Morden rightly praised the community work of AFC Wimbledon and elicited support from the Minister in her Adjournment debate, it is worth noting that the community work of MK Dons has been established over a shorter time frame to an even greater success—this is no disrespect to AFC Wimbledon—engaging some 55,000 people directly, including the piloting of the Government’s national citizenship service programme, the championing of apprenticeships in MK and a disability scheme that offers support to more than 250 people with a disability. As I have already mentioned, only today we have been announced as the community club of the south-east.

I shall briefly touch on the hon. Lady’s campaign to drop the word “Dons” from the name. The overwhelming majority of MK Dons fans want the club to retain its name. It is now part of our history, as can be seen from the Johnstone’s cup and the league two championship. When the Queen came to open our stadium, it was there as the MK Dons stadium, and at no point was there ever an agreement not to use the word “Dons” in our title.

I have already mentioned that, subsequent to the move of the club to Milton Keynes in 2003, the patrimony of Wimbledon was transferred to the London borough of Merton in 2006 after the signing of an accord. The accord was an arrangement between the MK Dons FC, the MK Dons Supporters Association and the Wimbledon Independent Supporters Association. Its purpose was to transfer the honours obtained by the original club to the London borough of Merton, not, it must be said, to AFC Wimbledon. However, during the negotiations, the MK Dons agreed that the trademarks related to the old Wimbledon, such as the badge and the term “Crazy Gang”, could be passed on to AFC Wimbledon by the London borough of Merton in return for dropping the call from the Wimbledon contingent that MK Dons should drop the “Dons” element of the club’s name. Indeed, apart from the accord itself, an e-mail dated 10 September 2006 from Ross Maclagan, the Wimbledon Independent Supporters Association secretary, confirms that.

Although I am sure that this is not the case, there is a feeling among some in Milton Keynes that we are attempting to renegotiate the accord signed in 2006. I must therefore say to the hon. Member for Mitcham and Morden that the feeling in Milton Keynes, given the signing of the accord, is that we will be keeping the name MK Dons.

--- Later in debate ---

[Damian Collins (Folkestone and Hythe) (Con)]

It is a pleasure to serve under your chairmanship, Sir Roger, in this important debate. We have heard a lot from both sides of the Chamber about the report and about people’s experiences of their local football clubs. It is clear that when football and football clubs fail, fans bear the cost, which is why we take the matter so seriously. Because football plays such a fundamental role in society—football in Britain is an expression of the country in which we live—it is right that Parliament take a view on some of the issues that are highlighted in the report. Those issues affect the whole of society and not simply the administration of a football club or a football competition.

[Mark Field]

I can understand why many in the footballing fraternity might think it is not necessarily Parliament’s place to opine in the way that we are doing. Not only do we have an interest on behalf of our constituents, but we have a fundamental financial interest. The British footballing industry was on its knees during the mid-1980s after a series of disasters, hooliganism and, ultimately, the Bradford City fire, which led to the Taylor report. A huge amount of public money has gone, and continues to go, into the game. That is one of the reasons why it is appropriate for Parliament to have a say on the matter.

[Damian Collins]

I agree with my hon. Friend. When we have foreign ownership and we do not know who the owners are; when we have a largely unregulated transfer market bringing billions of pounds into and out of the country, which is largely unknown and uncontrolled at its source; and when communities bear the cost of the financial failure of a football club and taxpayers bear the loss through unpaid tax bills, Parliament should take an interest. We do not seek to take away someone’s right to run their football club badly. That is beyond the control of Parliament. The report of the Culture, Media and Sport Committee and the debate have thrown up legitimate public interest concerns, however. The events of the past seven days demonstrate that the Football Association has an obligation to be the moral guardian of the game in this country, not simply the administrator of football.

I am sure that hon. Members support teams in their constituencies at all levels. I am a lifelong supporter of Manchester United, but one of the most exciting football matches I have ever watched was when Hythe Town beat Staines Town last season to qualify for the first round proper of the FA cup for the first time in its history. That was the first time in more than 50 years that a side from the Kent league had qualified. That is a single competition in which a club in the Kent league can compete alongside clubs that are competing in the Champions League. When multiple clubs are playing in multiple formats and competitions, there must be a single governing body that can have some oversight over the whole of football in this country. That can only be the Football Association, which is the guardian of the game in all competitions.

I praise the chairman of the Football Association, David Bernstein, for taking a stand on the John Terry affair. David Bernstein rightly accepted that the captain of the England football team has a position in public life in the country, and millions of sport fans look up to him as a role model. If his position is put into question by a criminal charge that has been made against him, although he is not guilty of that charge, while doubt remains about his role it is not appropriate for him to be captain of the England football team. If the manager of the England football team, Mr Capello, could not accept that ruling, it was right for him to stand aside. Although we might not have wished for the outcome of the past seven days—the removal of the captain and the manager—the course of events was inevitable. It was right for the Football Association to take a moral lead on the case, and I commend it for doing so. There are real financial concerns about the administration of football and clubs in this country, and a real concern about the lack of powerful oversight and intervention. There are many areas of concern, and hon. Members have touched on a good number. I will limit my remarks to three issues—club ownership, the football creditors rule, and player ownership and the player transfer market.

During our inquiry the fact that Leeds United was owned by a trust whose investors were not known was highlighted, together with the fact that Mr Ken Bates was employed by that trust to be chairman of the club, but did not know who the owners—the investors in that trust—were. No one in football in this country believes that Ken Bates did not always control that club. There is no other way in which he could suddenly have completed the purchase of it within days, without any kind of tendering process, and assumed ownership. He blamed the political obsession of the Select Committee, which was simply standing up for the legitimate interest of Leeds United fans to know who owned their club, for its interest in Leeds United. Many hon. Members have spoken about the role of the fit and proper person test. How can that test be applied if we do not know who the person is? That has been a recurrent problem for the football authorities, and shows that the test, which should function as a guardian, works only if the person who is being investigated is the owner, and if that can be proved beyond reasonable doubt.

--- Later in debate ---

[Mark Field (Cities of London and Westminster) (Con)]

I congratulate my hon. Friend the Member for Maldon (Mr Whittingdale) and his Committee on producing such a detailed and comprehensive report on the state of governance in our national game. I am the vice-chair of the all-party parliamentary football group, and I associate myself with the comments of other hon. Members about our late friend Alan Keen and all the work that he did.

I am a lifelong football fan, and in the past 20 years since the foundation of the Premier League, English football has undergone a massive transformation. Rather than continually attacking FIFA—I am glad that we have not really spoken too much about the national game, but there has a campaign against FIFA, particularly in the aftermath in December of the Football Association’s failure to secure the World cup, either in 2018 or 2022—we need to examine seriously the governance of the domestic game. There should now be a pledge from both the Football Association and the Premier League to put their houses in order urgently. True fans of the national game have become increasingly dismayed—as we have heard from hon. Members—at the cynical culture of illegal payments, opaque ownership and disregard for the grass roots of the game in recent years, as global TV money has dominated.

As has been said, half, perhaps slightly more, of all premier league clubs are now foreign-owned, and an increasing number of sides in the championship are attracting wealthy investors from overseas. However, as the report points out, a majority of clubs are still owned by a local business man on a philanthropic basis. Foreign ownership itself is not a problem if we have a robust fit and proper person test. Many will recall that Manchester City has not had an easy path in this regard. In 2007, they were bought by the disgraced former Thai Prime Minister, Thaksin Shinawatra. As we heard from my hon. Friend the Member for Portsmouth North (Penny Mordaunt), Portsmouth had no fewer than four owners in a single season before entering administration in 2009-10. Manchester United and Liverpool have both been subject to highly leveraged buy-outs from US owners. That model is highly risky and is not supported by the vast majority of fans or, indeed, by the Premier League.

There is a risk of chronic overreaching by clubs. I fear that the reckoning—the same can be said for much of the rest of the economy—is yet to come. Under all types of ownership model, this has led to a massive inflation in the cost of running a football club, which has usually impacted most profoundly on loyal, long-standing fans who find themselves priced out.

Asset stripping is highly detrimental. The separation of a football club from the ownership of their ground often spells long-term financial disaster. We have heard that that was the genesis of many of the problems for Wimbledon in 1991. My hon. Friend the Member for Milton Keynes North (Mark Lancaster) is not here, but one of the lessons of the phenomenal success of AFC Wimbledon is that the franchising model need not necessarily be one to which we should aspire. It took eight long years—in the scheme of things, quite a short period—for Wimbledon to move their way right back up that pyramid into the Football League. If there are to be such instances as Milton Keynes—a new town with a large population that is not traditionally served by a nearby football club—I hope that that will be a lesson for the future. Outside the Football League, Darlington have high-profile problems, having fallen into administration only this season. They are now subject to a bid for a community takeover.

It must be acknowledged, as other hon. Members have, that on occasion the football authorities are faced with the choice between allowing a bad owner to complete a takeover, or a club simply no longer existing. Football League clubs tend not to disappear, with the exception of Aldershot 20 years ago. However, often when they lose league status oblivion follows very quickly—one thinks of Maidstone United, Scarborough and Rushden & Diamonds. With that in mind, the Football League, rather than the Premier League, has led the way in recent years in improving the good governance of football in this country. Many measures that began in the Football League have since been adopted across English professional game.

A number of hon. Members have mentioned the owners and directors test, so I will not go over old ground. On players’ wages and the issue of debt, average wage spending per club at the advent of the premier league in 1992-93 was £4.5 million, which was 44% of turnover. That has since risen in the past 20 years to an average of £1.3 billion—68% of turnover. Deloitte and Touche suggests that 60% would be a prudent number. Wage spending is at its most corrosive in the championship, where it amounts to 88% of average club turnover. Championship clubs together made an operating loss of £133 million in 2009-10, and their aggregate debt hit £875 million in summer 2010—£36 million for each club.

Premier league clubs generally make an operating profit until financing and player trading costs are taken into the account. By contrast, each division in the Football League—championship, league one and league two—has collectively lost money. In total, debt across the 92 clubs stands at a £3.5 billion. Those staggering numbers really do put in doubt the future sustainability of our game outside the premier league, with all its wealth in its current format. Football League clubs are a vital pillar in all our communities and they play a vital role in developing young players, not just for our national team, in a professional and competitive environment.

One problem is parachute payments, which make getting into the premiership such a strong financial inducement. The pressure on clubs to succeed is perpetuated by parachute payments, which are paid over a four-year period after a club is relegated from the premier league and are worth £48 million in total. The justification is that it provides insurance to promoted clubs to allow them to be competitive in the premier league. The downside is that clubs have to be in the premiership only one in every five years to have such untold wealth coming their way. It therefore provides a perverse incentive, providing artificial support and allowing clubs to spend money that they have absolutely no hope of raising naturally. That distorts and undermines the integrity of the championship and, by extension, the rest of the football pyramid. There is no provision forcing clubs to use parachute payments to honour existing player contracts, for example, or to pay down debt. They can instead be used, and often are used, to finance the purchase of new players in a winner-takes-all gamble to win promotion.

On financial sustainability, currently, all clubs must include divisional pay clauses in player contracts that indicate what the player would be paid in each division, if he were to play in them, in each term of his contract. A salary cost management protocol was introduced as long ago as 2003 for league two, limiting club spending on player wages to 60% of turnover. That limit was reduced to 55% this season. Clubs provide budgetary information to the league, which is updated as the season progresses. Any player registrations that take clubs beyond the threshold are refused. The protocol has proven successful, with the vast majority of clubs in the division spending less than 45% of turnover on players’ wages. League two’s operating losses fell from £9 million to £8 million in 2009-10. I am very pleased that league one clubs are shadowing the protocol this season, with a 75% limit of turnover in place, although at this juncture there are no sanctions for clubs. Next season, the threshold will reduce to 65% with firm sanctions in place. The limit will fall again in future years.

I understand that the Football League is in discussions with clubs in the championship regarding the introduction of UEFA-style financial fair play measures based on a kind of break-even model. That is much needed if championship clubs are to bear the brunt of some of the premier league-induced wage inflation without the requisite TV money to absorb it.

[Damian Collins]

My hon. Friend mentioned the UEFA scheme. Does he share my concern that a report published by FIFPro this week, based on a study of players in the former Soviet republics in eastern Europe, showed that the salaries of 40% of the players it surveyed were paid not by the clubs that they play for, but by another party?

[Mark Field]

Yes, I share many of those concerns. I suspect, I am afraid, that at some level, even within our own professional game, there are similar problems.

Other hon. Members want to speak, but I hope that I have a few moments to say a little about sporting sanctions, which have caused considerable angst within the footballing community. The Football League pioneered the use of sporting sanctions, with a mandatory 10-point penalty applied to any club that enters administration. I strongly support the sanction, because it protects the integrity of the competitions by ensuring that clubs do not gain a competitive advantage, not just by going through insolvency, but through overspending in the years before that.

I understand why many fans are upset by the sanctions, particularly fans of clubs such as Luton Town and Plymouth Argyle, which have dropped rapidly through the divisions as a result of not just a 10-point penalty, but often more punitive penalties. In a sense, the new owners and loyal, much put-upon supporters find themselves left to pick up the pieces, although they are not responsible for many of those past misdemeanours.

We have not discussed agents’ fees to any great degree today, and there is also the issue of publication. The abolition of the minimum wage 51 years ago and the Bosman ruling, fundamentally, in 1995 have so massively tilted the power away from clubs to the players. It has gone from one terrible extreme of indentured play to the other, where the players have the whip hand. They have so much power that their agents can now extort huge fees. Although it is easy for the footballing fraternity —the FA, the premier league and even the Football League—to accuse agents of being at the core of all these problems, they often have a symbiotic relationship with agents, some of whom may be on their side, as the hon. Member for Hyndburn (Graham Jones) said specifically in relation to Blackburn Rovers, although that applies within many other clubs as well.

I am keenly aware that other hon. Members want to speak. Payments to HMRC have already been discussed by other hon. Members. On FA governance, as we know, the Football Association was created in an Olympian, Victorian age. In fairness to Oxford university, it won the FA cup a few times in the 1880s, which is probably why it still has representation to this day, but clearly this is not a sensible body to go forward as a 21st-century model for running our national game.

Given the commercial explosion over the past couple of decades following the emergence of the Premier League, which I have mentioned, one has to wonder how the FA in its current form can have any influence. In many ways, the Premier League has, again, been complicit in this and has colluded and been happy to allow the FA to take quite a lot of flack for elements of the governance concerns that we have addressed today.

The FA will need to change its culture to understand that it alone is there to enforce the rules and policy agreed by the whole game. The overall direction of football in this country should now have significant input from the Premier League and the Football League—not as a takeover, but as a partnership. Just think how much more successful even a relatively traditional FA could be with more input from the acknowledged day-to-day leaders in the leading tiers of global club football. A change in the culture will see the FA participate alongside the rest of the football family in creating policy with more of a focus on oversight, which is close to all our hearts.

Hon. Members have mentioned having more independent directors. Such directors would have an important role in examining the game’s policies at a board level. More power should be handed to them and to expert executives who will initiate the policies.

The Government are keen to avoid having an independent regulator for our domestic national game. Football must accept that, if many of these proposals are not acted upon, working together with footballing organisations, an independent regulator may be a sanction. I am interested to hear what the Minister has to say about that. This subject has probably been a headache for him, knowing that he is, in truth, much more of a professed player of cricket and rugby—more than just a fan—but I suspect that football takes up a huge amount of his time.

This report will play an important role as a stepping-stone to ensuring that the national game, which all hon. Members have close to our hearts, will thrive in the years to come.