Football Governance Bill (Third sitting)

Debate between Matt Rodda and Robin Millar

Committee stage
Thursday 16th May 2024 Public Bill Committees

[Robin Millar]

Q In the previous evidence sessions, we have had explained to us—in quite graphic detail at times—the differences between the leagues, the different challenges they face, the different ways that fans experience the game and so on. First, I am keen to hear from the fans’ perspective what you think those risks are across those leagues. Secondly, are you happy that the Bill addresses those risks, for example, in the way that clubs fail?

Alistair Jones: For the EFL, the precipice between the bottom of the Premier League and the top of the Championship is massively disproportionate to wherever it has been before. The simple fact is that over the 72 football league clubs, there is £450 million of losses just last year alone. That cannot continue—everything has to be sustainable.

For me and for Albion fans, a fairer distribution of wealth and a fairer redistribution of Premier League income would make that difference less between the 20th team and the 21st team in the country. At the moment, over £50 million of turnover is written off more or less overnight, and that is dependent on whether parachute payments are consistent. Also, the lack of competition is a big worry. The bottom three of the Premier League were the top three that got promoted last year, and they have just swapped places. It is more than likely that two of the three will be promoted this year.

Sarah Turner: We would like parachute payments to come under the independent regulator because we think it does make it an unfair competition. You are striving to reach the promised lands, so you will throw everything at it, and it makes owners gamble and spend recklessly, which is what has happened to Reading and many other teams. It is an unfair competition because you are pushing yourself so far to get there. We were relegated because of a points deduction to League One, and we are striving to get back up to the Championship.

Tim Payton: We are here because of the European Super League and the furore. I was in the meeting with the Prime Minister where he said he would “drop a legislative bomb” on it. What I hope you are all doing is passing legislation that means we do not need to throw bombs around but we have a good defensive mechanism in place. The two big threats to the heritage and competitive balance of the Premier League are all the revenue being earned outside of that in the UEFA and FIFA competitions and, as I said before, the relocation of our games. I would urge you to look closely at the suggestions we have made for tightening up in those areas.

[Matt Rodda]

Q As you said, there have been some serious problems with owners, not least at Reading. Do you feel that the Bill does enough to tackle that, potentially, through the regulator? Also, do you feel that there is enough of a fan’s voice in the process of raising concerns about owners?

Sarah Turner: It is a good start, but there is probably more we can do. I do not know if the owners and directors test is a duplication of the ones that the EFL will do or whether it will hand that over to the independent regulator. We think there needs to be some real-time tracking of what is going on at clubs because they are continuously overspending and risk-taking. We think the regulator should be taking an overview all the time of what is going on, rather than just at the beginning when they purchase.

Alistair Jones: I concur on real-time accountability around accountancy. From looking back at 2016 when we were purchased, it would be—quite simply; I am a simple man—a great case study to look at. If we could look at West Bromwich Albion, when they were purchased in 2016, and use that as a case study, what if the same company came and purchased West Brom now? Would it still be allowed? If that were the case, quite frankly there would be no point in doing it because it has proven that it was a poor opportunity to buy the club.

Tim Payton: In our evidence, we put forward the importance that the independent non-executive director can have. Following up from what you heard from Sanjay, we think that it would be powerful having in the Bill the need to have two INEDS on the board of each club, and the regulator obviously could then set the guidance and framework. Of course, we already have that in the corporate governance code, which is set out in—I think you mentioned—the Companies Act. Where I see it linking across to other areas of the Bill is the INED under the corporate governance code already has a lead responsibility to consider stakeholders, and of course the stakeholders in football are the supporters.

When we look for improved fan engagement, we do not just look at the fan engagement standard, but to the INEDs on the board being there to ensure that effective fan engagement is taking place. Good INEDs are an early warning system to many other things going wrong. The Minister will be aware of the improvements that have come to national governing body governance through the corporate code. He inherited all that from the pioneering work that Tracey pushed through. I really hope we can have the same framework for the football clubs under the IFR.

Football Governance Bill (First sitting)

Debate between Matt Rodda and Robin Millar

Committee stage
Tuesday 14th May 2024 Public Bill Committees

[Matt Rodda]

Q Do you feel then that the Bill goes far enough in tackling these issues?

Kieran Maguire: As an investigator, you would always want more powers than less, so I think you have to be honest there. At the same time, in terms of protecting the game from over-regulation and being mindful that FIFA does not allow government interference in football, I think we have probably hit a reasonably good sweet spot with regard to the proposals to date.

Dr Philippou: I agree with that.

[Robin Millar]

Q Dr Philippou, you describe a industry that is reliant on patronage. If I could remind you, Mr Maguire, you said that a collective inability to control costs characterises the industry. How do you reconcile the two? Is it the inability of owners to control costs? Is it the structure that has the problems? Is it actually an inability, or is it an ignorance of costs or an unwillingness to address them?

Dr Philippou: I think it is a combination of various things. Ultimately, what you have is poor cost control and poor monitoring. Owners have to be mindful of that because, ultimately, at least half of them are putting money into football clubs every year to keep them running, so they are aware that there are cost problems there. You cannot be propping up a technically insolvent club and not know that you are propping it up, so there is that element there. You also have general cost controls —people are aware that they are losing money. It is not something where you can say there is a lack of awareness there; it is a lack of a willingness to do something about it. We saw UEFA bring in financial regulations back in 2010-11. The Premier League brought them in around about 2014. But we are still seeing these problems, even with the financial regulations in place, which tells you that there is an ongoing issue.

Kieran Maguire: What we have in terms of the present model is one of self-regulation, and self-regulation is normally walking hand in hand with self-interest. As far as owners are concerned, and I can understand this from an owner’s perspective, if I bought a football club as a trophy asset and I have unlimited funds, then why should I not spend as much money? What there has been is a trade-off between those owners willing to put in unlimited amounts, those owners wanting to put in limited amounts, and those owners wanting to put in nothing because they see the football industry as an extension of the entertainment industry, with a view to making it profitable on a longer-term basis. That is where we are at present.

The rules have effectively failed to address the loss-making in the business. Loss-making is sustainable until it is not sustainable—until those owners, either individually or collectively, decide to change the rules. Without any form of assistance from the regulator, that would mean that the industry is naturally precarious, because you only have to have, as we said earlier, a change in circumstances, as we saw with Chelsea. We have seen a club such as Bolton Wanderers have a very beneficial owner. His personal circumstances changed due to illness, and then you have a crisis for the club.