Football Governance Bill

Stephen Doughty Excerpts

Friday 7th November 2014 Commons Chamber

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

I am grateful to Members for enabling us to make enough progress, on this day of private Members’ business, to reach the Football Governance Bill.

The Bill has been a journey for me as a Member of this House. It started with my involvement with the Culture, Media and Sport Committee’s 2011 inquiry into football governance. The Committee’s work in that inquiry built on a number of reports that had been produced by the all-party football group, and by other Members of Parliament dating back very many years. Although I have sought to bring forward some measures that I believe will help in the administration and good governance of football in England—I shall go through those briefly—I would say that the Bill is the architecture of many hands in this Parliament.

When I presented the Bill I was grateful for the support of Members from across the House, many of whom have taken a particularly strong interest in issues of football governance because of problems in their constituencies.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I should be grateful for some clarification. The hon. Gentleman mentioned football governance in England, but obviously his Bill also extends to Wales and Scotland. That is crucial, because many of us in Wales have had very similar concerns to the ones that he has outlined.

[Damian Collins]

I am grateful to the hon. Gentleman. The 2014 Bill is an England Bill, largely because I was advised that in Scotland and Wales these were devolved matters. My original version of the Bill was a Scotland and Wales Bill too, and I believe that this Bill’s provisions could easily be extended to Scotland and Wales as well. I look forward to hearing Members’ remarks on that in Committee; I would welcome their views.

I want to mention the support for the Bill, when it was presented, of the hon. Member for Coventry South (Mr Cunningham), who has done much to highlight the plight of Coventry City football club in Adjournment debates; of a former Minister for Sport, my former colleague on the Select Committee, the hon. Member for Bradford South (Mr Sutcliffe); and of my colleagues on the Government Benches. My hon. Friend the Member for Portsmouth North (Penny Mordaunt) has been tireless in her campaigning to relieve the plight of Portsmouth football club. My hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) has raised issues to do with governance in non-league football, particularly in the case of Hereford United, which is one of the worst examples of a failure of football governance that could be seen. A great and fighting football club with a proud tradition has been completely trashed by its poor ownership. I am also grateful for the support of my hon. Friend the Member for Maldon (Mr Whittingdale), the Chairman of the Select Committee.

The Bill seeks to address what I believe are some of the major failings in the governance of football. I do not believe that it is the role of the Government or Parliament to seek to regulate and control football, which is a private enterprise. Football clubs are private organisations; they are community-based and run; and the Football Association is rightly an independent body. I do not believe that it is necessarily the role of the Bill or Parliament to seek to regulate and control football. A series of failures in governance has led to recurring problems, certainly with the failures of ownership and the financial control and regulation of football. The Bill proposes some measures that would address that and that are relevant to some of the issues that football clubs have faced.

Clause 1 deals with the public declaration of the ownership of football clubs. During our Select Committee inquiry, no one knew who the leader of Leeds United football club was. In fact, the club’s then chief executive—Mr Shaun Harvey, who is now chief executive of the Football League—told me in a Committee hearing that not even he knew who the club’s owner was. Since then, the Premium League requires the public declaration of the ownership of football clubs, but the Football League does not require that public declaration.

Such public declaration should be mandatory because fans have the right to know who owns their football clubs. We should have the right to know what other interests, either in football or outside football, that the owners of football clubs have, particularly as we have recurring problems with the business interests of football club owners seeming to prejudice their suitability to be the chief executives or presidents of football clubs. I therefore believe that, with public declaration, fans and investigative journalists can see and inquiries can be made into the nature and interests of the owners of football clubs.

Coventry City, I believe, has been poorly served by an ownership model whereby it was owned not by a named individual but by an investment trust. That club has been badly run and it is still trying to overcome some of the many issues that it has faced. I am pleased that Coventry City have returned to playing football in Coventry, but many of the issues about its running remain of grave concern to its fans.

I believe in such public declaration of interest in and ownership of football clubs. Anyone who has a 1% stake in a football club should be on a public register. That is in keeping with the reforms that the Government have put in place to ensure that the beneficial owner of any UK-registered company must be declared at Companies House, and it would ensure that football continued to fall in line with that requirement.

Clause 2 deals with the fit and proper person test—the owners and directors test—which has continued to be a problem for football clubs, and Leeds United is a particularly topical example. Massimo Cellino—a business man from Italy, with previous convictions for fraud, whose case relating to tax evasion is going through the Italian courts—sought to buy and take control of Leeds United football club. The Football League objected to his acquisition of the club. He successfully challenged that in the courts and was allowed to acquire it.

The football bodies have a real problem in that they have no discretionary power over how they administer the owners and directors test. If someone has convictions, such as Mr Cellino’s, for fraud-related offences, some people might think that they are unsuitable to own a football club. If the offence is considered spent in UK business law, there is no barrier in law to anyone taking over a club. The Football League would probably have been challenged in the courts had it sought to stop Mr Cellino taking over the club in that way. The club’s ownership could still be in balance. The fate of Leeds United could rest in the appeal courts of the Italian legal system: a final ruling against him would mean that he is in breach of the owners and directors test and unable to take over the club.

Many Leeds United fans are concerned about Mr Cellino’s background and whether he is a suitable owner. The Football League clearly had concerns but no power to do anything about them, and the Football Association seems to have no power to intervene either. I believe that here is a clear example of where some statutory underpinning of the owners and directors test would be of huge benefit to football as a whole to help to keep out bad owners.

I suggest in my Bill that the Football Association act as the governing body of football—all football clubs need to be members of the Football Association to play in the upper football leagues in England—and that it have a discretionary power similar to that exercised by Ofcom under the 1990 and 1996 Broadcasting Acts. Ofcom applies its own fit and proper person test to the issuing of a broadcasting licence. It has the power to remove broadcasting licences from broadcasters who have fallen foul of that test—indeed, it has done so. It is a discretionary test based on its view of whether a licence holder has complied with UK broadcasting regulations and whether it is likely to do so in the future. I believe that the Football Association, based on its own memorandum and articles of association, should have the same power when looking at a potential owner of a football club; to be able to say that in its view that person is not a fit owner.

We have had problems with people who are not considered fit owners. Carson Yeung, former president of Birmingham City football club, is a good example. He was found guilty of money laundering offences in Hong Kong, so it was ruled that he could not hold an executive office within the club, but the rules do not stop his son or other business associates being on the board. I believe that the Football Association should have the power to step in and say, “No, we do not feel this is right. We are not happy with this ownership model, so we will not allow you a licence to own this football club.”

There is also a question about new owners coming in. In the recent debate in the House on non-league football, the hon. Member for Wrexham (Ian Lucas) asked whether there should be a process of prequalification, whereby someone must be declared a fit owner before taking on the ownership of a club. I think that would have stopped many of the problems we have seen. I also agreed with the view, expressed by my hon. Friend the Member for Hereford and South Herefordshire, that there should be transparency when the Football Association investigates an owner under its own owners and directors test, and transparency on the outcome so that fans know what it is. I think that is very important. To set up those powers would give the Football Association, and with it the Football League and the Premier League, the power to have tighter controls over who comes into the game.

Mr Yeung’s money-laundering offences certainly make him a poor owner, but they also highlight a grave area of concern. Many people have raised the concern that football is open to abuse from money laundering. It is a sport and an industry that deals with assets of intangible value, with cash transactions through the gates, so tracking the money that flows through football is very important. We should rightly be very concerned about someone who has been convicted of money-laundering offences owning a football club. We should also be concerned about whether someone has heavy interests in gambling or other sporting interests around the world that might lead us to question their suitability to take on the ownership of a football club. This Bill would give the football bodies in this country discretionary power to intervene and prevent poor owners from coming into the game.

That point is particularly important when we look at clause 3, which deals with something called the football creditors rule. The Select Committee examined that in great detail during our inquiry and strongly recommended that it be abolished. Ministers have agreed at the Dispatch Box that the football creditors rule has had its day. It has been challenged by Her Majesty’s Revenue and Customs in the High Court, unsuccessfully against the Football League. It remains a grave anomaly and, I believe, a shame on football in this country.

Football in this country has never been wealthier; there has never been more money in the game. The Premier League, in particular, is a great success. It has taken the English game around the world and brought huge amounts of money into football in this country, and I would not for one moment decry it. However, since the Premier League was founded, over 40 of the professional clubs in the 92 top positions in the football leagues have gone into some form of administration. There is a problem at the heart of finance in football that creates a lot of the problems we have in club ownership today, and it is the fans and the communities who suffer and have to pick up the cost of the poor regulation of football finance.

I welcome the measures on financial fair play that have been introduced into football, particularly as a consequence of UEFA requiring anyone playing in its competitions to comply with financial fair play, but I think that we need to go further. I believe that getting rid of the football creditors rule will be an important step forward. It cannot be right that when a football club goes into administration, the football debts are honoured in full, whether debts of transfers to other clubs or payments to players, in order that the club can carry on playing, but any other debts that are owed, particularly to businesses in the community, are settled with whatever is left. A company that maintains the grounds or prints matchday programmes, for example, might get a penny in the pound or less, whereas all football debts are honoured in full. That is morally wrong. The former chairman and chief executive of the Football League told the Select Committee in evidence that there was no moral justification for the existence of that rule. Nevertheless, it persists.

I believe that the football creditors rule also has an important knock-on effect: it does not encourage any sort of financial responsibility in the way clubs deal with each other. A club selling a player on to another club, perhaps at an inflated price in the transfer market— most of the money that comes into football goes back out through transfer fees and payments to players—would not really be concerned about whether the other club could afford the transactions it had entered into. If the club was going to pay a transfer fee in instalments, it would not be worried about whether it could really afford to pay it, because it knows that the football creditors rule effectively guarantees it the value of the transfer fee. If there were some element of shared risk between football clubs, there would be more honesty and transparency in transactions, and they would require more public declarations from each other as to their true solvency. This could be an important measure to stop clubs getting into the sorts of financial difficulties that we want to avoid.

I have raised this matter with the Department for Business, Innovation and Skills, which oversees the Insolvency Service, which, ultimately, is the responsible body that would look into the football creditors rule. There are grounds for amending insolvency legislation, as set out in the Bill, to get rid of this power so that the administrators of a football club would have the right and the power to settle all debts equally. It would then be a matter for the football creditors to come to an understanding with the football club on how outstanding debts were settled and whether it would be over a future period, but at least all existing debts should be settled equally so that local communities do not lose out when their football club goes into administration, getting nothing while the football players, the other football clubs and the football agents get all the money. That cannot be right.

Clause 4 deals with the ownership of football clubs. I suggest that there should be no bar to community trusts owning and running football clubs in the upper leagues and that any restrictions in that regard should be lifted. I would welcome the views of other MPs on what we can do to encourage more community ownership of football clubs. Ultimately, we cannot and should not seek to impose ownership models on football clubs by legislation, but it is worth bearing it in mind that the community supporters trust is an excellent model that has served many football clubs in the lower levels extremely well. AFC Wimbledon and FC United of Manchester are great examples of clubs that have been transformed through fan ownership. Clubs that have previously got into difficulties, such as Exeter City, have been transformed by fan ownership. It is a very good model that we should look to progress.

I greatly support the view expressed by Supporters Direct that we should see whether there can be incentives in the tax system to give non-league football clubs a similar status to community amateur sports clubs. At the moment, because of the level at which they may pay their players, even if it is as little as £100 a week, they may fall outside the threshold. It would be good to give clubs the opportunity to enjoy some of the status of community amateur sports clubs as an incentive for them to adopt a proper, robust supporters trust model of ownership. I have suggested a starting point for that process, but, again, I would welcome the contributions and ideas of other Members as the Bill progresses.

The Government have been looking at football governance for some time. The previous Sports Minister, my right hon. Friend the Member for Faversham and Mid Kent (Sir Hugh Robertson), took up the challenge in response to the Select Committee inquiry. The time has come for the House to set out its own proposals and measures. I hope that I have started that process with this Bill. I certainly look for the contributions of other Members as it progresses. I believe that it would send out a clear message to the football authorities that unless they finally act on these measures, this House will intervene, as it has the right and the power to do. I commend the Bill to the House.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I now find myself on the Back Benches. I do not want to detain the House long, but I feel particularly passionate about this issue. I pay tribute to the hon. Member for Folkestone and Hythe (Damian Collins) for bringing it before the House. I know of the extensive work that he and many other hon. Members have done. I pay particular tribute to my hon. Friend the Member for Eltham (Clive Efford)—the House will enjoy hearing from him shortly—who has set out an extraordinarily ambitious and progressive agenda for supporters’ involvement in their football clubs. I very much hope that that comes to fruition.

I should put on record a declaration of interest as a member of the Cardiff City supporters trust, Cardiff City supporters club, and Supporters Direct. As a Labour and Co-operative MP, I find this issue particularly interesting. I am a big supporter of community trust models and co-operative and mutual solutions in a whole series of areas, whether football or others.

I have a particular interest because of the recent, but also longer-term, experiences of my own football club, Cardiff City, which I have supported for 28 years this year, and for which I have been a season ticket holder. My father was briefly its club secretary during a quite turbulent period of ownership. The hon. Member for Folkestone and Hythe is probably aware of the series of owners the club has had over a number of years, all of which have involved significant ups and downs, including Tony Clemo, Rick Wright, the Kumar family, Sam Hammam, Peter Ridsdale and, more recently of course, Vincent Tan, who is widely known across the country and in football circles. He has made significant changes to the club, particularly to its colour, its badge and many other aspects of its heritage. Personally, I opposed those changes and I have made that clear to Mr Tan and in public. Indeed, I spoke about it in my very first speech in this House, when I made clear that my colours remain as deeply blue in my football as they are red in my politics.

A number of the issues addressed by the Bill are crucial and closely related to the ambitious plans that my hon. Friend the Member for Eltham has set out recently. We have to look at how fans and community figures can engage much more positively with clubs, so that they are not just left to those with the money and resources. I was reminded this week of one of the founding figures in Cardiff City’s history, Lord Ninian Crichton-Stuart, who was a predecessor of mine as a Cardiff Member of Parliament and who was sadly killed in the first world war while still serving as an MP. He is remembered fondly and his name was given to our original club home, Ninian Park. He was known as not only a great benefactor and fan, but a keen community supporter who engaged in the governance of the club. It is a shame that we have moved away from that sort of local involvement and understanding of the local heritage and the concerns of fans, and towards the current governance models and the challenges outlined by the hon. Member for Folkestone and Hythe.

As I have said, specific issues have included the change to the club’s shirt, colours and badge, and now red seating is being installed in the new stand being erected at Cardiff City football club, even though the traditional colour is blue. Cardiff City fans care deeply about such things and they go to the heart of the matter.

Many of us welcome the investment that Mr Tan has made, as well as his business acumen and a number of things he has done in the community. Indeed, he generously donated £1 million to local charities, which was a compelling offer. On other issues, however, including regular consultation with fans and the engagement of club officials below Mr Tan and the board, there has, sadly, been a lack of understanding. That makes me very sad, because, although Mr Tan has shown business acumen and invested money, and although he remains committed to the club, which is a positive thing, at the same time the heritage and history of the club have faced huge challenges and changes.

As the hon. Member for Folkestone and Hythe has said, we have to get the balance right between the principle of the rightful autonomy of owners and businesses to go about their business and the retention of the crucial involvement of fans and communities in their clubs. Football clubs are not like any other business: they are part of the heritage, community and history of many areas and are deeply related to other concerns in the local area, including those of the communities that immediately surround them. For example, I often deal with parking problems around Cardiff City stadium. Clubs also engage with local charities.

Unfortunately, we do not seem to be getting the balance right. That represents a contrast not only with the German model, where there is 51% ownership by fans’ organisations, but—I rarely praise other clubs in Wales, certainly not on the pitch—with the different approaches taken by Swansea, Merthyr, Wrexham and Newport.

I do not want to make the speech of my hon. Friend the Member for Eltham for him, but we have set out ambitious plans, which I thoroughly support. The plans have been welcomed by many supporters trusts across the country. Indeed, they were developed as a result of a very strong and lengthy consultation with those trusts and other organisations. The Cardiff City supporters trust welcomed them and I am sure the measures proposed by the hon. Member for Folkestone and Hythe will also be welcomed.

As I asked in an intervention, will the hon. Gentleman, when he responds to the debate, clarify the extent of the Bill? The Bill clearly states, if I have an accurate version, that it

“extends to England and Wales, and Scotland.”

It also makes it clear that it relates to English football authorities and the Football League. Cardiff, Swansea and other clubs are in an unusual situation in that they are based in Wales but play in the English football pyramid, as they have done for many years; Cardiff is the only club to have taken the FA Cup out of England, geographically, as it famously did in 1927. It would be useful to understand such issues, but they can perhaps be explored in detail in Committee, should the Bill reach that stage.

I certainly want many of the hon. Gentleman’s measures to apply to Welsh clubs, and I am sure that my hon. Friend the Member for Eltham does as well. I pay tribute to the hon. Member for Folkestone and Hythe. Such concerns matter very much to the people of Cardiff, Cardiff City fans and the Bluebirds alike. I very much hope that the Bill and the wider discussion can proceed apace in the House, and that some serious changes are made to get the balance right and to increase fans’ involvement in the ownership and operation of their clubs.