Football Governance Bill

Baroness Winterton of Doncaster Excerpts

2nd reading
Tuesday 23rd April 2024 Commons Chamber

[Dr Luke Evans]

It is fantastic that the top five leagues will have to have a licence. Will the Secretary of State comment on the resources that will be necessary to put that in place for the season? This is a big undertaking, and considerable resources will be needed to monitor what is going on.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I know that some colleagues who are intervening might not be seeking to catch my eye later. I remind colleagues that if they do intervene, it is customary for them to stay for the entire speech.

[Lucy Frazer]

The Government are very conscious of the impact on clubs, which is why we are giving them time to prepare for the measures we are bringing into play.

On top of the new licensing system, the regulator will introduce a new strengthened owners and directors test to make sure that a club’s custodians are suitable, and to protect fans from irresponsible owners. This responds directly to growing concerns about financial mismanagement in football, particularly illicit finance, as well as to fans fighting back against owners at clubs like Blackpool and Charlton Athletic. The regulator will also bring in new, robust financial regulation to improve the financial resilience of clubs across the football pyramid.

As members of this House will be all too aware, a lack of financial resilience is one of the key risks to clubs’ futures. Giving the regulator powers to oversee financial plans and to step in to require clubs to beef up their financial resilience, where it has concerns, will prevent clubs from facing cliff-edge situations like we recently saw at Southend United. That will not mean that all clubs have to break even. We know that striving for success can come at a cost and that this ambition makes the game so exciting, so we welcome sustainable, sensible investment. What we cannot have is reckless overspending, irresponsible risk taking and inadequate funding. That is why the regulator will look at each club’s plans and how they are funded, and ensure that clubs have the resources to manage their risk taking. No longer can we have short-term actions jeopardising a club’s long-term sustainability.

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I thank the hon. Lady for her kind words about Doncaster Rovers. I get the feeling that I speak for the whole House in saying how pleased we are that her work in this area has been recognised appropriately. [Hon. Members: “Hear, hear!]

Before I call the next speaker, a great many right hon. and hon. Members wish to contribute, so my first advice to Members is to try to confine their remarks to about seven minutes. I call Kevin Brennan.

[Kevin Brennan (Cardiff West) (Lab)]

Thank you, Madam Deputy Speaker. I also broadly welcome the Bill. May I add the members of the Culture, Media and Sport Committee to the list of people whom the Secretary of State praised? I was a member of that Committee until the end of last year, and I am glad to see several of its members in the Chamber for Second Reading.

It is a pleasure to speak directly after my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch)—I think I can call her a friend after all these years. I commend her for her work in this area and the terrific speech that she has just delivered. I found myself agreeing with pretty much everything that she said. I know that we are in favour of replays, but it would perhaps be wise of me not to repeat everything she said, so I will try not to, although I commend her for what she had to say.

There are still some who question whether Parliament should be regulating in this area at all. Why should we legislate to regulate football? After all, we do not do that in every sport—although, as the hon. Member for Worcester (Mr Walker) pointed out, there is perhaps a strong case for doing so in rugby union after what happened to his local club and other English premiership rugby clubs. However, in reality, Parliament has a long record of legislating specifically in lots of different areas of football. In fact, my private Member’s Bill—the Unauthorised Entry to Football Matches Bill—will have its Committee stage on 8 May, and will, I hope, given its widespread support, make its way into law if we have time before a general election is called. There is a long record of football-specific legislation, so this is not that unusual. Football plays such a huge part in our culture.

Let me say, as the Member of Parliament representing Cardiff West, that although we talk about the English football pyramid, it includes Welsh clubs of course, and has done for well over a century. Football is a huge part of our culture in Wales. In fact, a lot of hon. Members will not know that it is the most popular sport in Wales—more popular even that rugby—helped greatly by the success of our Welsh men’s national football team in recent years, including their reaching the semi-final of the Euros.

Of course, as hon. Members have pointed out, we would not be legislating if football had demonstrated the ability to regulate itself, which many of us—including the late Alan Keen, whom I am glad got a mention in the speech of the hon. Member for Chatham and Aylesford—have called on it to do for many, many years. It is telling that the Bill is now widely welcomed in almost all tiers of football except, as has been mentioned, the Vanarama national league and the higher echelons of the premier league. I completely acknowledge not only that the premier league is the world’s most successful club competition, but that its existence has brought benefit down the football pyramid.

In the first 25 years of the premier league’s existence, its revenues grew thirtyfold while revenues in the second, third and fourth tiers grew more than tenfold. That is the nub of the issue: if we go on as we are without effective redistributive methods, the inevitable consequence is that that the gap between the top and lower tiers would gradually make the pyramid untenable and unworkable. Without a long-term viable pyramid, football at the top will become even more of a cartel than it currently is.

The Premier League’s chief executive told the Culture, Media and Sport Committee earlier this year, that he was

“totally accepting of the Bill and the regulator coming in after that Bill.”

As the Bill progresses we should bear that comment in mind, which he said on the record to the Select Committee. We should hold the Premier League to that.

As we have heard during the debate, football should be about competition. Business should be about competition, and regulation is about helping to promote fair competition. That is the role of Parliament, Government and the state in this sphere. In the absence of an agreement between the Premier League and the English Football League, the backstop power of the regulator is an essential tool to ensure fair competition, and so that smaller businesses are not ultimately wiped out by the gradual concentration of resources at the top of the game and the impossibility of making progress in the game without taking the sorts of risks that undermine local clubs, and ultimately led to a number of situations that we have heard about. I do not see how Ministers will be able to convince right hon. and hon. Members that that is possible without the regulator having any powers to deal with pyramid payments. As we have heard, the Government’s own White Paper acknowledged the distorting impact that they have on competition. If the Bill is about fair competition, that has to be dealt with.

I want to mention my own club Cardiff City—hon. Members would not expect anyone not to mention their own club. Its stadium is located in my constituency and its recent history has contributed to some of the clauses in the Bill, particularly around fans’ rights. Cardiff City has been very successful during my 23 years in Parliament. It has been in the premier league twice, reached the FA cup final, and lost to Liverpool on penalties in the league cup final, but as is well known, some years ago a new owner, Vincent Tan, decided to change the club’s colours from the traditional blue to red, believing it to be a colour that brought good fortune. If hon. Members can imagine, for a football club universally known as the Bluebirds, the switch to red was somewhat problematic for the fans.

I welcome the fact that the owner changed his mind, and that the Bill would not allow that sort of thing to happen without the involvement of the fans. I can confirm that Cardiff City football club welcomes the Bill. I thank the club’s director Steve Borley, who wrote to me about the Bill. He said that

“the game’s fractured governance model and the inequitable distribution of finances”

is increasingly putting the game at risk. That is why the Bill is so important.

The Bill does not make any reference to the players. That is a missing part. The players’ union, the Professional Footballers’ Association, wrote to hon. Members about that, to say:

“As drafted, there is currently no reference to players within the Bill. We think this is a significant omission”.

I would like to hear from the Minister why that is the case, whether the Government would consider the representations from the players’ union to ensure appropriate references to them in the Bill, and reassurances about some of the existing structures that protect the rights of players, which the union is concerned about.

No one here wants to damage the premier league. I simply want my club, Cardiff City, to have a fair chance of playing in the premier league again. I hope that the Bill will go some way—hopefully improved, strengthened and amended—to ensure a healthier future for football.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Chair of the Culture, Media and Sport Committee.

[Dame Caroline Dinenage (Gosport) (Con)]

I also rise to welcome the Bill and congratulate the Government on bringing it forward. I have to admit that we on the Culture, Media and Sport Committee were wondering whether this day would ever come, but the Government appear to have been inspired by the mighty Portsmouth football club, who last week secured victory and promotion to the championship with a last-minute goal. It is edge-of-the-seat sporting drama like that that makes British football the best in the world, right from the very bottom to the top—from the millionaires at the top of the premier league to grassroots clubs such as Gosport Borough, who have treated fans to a romping season. They play in the southern football league and sit tantalisingly in the promotion zone. Of course, there is also Fleetlands FC, who are pushing for promotion in division 1 of the Wessex league.

Here in Parliament, we have also been kept on the edge of our seats, eagerly awaiting this Bill that could potentially reshape the landscape of football governance. Over the past few years, instability off the pitch, not the action on it, has increasingly grabbed the headlines. Soaring levels of debt have led to the collapse of clubs such as Bury and Macclesfield, an experience shared by so many fans in communities up and down the country devastated by the demise of their beloved clubs. The debt problem is getting worse: premier league clubs have reported staggering losses of over £1.2 billion over the past 12 months alone, and the figures in the championship are looking just as shocking, with Leicester losing £90 million in 2022-23.

Fans of clubs such as Everton and Reading are sick of seeing them mismanaged through the reckless decision making of irresponsible owners. Just last week, the House heard of the pain of Torquay United fans, whose club has entered into administration following years of flawed business plans. Unreliable owners who do not have the interests of their club or its fans at heart, and are prepared to play fast and loose with their finances and their future, should be held accountable. As a lifelong Pompey fan, I feel their pain: after a series of disastrous owners, it took a fan-led buy-out in 2012 to save our club, demonstrating that our fans were literally prepared to pay up in order to stay up—or, in fact, to stay afloat—such was their dedication and commitment.

The failure of English football’s wealthiest clubs, those in the premier league, to agree a financial distribution deal is putting the fabric of our national game at risk. This situation has dragged on for far too long, and it has been especially disappointing to see the Premier League spending time and money lobbying MPs and peers against the Bill, rather than lobbying its clubs to secure a fair deal for English football. Decisions are repeatedly being made in the interests of the top of the football pyramid without a thought for the vital ecosystem that generates its lifeblood. Scrapping FA cup replays may be welcome in some quarters, but once again it is a characteristically messy number, denying lower-league sides that all-important financial boost. We need a change of tactics, so I know that fans across the country will welcome these plans to introduce a regulator and attempt to bring some stability to the game.

Of course, that is not to say that the new independent regulator will be the silver bullet that the Government have sometimes presented it as. The problems faced by football are extensive and complex, and there are still some areas where I would like to see more clarification and further work as the Bill progresses. I will talk through a couple of those now.

Widening financial distribution across the football pyramid will be the ultimate test of the Bill. Last year, our Committee urged the Premier League and the EFL to urgently agree a new deal to redistribute a higher proportion of revenue throughout the football pyramid. We recommended that in the absence of such a deal, the Government should expedite their plans to establish a regulator with the power to mandate a solution. I am pleased to see that the Bill aims to address this issue by giving the independent regulator the backstop power to intervene in the distribution of broadcast revenue, but that power is subject to certain thresholds being met, and it excludes the controversial parachute payments within the pot that we have already heard about. We need reassurance that the regulator has the teeth to trigger its own backstop powers and impose a fair settlement, when and where it deems necessary and without any undue delay. We also need an indication from the Government of how the regulator will curb the reckless spending of clubs trying to keep up with those in receipt of parachute payments.

Enhanced financial regulation across the football pyramid is really welcome. It will improve the resilience of clubs, encourage sensible financial decisions and ensure that risks are mitigated. However, given that the regulator will not oversee regulations such as the Premier League profitability and sustainability rules or the squad cost controls that are set to replace those rules, the Government need to provide clarity on how both systems will work alongside each other and reassurance as to why they deemed it unsuitable for the regulator to take on this responsibility.

When it comes to owners, I am really pleased to see that the regulator will establish a new, strengthened owners and directors test to ensure that a club’s custodians are suitable for the role. I welcome the fact that the Bill confers enforcement powers on the independent regulator to protect clubs from any harm that an irresponsible owner or officer might cause and to be able to remove them, but we need further detail on what precisely will happen to those clubs that have an unsuitable owner removed. We need to understand how the regulator would remove another potential Dai Yongge from Reading without compromising the future of the club and ultimately punishing its fans. I would be grateful if the Minister could explain how the Bill will safeguard clubs that find themselves in the position of having no owner, no financial safety net to keep them going and potentially no prospective buyers on the horizon.

We have already heard from Members that football is nothing without its fans, and I am pleased to see the Bill placing fan engagement requirements on the clubs as well as requiring them to comply with heritage protections and to seek approval for the sale or relocation of their home ground. But the Bill does not go quite so far as requiring fans to have a golden share, as recommended in the excellent fan-led review led by my hon. Friend—and real-life friend—the Member for Chatham and Aylesford (Dame Tracey Crouch). At this point, it would be terribly remiss of me not to add my congratulations to her and the whole team who have put an enormous amount of brilliant work into getting the Bill to this stage. As the Bill progresses, I want to be sure that it provides a way for fans to share their concerns about their club with the regulator and to know that they will not be dismissed. The Culture, Media and Sport Committee has agreed to hold a pre-appointment hearing with the chair of the independent regulator once the Government have a preferred candidate, and I expect that this will be one of the first questions we will be asking them.

Ultimately, there are two main questions that I want to see answered by this legislation. First, does it deliver for football and its fans? Secondly, to what extent will it prevent some of the distressing times that clubs like Reading are currently undergoing? There is more to be done on the Bill—and indeed the guidance that goes alongside it—to ensure that it fully meets those aims. We cannot overlook the huge economic value, the sense of community cohesion, and the moments of both local and national pride that football gives us; nor can we ignore the vital importance of a football pyramid that delivers at every single level. I know that some, including the Premier League, have concerns about unintended consequences, so the Select Committee has written to them to give them a chance to set out exactly what they would change—because there have been plenty of chances for the sceptics to prove that this Bill is not needed. Given that this is one of the biggest overhauls in the history of English football, we must do it right.

I congratulate Ministers, particularly the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), on getting the Bill to this stage. I look forward to his responses and to hearing what more can be done to secure a clear win—and, just like Pompey, can we do it well before the end of the season?

[Madam Deputy Speaker (Dame Rosie Winterton)]

I am putting in place a seven-minute time limit to ensure that everybody gets as equal a chance to speak as possible.