Football Governance - United Kingdom Parliament

Football Governance - United Kingdom Parliament
House of Commons
Culture, Media and Sport
Committee
Football Governance
Seventh Report of Session 2010–12
Volume II
Oral and written evidence
Additional written evidence is contained in
Volume III, available on the Committee website
at www.parliament.uk/cmscom
Ordered by the House of Commons
to be printed 19 July 2011
HC 792-II
Published on 29 July 2011
by authority of the House of Commons
London: The Stationery Office Limited
£24.50
The Culture, Media and Sport Committee
The Culture, Media and Sport Committee is appointed by the House of
Commons to examine the expenditure, administration, and policy of the
Department for Culture, Media and Sport and its associated public bodies.
Current membership
Mr John Whittingdale MP (Conservative, Maldon) (Chair)
Dr Thérèse Coffey MP (Conservative, Suffolk Coastal)
Damian Collins MP (Conservative, Folkestone and Hythe)
Philip Davies MP (Conservative, Shipley)
Paul Farrelly MP (Labour, Newcastle-under-Lyme)
Alan Keen MP (Labour, Feltham and Heston)
Louise Mensch MP (Conservative, Corby)
Mr Adrian Sanders MP (Liberal Democrat, Torbay)
Jim Sheridan MP (Labour, Paisley and Renfrewshire North)
Mr Tom Watson MP (Labour, West Bromwich East)
Powers
The committee is one of the departmental select committees, the powers of
which are set out in House of Commons Standing Orders, principally in SO No
152. These are available on the internet via www.parliament.uk.
Publication
The Reports and evidence of the Committee are published by The Stationery
Office by Order of the House. All publications of the Committee (including press
notices) are on the internet at www.parliament.uk/parliament.uk/cmscom. A list
of Reports of the Committee in the present Parliament is at the back of this
volume.
The Reports of the Committee, the formal minutes relating to that report, oral
evidence taken and some or all written evidence are available in a printed
volume.
Additional written evidence may be published on the internet only.
Committee staff
The current staff of the Committee are Emily Commander (Clerk), Andrew
Griffiths (Second Clerk), Elizabeth Bradshaw (Inquiry Manager), Jackie Recardo
(Senior Committee Assistant), Keely Bishop/Alison Pratt (Committee Assistants),
Steven Price, (Committee Support Assistant) and Jessica Bridges-Palmer (Media
Officer).
Contacts
All correspondence should be addressed to the Clerk of the Culture, Media and
Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The
telephone number for general enquiries is 020 7219 6188; the Committee’s email
address is [email protected]
Witnesses
Tuesday 8 February 2011
Patrick Collins, Mail on Sunday, Sean Hamil, Birkbeck Sport Business Centre,
University of London, and Professor Stefan Szymanski, CASS Business School
Lord Burns, Graham Kelly, former Chief Executive of the Football
Association, and Lord Triesman, former Chairman of the Football
Association
Page
Ev 1
Ev 11
Tuesday 15 February 2011
Greg Clarke, Chairman, the Football League and Andy Williamson, Chief
Operating Officer, the Football League
Ev 21
Gordon Taylor, Chief Executive, Professional Footballers Association, and
Paul Elliott, former Chelsea Captain and Professional Footballers Association
Trustee
Ev 32
Tuesday 8 March 2011
David Gill, Chief Executive, Manchester United Football Club, Peter Coates,
Chairman, Stoke City Football Club, Tony Scholes, Director, Stoke City
Football Club and Niall Quinn, Chairman, Sunderland Football Club
Ev 43
Lord Mawhinney, Former Chairman of the Football League, and Henry
McLeish, author of recent review of Scottish Football
Ev 58
Tuesday 15 March 2011
Shaun Harvey, Chief Executive, Leeds United Football Club, John Bowler,
Chairman, Crewe Alexandra Football Club, Barry Kilby, Chairman, Burnley
Football Club, Julian Tagg, Vice Chairman and Sporting Director, Exeter City
Football Club
Ev 67
Dave Boyle, Chief Executive, Supporters Direct, Malcolm Clarke, Chair,
Football Supporters Federation and member of the FA Council, and Steven
Powell, Director of Policy and Campaigns, Football Supporters Federation
Ev 80
Tuesday 22 March 2011
Ian Watmore, former Chief Executive, Football Association
Ev 88
Richard Bevan, Chief Executive, League Managers Association, Steve
Coppell, Former Manager of Reading Football Club, and Martin O’Neill OBE,
Former Manager of Aston Villa Football Club
Ev 98
Tuesday 29 March 2011
David Bernstein, Chairman, the Football Association, and Alex Horne,
General Secretary, the Football Association
Ev 110
Roger Burden, Chairman, National Game Board, the Football Association,
and Kelly Simmons, Head of National Game, the Football Association
Ev 122
Stewart Regan, Chief Executive, the Scottish Football Association
Ev 131
Tuesday 5 April 2011
Sir Dave Richards, Chairman, the Premier League, and Richard Scudamore,
Chief Executive, the Premier League
Ev 138
Brian Lee, Chairman, the Football Conference, and Dennis Strudwick,
General Manager, the Football Conference
Ev 156
Tuesday 26 April 2011
William Gaillard, Adviser to the President, UEFA
Ev 161
Hugh Robertson MP, Minister for Sport, Department for Culture, Media
and Sport, and Henry Burgess, Head of Professional and International
Sport, Department for Culture, Media and Sport
Ev 169
List of printed written evidence
1
Exeter City AFC Supporters Society Ltd
Ev 179
2
Dr. Malcolm Clarke, FRSA, supporter representative on the FA Council
Ev 183
3
Gordon Taylor, Chief Executive, Professional Footballers Association
Ev 186
4
Football Association (The FA)
5
Premier League
6
Supporters Direct
7
Football Supporters’ Federation
Ev 223
8
League Managers Association
Ev 227
9
Department for Culture, Media and Sport
Ev 230
10
Football League
Ev 232
11
Dave Boyle
Ev 237
12
Professor Stefan Szymanski
Ev 241
13
Mr Sean Hamil & Dr Geoff Walters, Birkbeck Sport Business Centre,
Ev 188; 278
Ev 207; 276; 279; 281
Ev 218; 279
Birkbeck College, University of London
Ev 247
14
The Football Conference
Ev 252
15
Lord Triesman
Ev 257
16
UEFA
Ev 270
17
Ian Watmore
Ev 274
List of additional written evidence
(published in Volume III on the Committee’s website www.parliament.uk/cmscom)
18
Mrs Linsey Wraith
Ev w1
19
Carlos Diaz-Sanchez
Ev w1
20
Steve Lawrence
Ev w2
21
Peter Hodge
Ev w8
22
Jay Cochrane, The International Football Development Academy (iFDA)
Ev w12
23
Saints Trust Consumer Cooperative Action Committee
Ev w13
24
Runcorn Linnets Football Club
Ev w14
25
Gary Pettit
Ev w17
26
Rob Bradley and Roy Noble, Lincoln City Supporters Trust
Ev w20
27
Commission on the Future of Women’s Sport
Ev w21
28
Cardiff City Supporters Trust
Ev w21
29
Andy Green
Ev w23
30
Cambridge Fans United (CFU)
Ev w26
31
James Wheeler
Ev w29
32
Paul Norris
Ev w32
33
Manchester United Supporter Trust (MUST)
Ev w36
34
Football Foundation
Ev w38
35
Liverpool Supporters’ Union – Spirit of Shankly
Ev w39
36
Steve Beck, York City Supporters Trust
Ev w42
37
Keith Blagbrough
Ev w43
38
Clarets Trust
Ev w47
39
Merthyr Town FC
Ev w49
40
Arsenal Supporters’ Trust and Arsenal Fanshare
Ev w52
41
Wimbledon Football Club Supporters Society Limited on behalf of
AFC Wimbledon
Ev w56
42
Professor Richard Giulianotti
Ev w59
43
Bristol City Supporters Trust
Ev w63
44
Bees United, the Brentford FC Supporters Trust
Ev w66
45
Independent Manchester United Supporters’ Association (IMUSA)
Ev w70
46
Newcastle United Supporters Trust
Ev w72
47
Fulham Supporters’ Trust
Ev w74
48
Board of Reading Football Supporters’ Society Limited T/A “STAR”
(Supporters’ Trust at Reading)
Ev w77
49
Blake Welton, Editor, First e11even
Ev w79
50
Southend United Supporters’ Club Trust t/as The Shrimpers Trust
Ev w85
51
David Hodges
Ev w89
52
Bradford City Supporters’ Trust (BCST)
Ev w91
53
Phil Gregory
54
Wrexham Supporters Trust
Ev w101
55
Blue and Gold Trust (King’s Lynn FC Supporters Trust)
Ev w105
56
Foxes Trust (Leicester City Supporters Society Limited)
Ev w107
57
AFC Telford United
Ev w108
58
Daniel York and Ben Westmancott on behalf of the board of Fisher FC
Ev w112
59
Adam Franks FCA CFA
Ev w115
60
Schwery Consulting
Ev w119
61
FC United of Manchester
Ev w122
62
Wimbledon Independent Supporters Association (WISA)
Ev w124
63
Olswang
Ev w127
64
National Association of Disabled Supporters (NADS)
Ev w132
Ev w94
65
Paul Baggaley, Chairman, Newark Town FC
Ev w136
66
Chester Football Club
Ev w137
67
Stephen Temple
Ev w141
68
Centre for the Study of Law, Society and Popular Culture,
University of Westminster
Ev w144
69
Scarborough Athletic Football Club
Ev w147
70
Yorkshire Division of the Football Supporters’ Federation
Ev w149
71
Professional Players Federation
Ev w153
72
Darlington Supporters Trust
Ev w154
73
Jonathan Keen
Ev w157
74
Dr John Beech, Head of Sport & Tourism, Applied Research Centre
for Sustainable Regeneration, Coventry University
Ev w161
75
Lawn Tennis Association (LTA)
Ev w165
76
John Bentley
Ev w169
77
Rick Duniec
Ev w170
78
Pompey Supporters’ Trust
Ev w172
79
Football Licensing Authority
Ev w176
80
Swansea City Supporters Trust
Ev w178
81
Co-operatives UK
Ev w180
82
Vince Cullen
Ev w183
83
Cambridge City Supporters Trust
Ev w186
84
Hendon Football Club Supporters Trust
Ev w188
85
Mark Usher
Ev w190
86
Hamburger SV Supporters' Club
Ev w198
87
Christian Müller
Ev w201
88
Substance
Ev w204
89
The Isthmian Football League, known as the Ryman Football League
Ev w208
90
Inclusion and Diversity Caucus
Ev w214
91
Bates Wells and Braithwaite London LLP
Ev w216
92
Chris Vasper
Ev w217
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Culture, Media and Sport Committee: Evidence Ev 1
Oral evidence
Taken before the Culture, Media and Sport Committee
on Tuesday 8 February 2011
Members present:
Mr John Whittingdale (Chair)
Ms Louise Bagshawe
David Cairns
Dr Thérèse Coffey
Damian Collins
Philip Davies
Paul Farrelly
Alan Keen
Mr Adrian Sanders
Jim Sheridan
________________
Examination of Witnesses
Witnesses: Patrick Collins, Mail on Sunday, Sean Hamil, Birkbeck Sport Business Centre, University of
London, and Professor Stefan Szymanski, CASS Business School, gave evidence.
Chair: This is the first hearing of the Select
Committee’s inquiry into football governance. I
welcome our first three witnesses: Patrick Collins of
the Mail on Sunday, Sean Hamil of the Birkbeck Sport
Business Centre and Professor Szymanski from CASS
Business School.
Q1 Ms Bagshawe: Could we start with a brief
overview of things as you see them? How robust do
you think the English model of football is?
Professor Szymanski: Partly I think the question is
what do you mean by the English model of football?
Are you talking about professional football? Are you
talking about football in the top leagues—the Premier
League, the Football League? Are you talking about
the national team game? Are you talking about
grassroots? Are you talking about local club football?
Are you talking about, indeed, mass participation in
football on an informal scale? Part of the problem is
which bit we are talking about.
If we talk about the professional game, my view is
that the professional game is extremely robust and
very successful. We have the most successful football
league in the world in the Premier League. We have
the most popular lower tiers of football anywhere in
the world: the English Championship is by far the
most popular second league in the world, the third tier
and fourth tier are very strong. They have very high
levels of attendance and of income. Although on the
face of it people say, “It looks like they have lots of
individual problems”, taking the system as a whole, it
is very robust.
If you think about the national team, obviously people
talk about issues with that, but that is a very special
problem. If you think about the grassroots, in terms of
participation, people participate very strongly in
football in this country. There are lots of facilities and
I would say overall I think it is fairly strong and
robust.
Sean Hamil: It has a lot of strengths, but there are
problems, and I think that is the reason why this
Committee is conducting this investigation. The
professional leagues are strong in the sense that they
generate a lot of turnover, a lot of people want to
watch it and English teams perform comparatively
well in European competition, but if you focus on one
key financial indicator, there have been 53 incidences
of financial administration in English football since
1992. There has not been a single year since the
foundation of the Premiership that the clubs
collectively have made a pre-tax profit. Football is
different but turnover is vanity, profit is sanity. I have
got a copy of the Portsmouth administration document
here. It is sorry reading, and one of the problems is
that essentially what you have in administration is
that, because of the football creditors rule, the key
football creditors all get paid 100%, which means that
the tax authorities get proportionately less and all the
small creditors, such as St John Ambulance, do not
get paid. Even looking at that as an isolated episode,
that should be intolerable. I recommend that
everybody read this document, because it is available
on the Portsmouth website, and all the administrations
follow the same pattern.
It should not be acceptable in any industry that says
it is a private business but has a loss-making financial
model. Essentially, it receives a de facto subsidy from
the public purse through the non-payment of taxes. To
be fair to the football authorities, they have recognised
this fact and we now have early warning for tax
payments, but there has been a long history of nonpayment of taxes at football clubs, and you have to
ask why is it only now that it is being addressed? The
reason, in my opinion, is because the tax authorities
have finally said, “Well, we’re going to get serious
here”.
The other fundamental problem with a loss-making
model is that it is about the quality of the owner that
you get. If you have a scenario where someone of the
quality of Delia Smith, a successful entrepreneur or
Sir John Madejski, successful entrepreneur and local
boy who tried to build a sort of major sporting
institution in his hometown, decide it is not worth it
and that they would like to get out, I think that that is
a problem.
Similarly, if you look at the Liverpool situation
recently, in the nick of time, there was some very
effective work by the interim chairman and his team
to deal with failed owners who basically bought the
club with borrowed money It’s all very well to say
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Ev 2 Culture, Media and Sport Committee: Evidence
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
that money invested by new owners is money being
brought into the game but where you have a leveraged
buyout, money is going out of the game. In our written
submission from Birkbeck, we acknowledge all the
many strengths of English football. It is very
important to do that if you want to have a balanced
discussion, but there has to be a realistic assessment
of this particular issue. If you are losing money year
after year after year, I’m sorry, that is a problem.
Secondly, we have the recent example of the lack of
financial regulation in the credit crisis. I make no
bones about this: there is a role for effective
regulation. That is the lesson of the financial crisis.
The only question is what form it should take.
Patrick Collins: Essentially, I agree with very much
of what Sean has just said. If it were sufficiently
robust, we would not be having this Committee at all.
I also think that the game tends to get judged on the
success or failure or otherwise of the Premier League,
which is a mistake. The Premier League has great
weaknesses, which spring possibly from its
foundation. I think it was conceived in the spirit of
greed and over the years it has probably got a good
deal greedier. This is one of the central problems of
the game: judging everything by how much money
it can make rather than what sort of contribution it
can make.
The solution is obviously far broader than this, but the
notion of having two independent directors of the FA
is an excellent one, because one of the central things
that is going wrong with the game is the ongoing
conflict between the Premier League and the FA. That
has to be resolved. Once that has been resolved, we
can look at the game much more calmly. I have some
hopes of this Committee because it has been long,
long overdue that Parliament has taken a proper look
at it. I have urged for years that there should have
been an inquiry of this sort and I am very pleased that
you have decided to have one.
Q2 Ms Bagshawe: Thank you very much. That leads
me neatly on to my follow-up question. If we think of
the structure of English football as a pyramid, from
the Premier League down to League One, League
Two, Conference, semi-professional football, has
overall the introduction of the Premier League, would
you say, strengthened or weakened the English
football pyramid as a whole? Mr Hamil, what do
you think?
Sean Hamil: I think any high-level competitive
league where people want to watch it is a good thing,
so I don’t think the Premier League is a bad thing. It
would show a lack of focus on the part of the
Committee if the way that it proceeded was that there
is a problem with the Premier League. I don’t think
that is the problem. The issue, as you allude to, is the
relationship between the Premier League and the rest
of football.
It is well recognised in all sports models that there is
a pyramid, because the grassroots provide the players,
even in an international marketplace, but they also
provide the fans and the whole participation culture
creates the interest. It is well recognised that there
should be solidarity from the top to the bottom. The
critical issue is how that solidarity relationship is
organised. My own view, it won’t surprise you to hear,
is I think there should be greater solidarity between
the Premier League and the grassroots, either through
the Football Foundation, through payments down to
non-league football or through partnership with the
FA. But the Premier League itself is not the problem.
The problem is that the relationship has got out of
kilter, and you can see that, as Patrick alluded to, most
obviously on the board of the FA where, instead of
having a unitary board that tries to serve the interest
of the wider game, you have two sectional interests
who are not quite sure how to relate to each other.
Professor Szymanski: I agree with Sean about this not
being just about the Premier League. One thing you
need to take into account is the context of English
football around the time the Premier League was
formed. The history here is that in the post-war era,
up until 1985, attendances were continuously in
decline at English football. We all know the history of
what the problems were in English football: neglect
of investment, poor facilities, poor crowd control,
hooliganism, a sense of danger and it not being a safe
place to be.
If you look in my written submission, I show a chart
of the actual movement of attendance in English
football; that reverses in 1985 and since 1985 it has
gone continuously in the opposite direction. In terms
of people going to football, we have just got back to
where we were in 1960, and one of the things this
Committee should think about is what brought about
those changes. Why has English football become so
much more popular? The Premier League is part of
that in the sense that the Premier League was
motivated by the advent of satellite broadcasting,
which was again motivated by partly or largely by
deregulation of broadcasting in Europe, which created
competition to own broadcast rights, which created
competition to be able to show things like English
football. That competition bid up the value of the
rights, which brought money into the game and that
money has been used to buy players and make the
game more attractive. That is that part of the story.
Of course another part, as Sean would probably draw
your attention to, is the improvement in football
stadiums, which was motivated partly out of
Government intervention following the Hillsborough
tragedy and the Taylor report that followed on from
that. But I would also point to another big change,
which was an internal change that happened in
English football in the early 1980s, which was that
following the recession of 1980–81, the Football
League authorities looked at football again and said
that one of the problems in English football was that
it was not commercial enough. You could not pay
directors, you could not pay dividends and,
essentially, the Football League’s own investigation
concluded that it needed to adopt a more commercial
approach. That is what, I think, underlies all the
changes that have gone on in the last 20 or 30 years.
Football has become more commercial. Of course this
has caused a lot of outrage because ticket prices have
gone up, and there is new merchandising and new
ways of selling football. Certainly people of my
generation or older look back and say, “Oh well,
things must have been better in the past.”
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Culture, Media and Sport Committee: Evidence Ev 3
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
But in reality you have to look at the level of national
and international popularity of the game and say,
“Well, it has really been very, very successful.” Sure,
there are issues you can talk about and problems that
you might focus on, but the overall background
picture should be one of this is one of Britain’s most
successful export industries right now and, before you
think about interventions that the Government might
make or the state might introduce, you should ask
yourself, “Could we jeopardise any of that success and
popularity in the future?”
Q3 Ms Bagshawe: Mr Collins, have you anything to
add, particularly in relation to how the Premier
League affects the other strata of English football?
Patrick Collins: I think, and it is going way, way back
to roughly the time Stefan was talking about, some
people have a certain yearning for the kind of equality
which prevailed before 1983, when each club took
their home gates and paid the away team 20% of that
gate. The result was a rough equality among the 92
clubs. In fact, going right back to 1965, the first
television contract for the season was £5,000 when
the 92 clubs received around £50 each. I would not
recommend that, but after that in 1985 when it started
to change—the first division took 50% of the revenue
from television, the second division 25% and the third
and fourth 25% each—it produced a game that I agree
had many of the problems that Stefan spoke about but
it was also an age in which clubs succeeded by virtue
of their ability. Derby won a league title and
Nottingham Forest won two European cups, not
because they were richer than the rest but because
they found a manager who was better than the rest.
The game seemed to be then centred on sport rather
than money.
It is absolutely inconceivable that you could have a
Derby or a Nottingham Forest, totally inconceivable.
They couldn’t approach the feats that they did. I find
some regret in the way that the Premier League came
and corralled the huge percentage of the money and
made a much more unequal game. So you now have
people coming into the game with huge spending
power, you have a sheikh here, another guy up there,
who can determine the course of the season by the
power of their purchasing. Sport lost a great deal
when it lost the kind of equality that used to prevail.
Q4 Mr Sanders: As we are going to be dealing with
supporters trusts in this inquiry, I have to declare I am
a member of the Torquay United Supporters Trust.
That leads me nicely to my question: is there sufficient
redistribution of income down the pyramid to sustain
football’s structure in the longer term?
Professor Szymanski: That is a very good question. I
guess again it comes down to what one would mean
by “sufficient” in this context. In a sense, you don’t
need any money to trickle down the pyramid in order
for there to be people interested in playing football
and people to want to play. For example, if you cut
off all solidarity mechanisms now from the Premier
League to the lower levels, the lower levels would all
continue, people would still go to watch. If you went
to a school and asked how many kids would like to
play Premier League football, if you cut off all the
solidarity mechanisms, that number of kids would not
go down. Ultimately, football is a game played by
people and the key incentive is, “Do you want to play
this game?” and that is not going to change, regardless
of the solidarity mechanisms.
That does not mean to say there is no justification for
money trickling down, and it is perfectly reasonable
to say that money should come from the top levels in
order to help provide facilities and provide investment
and maybe improve the quality of the game. That is
no doubt true, but again one of the things we should
perhaps ask ourselves is: where do we want our
footballers to come from? A lot of people are very
concerned that there are not enough young footballers
coming from this country and too many footballers
coming from abroad. In other words, Premier League
money is being used to track down talent globally
rather than nationally. Is that a bad thing? Should we
think that it is more important that we have more
English footballers or more Welsh or Scottish
footballers, rather than having more African
footballers? We have not had any major stars in the
Premier League from India, for example, but no doubt
that will come at some point, and more Chinese
players and so on. Is it bad that they spend their
money on that?
In a sense, when you talk about the trickle down and
is there enough money being redistributed, ultimately
all the money that gets spent in football goes on
footballers in one way or another, and the teams at the
top are looking to find the best players that they can.
I do not see any particular reason to say that there is
not enough money currently going down to the
lower levels.
Sean Hamil: Your question brings us back to the
problem of loss-making. On the current system, there
is a famous academic paper by Peter Sloane that says
what sports club owners do is they maximise utility
not profit. They want sporting success, therefore they
always overspend. Alan Sugar used the rather crude
expression “the prune juice effect” about Tottenham:
money goes in one end and out the other end to
players.
What happens in that scenario is that unless you are
able to deal with this fundamental challenge about
how you can stop clubs spending more than they earn
on salaries, you will always have chronic financial
instability. To go back to the trust example, I was an
elected director of Supporters Direct. It is well known
I am a passionate supporter and continue to be, but
one of the problems we faced at Supporters Direct,
post-ITV Digital, was that 17 clubs went into
administration because of a collapsed TV deal. At one
point I think there were seven league clubs in fan
ownership, basically because there was an investor
strike, because no one would buy a league club in that
brief period of 18 months, so it was like a financial
accident and emergency. The volunteers took over,
they cleaned up the balance sheets through voluntary
labour, fans’ investment, and at the end of the period
when the situation stabilised of course the fans said,
“We can’t compete because our rivals have got a sugar
daddy.”. So what happened? They were reluctantly
forced to sell back to private owners. In other words,
financial virtue did not have its own reward.
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Ev 4 Culture, Media and Sport Committee: Evidence
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
That is why the principles of UEFA financial fair play
are absolutely critical. The fact they happen to come
from Europe is neither here nor there. They should
be applied in every league in Europe independently
because what happens is that if you are overspending
on players you are not spending on disabled facilities
for local fans, you are not spending money on that
family facility, you are not spending money on that
outreach into the community. Stefan, who is one of
the most pre-eminent sports economists in Britain,
throughout Europe, has written extensively about this
whole business of somebody has to pay somewhere
along the line.
Q5 Mr Sanders: Where do you regulate and who
regulates?
Sean Hamil: It is absolutely clear who should
regulate. The regulators should be the football
authorities but the Government has a role in nudging
them in the right direction. If you take the Taylor
report, football could not reform itself at that point;
Government had to intervene and say, “We’re sorry,
but you’re going to have to modernise your stadia.” I
think we’re at a similar turning point.
From 1992, four factors came together to create a
perfect storm for football. First of all, stadia were
being modernised with a 25% subsidy over 1992 to
1997 from a levy on the pools betting duty. English
teams had just re-entered European football in 1990.
The pay TV revolution had just started, and we had
just started 15 years of uninterrupted economic growth
through to 2007 and, as we all know, as growth rises,
a disproportionate amount is spent on leisure. That
ended in 2007. We are in a paradigm shift now and it
is important that the football authorities focus on that.
Things have changed. European money is now a
necessity not a bonus. The TV money domestically
has plateaued. They have to pay for their own stadia
money now and we are in a financial downturn. That
is an appropriate time for reflection. But to come back
to your fundamental point, something has to be done
about loss making because loss making basically
means spending everything you have on players and
not building the club as a viable institution, which not
only benefits its shareholders but also the wider
community.
Q6 Mr Sanders: You mentioned the football
authorities. A lot of people give that answer, “The
football authorities should do something”. Who are
the football authorities?
Sean Hamil: The FA should be the lead body because
the FA is the governing body of football, and on the
board of the FA are representatives of the Football
League and the Premier League. When people attack
the FA, they are actually attacking the Premier League
and the Football League as well. It is the governing
body. If you read the submissions from the Premier
League, they acknowledge the relationship and so on.
There is no need to reinvent the wheel. What is
necessary is to recalibrate the relationship between the
two leagues and the FA and, in my opinion, to allow
the FA to get on with its historic role of governing the
game in the wider interest. The job of the leagues is to
run two successful leagues. It is not to govern football.
Q7 Mr Sanders: Can I come back to my original
question about the pyramid? The pyramid is not just
about an agreement of income going down; in the past
a lot of transfer money also went down the pyramid
that now tends to go overseas. Would Patrick want to
say something on that? There also used to be more
redistribution within by sharing of gate receipts,
which went out of the window, which clearly benefits
the bigger club against the smaller club.
Patrick Collins: The transfer money point you make
is very relevant. In the last transfer window, I believe I
am right in saying that the leagues outside the Premier
League benefited by about £12 million, which is
obviously peanuts given that about £200 million was
spent. So this doesn’t happen. We hear about this
trickle-down effect. One of the great dangers of the
so-called trickle-down effect is that when a monstrous
fee is paid, for instance like the one that has just been
paid for Fernando Torres, it sets the bar at a different
level. People who have other players to sell say,
“Well, if he is worth that, mine must be worth that.”
It is not just the fee but of course the ancillaries that
go with it, the salary even more so than the fee. I do
not know what Chelsea are paying Torres but it would
be enormous. The next agent will know what Torres
is being paid and he will negotiate on that basis. The
idea of this wonderful pot of money going down and
doing good all over the place seems to me to be a
misnomer.
I take Stefan’s point that the Premier League has
fulfilled many of its aims and ambitions, but I remind
you that one of the central reasons it was brought into
being, one of the reasons under Graham Kelly, who I
believe is speaking to you later, under the blueprint
for football he devised, which effectively brought the
Premier League into existence, was that the Premier
League would make for a successful England team:
because of the extra time players would have to
prepare because of fewer games and so on, we would
have a successful England side. As we all well know,
every two years we have inquests and eruptions when
first England fails at the World Cup and then it goes
out at the European Championships. The Premier
League does a good job of preparing the world’s
players to perform at major tournaments, but since
there are fewer and fewer English players playing in
the league it does less well with England players.
Q8 Jim Sheridan: Stefan, if I picked you up right,
you said that the money generated in football tends to
stay in football. Can I therefore ask you about the role
of football agents, because from where I am sitting
the agents take money out of the game. That money
doesn’t go back into the game; that money goes out
of the game. There is a self-interest in agents moving
players around clubs in order that they get their
commissions fee and so on. Given the fact that there
is only one source of income for football, and that is
the paying fan who buys the merchandise, the
televisions, the tickets, they’re the only people that
put the money into football, is there an argument to
regulate agents so that they do not move players or
encourage players to move around clubs and get these
extortionate, ridiculous sums of money? That is
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Culture, Media and Sport Committee: Evidence Ev 5
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
money that is leaving football; it doesn’t come back
in again.
Professor Szymanski: Before answering that, can I
just briefly go back to a point that you were raising.
Your comment about the trickle-down effect is, I
think, completely wrong. If you go back historically,
there never has been a trickle-down effect. If you go
back to the very first Government report, the
Department of Education and Science’s report in 1968
by Sir Norman Chester, it showed that, in fact, teams
in the third and fourth divisions were paying net
money to the top division. The trickle-down effect is
a myth and that is part of the problem with the whole
approach when people talk about it. They do not base
the arguments on researched facts. I am sorry, that is
not a particular criticism of you, but in general there
is a reluctance to look at the data about what we know
and more interest in talking about emotions.
To come to your question now, from the day that
agents came into the game, it was clear that the clubs
and the football authorities hated them and would like
to get rid of them. Why is that? It is because football
agents drive up the wages of their clients, and of
course they have been unbelievably successful in the
last 20 or 30 years in doing that, so you will get a lot
of calls for regulation of football agents because of
the damage that they allegedly do. If you think about
the situation we had before we had football agents, we
had the retain and transfer system in football, which
effectively tied players to the clubs for their lifetime.
Up until 1960, we had a maximum wage rule that
said that players could only be paid up to £20 a week
maximum. Effectively, all the money that came into
football was kept within the clubs, within the
organisations that run the clubs, and the players got
nothing.
There are two points one could make about that. One
could make an ethical case and say, “Is it fair that the
people who create the performance on the pitch get a
tiny fraction of what is paid?” We could argue about
the ethics of that. Most of these people would play for
nothing. Any of us would love the chance to play at
the top level and so maybe they do not need to be
paid that money. But the other question to ask is, when
the money did stay with the clubs and the
organisations that ran football, was it well used? Was
it invested for the future? Was it invested in
developing the game? Arguably, that coincides with
the period of dramatic decline in English football. It
is so easy now, 25 years on, to forget the scale of
the crisis in English football that was continuing and
persistent over a quarter of a century. The game really
was on its knees. Allegedly, Margaret Thatcher talked
about shutting down football in this country. It is
unimaginable.
Q9 Jim Sheridan: Football has changed in 25 years.
We have come a long way in 25 years. I am not
suggesting for a minute that the clubs keep the money
and do not pay the players appropriately, but the
bottom line is it is the supporters that are paying £50
million for players. That is supporters’ money.
Professor Szymanski: Absolutely, but the supporters
willingly part with the money because they go to
watch the football and they watch the football.
Nobody is forced to go to watch football. Again, if
you are talking about any high-quality product, people
pay a high price to get that high-quality product. We
would not be having a committee here about any other
high-quality service that is being provided. We
wouldn’t be talking about Gucci shoes or luxury cars
and saying, “People are paying large sums of money
for this. Why is that money not being used for the
right purposes?” The point about this is that the agents
negotiate on behalf of their players to get them a
reward for their services. This is true not just here in
English football, it is true worldwide. If you look at
the United States, for example, very much the same
situation prevailed up until the 1960s: the players got
nothing and the teams took all the money. Then
players got freedom of contract, agents came into the
game, and the players’ wages went up dramatically.
The clubs told everybody and you can look at
congressional hearings where the clubs and the
franchises all say, “Oh, you’re destroying our game
and it’s ruining the game” but the fact is that there,
again, attendance has grown, people have become
more interested and the coverage has increased.
Regardless of the ethical question, in terms of does it
damage the health of the game, I think not. Partly the
reason is that the agents have the incentive to go and
find new players. What they have done is the quality
of football has gone up, I would argue, because there
has been this persistent search globally to find the best
possible players.
Patrick Collins: I butt in because you do not often
hear defences of agents. I think they are a scar and a
stain on the game. The money the agents have taken
out—we cannot be sure because all the figures are not
available. Everyone has terrible stories about football
agents because so many regard them, not as Stefan
seems to, but as leeches and parasites. There was one
12-month spell around 2009 when Premier League
clubs paid them a total of £70.7 million. That is
money the game will never see again, and for what?
It is money that is just lost to the game and I think
that is quite scandalous.
A couple of examples. When Wayne Bridge moved
from Chelsea to Manchester City, the agent, Pini
Zahavi, was paid £900,000. Now, Bridge wanted to
go to Manchester City, Chelsea wanted to sell him
and City wanted to buy him. Both clubs had chief
executives who could have picked up a telephone and
done the deal in about five minutes, I would guess,
yet Zahavi took £900,000 from this deal and nobody
thought that was appalling. Years ago, in 2004,
Manchester United paid an agent named Rodger Linse
£1.3 million for renegotiating the contract of Ruud
van Nistelrooy—not negotiating a contract but
renegotiating it, and he got £1.3 million for it. Yet
there is something called the Association of Football
Agents whose chairman is somebody called Mel
Stein, and he wants them to have a seat on the FA
Council, because he says, and I quote, “Agents
perform a valuable role and should be acknowledged
as stakeholders in the game.” Those arguments, at the
moment, go unchallenged by the football authorities.
We need people there who will take on this nonsense
and we do not have them at the moment.
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Ev 6 Culture, Media and Sport Committee: Evidence
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
Sean Hamil: May I just make a very brief
observation? The thing about agents is that it is
legitimate. I have done a bit of active trade unionism
myself. It is legitimate that you have a representative,
but the problem with agents is that there has been so
many abusers taking money from both sides and so
on, but there is also potential for corruption. At the
heart of the Calciopoli scandal in Italy in 2006, agents
had players who they effectively controlled on both
sides in a game. The role of agents in sport is much
more complex than it is say, for example, in movies,
and for a whole lot of different reasons it needs to be
very aggressively regulated.
Q10 David Cairns: It struck me in reflecting on what
has just been said that there is a connection, which is
that when all this money goes on wage inflation and
to agents, it is the people who make Gucci handbags
and Lamborghinis who benefit from this. Maybe we
should get them in as part of it.
We are going to talk about debt financing and
leveraged buyouts later, but just a couple of specific
questions before we do. Picking up Adrian’s point
about redistribution, although this is an inquiry
primarily focusing on England, there are clearly
implications for Scotland and Wales and all the rest
of it in terms of fit and proper persons, leveraged
buyouts and foreign ownership, so we will bear that
in mind. One of the things that rankles in Scotland is
that the clubs that get relegated from the premiership
get 30 times more money than the team that wins the
SPL. Isn’t this parachute payment—it is a form of
redistribution and I understand the logic of it—just a
big fat reward for failure? You come last, so you get
extra money for it. It is a Fred Goodwin model of
rewarding people. Worse than that, doesn’t it import
into the championship wage inflation that would
otherwise not be there, because of this grotesque
distortion?
Professor Szymanski: The point you make about
rewarding failure is a very important one, because the
Committee will think a little about the American
model and why something like the NFL—we just had
the Superbowl—is so incredibly successful. One of
the points people make about that is that it is a system
that rewards failure as well. The traditional football
model we have in Britain, Europe and most of the
world is a model that punishes failure through
relegation, and that is one of the things that drives
the clubs to live financially on the edge. They live
financially on the edge in order to avoid relegation and
to get promoted up the system, so we have a hypercompetitive system. This is true not just of this
country; it is true everywhere in football. It has always
been true, because of the nature of the incentive
system.
The NFL is the most profitable football sports league
in the world by a country mile. The 32 owners are
incredibly wealthy and they get incredibly wealthy out
of American football, and they do this by being, as
they describe themselves, 32 socialists who vote
Republican, because what they do is they share
everything in common: 40% of the gate money goes
to the visiting team. They share all the broadcasting
money absolutely equally, they share all the
merchandising income equally. Imagine Manchester
United sharing its shirt income with Stoke. That is
what goes on in the NFL: every team shares equally.
They also have a salary cap, which limits the amount
that they can pay players, and they have a draft
system, which rewards the worst performing team
with the first pick in the draft, which in addition gives
them exclusive negotiating rights, which helps to keep
the wages down. They have designed a system that
keeps wages down.
Q11 David Cairns: What is the salary cap?
Professor Szymanski: I cannot remember the latest. It
has changed. They are just about to have a big strike
probably because the collective bargaining
agreement—they have a union and an unionised—
David Cairns: It is socialism then.
Professor Szymanski: It is socialism. Again, in
America all the players are represented by strong
unions. The old agreement I think was 58% of
revenues. I think it was 58% but I would have to
check the figure.
But they have these arrangements, which mean that
things are held in common. One interpretation of the
parachute payments, to come to your question, is that
in fact the Premier League is setting about doing the
same thing. One implication of the parachute
payments is that teams that benefit from these
payments are very likely to get promoted again. They
have just extended the parachute payments, so in other
words they are reducing the size of the club that can
participate in the Premier League.
One way of thinking about what they would
ultimately like to do to run it, to be successful and to
avoid all the financial problems that they have, is to
become a closed league like the NFL, get rid of
promotion and relegation entirely. In many ways,
when you think about the mechanisms that you might
think about to bring financial security to the Premier
League, you might be helping to move it towards an
NFL style organisation in the future. I think that is
something you should bear in mind in your
discussions.
Patrick Collins: I would agree with Stefan’s analysis,
though perhaps I would not share his sympathies. One
of the principal reasons for sport is winning and
losing. You win, you succeed; you lose, you suffer the
consequences. But I do agree that the Premier League,
deep down, wants to be a closed shop. Phil Gartside,
the chairman of Bolton, has tried once or twice to
bring in this idea of no relegation, keep the whole
thing, so you won’t have to worry about losing vast
sums when you go down. It was a rather subtle way
of doing it. In order to bring this about, the parachute
payments, which I think are a really important subject
with regard to this inquiry, have now grown to
enormous size. They are £18 million for the first two
years and more over the next two. This seems a lot
anyway, but when you realise that, from television
alone, every old-time second division club gets £1
million whereas every Premier League club gets £45
million, the gap is horrendous. The parachute
payments involve going down with £18 million in
your pocket when everyone else has got £1 million
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Culture, Media and Sport Committee: Evidence Ev 7
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
and so the likelihood is, as Stefan says, they will come
straight back.
The idea of at least a two-division Premier League is
still lurking there. In that sense, again it is what I was
saying earlier, the whole thing has become who can
wave the biggest cheque, and I don’t think sport
should be like that. It should be more than a battle
between billionaires, and the public rightly expects
more of it than that, but that is the way it is going at
the moment.
Sean Hamil: Stefan is correct when he says that an
obvious solution to the loss-making is to have a closed
league and the increase in the parachute payment
looks very like a de facto attempt at that. But you can
deal with that within the European system of
promotion and relegation, and the way you deal with
it is to say through some version of financial fair play
it is written into your membership of the league that
if you get relegated you have to renegotiate your
salaries. I am not a fan of the football creditors rule,
I don’t think it is sustainable in the current
environment, but the leagues have enormous power
because they control ownership. If you want to play
in the league, you have to get the league’s permission,
and if the league is really serious, it can say when
you get relegated, particularly if you have the financial
principle that you cannot spend more than you earn,
then written into every player contract is renegotiation
of salaries. It can be done. There has to be radical
thinking about this. The key thing about sport is that
it is a joint product. The reason why the Republicans
vote socialist is because they recognise the peculiar
characteristics of sport. Even the children in the
schoolyard know “I pick one, you pick one” if you
want to have a competitive product. Only in sport do
you want a strong competitor, and it is not for any
political, ideological reasons that you need to regulate.
You need to regulate because of the peculiar nature of
sports competitions, and this particular conundrum is
just one more example.
You just need to be a little bit imaginative. We can still
have all the good things of promotion and relegation.
Hopefully AFC Wimbledon are going to embody that
by getting back in the Premier League soon from
starting again in 2002. The problem with a closed
league is you get rid of that romance and that magic,
which is at the heart of the economic power of
English football.
I just want to add one thing. Salomon Brothers in
1997 brought out a report on how you value a football
club. It was a very insightful piece of work by a group
of hard-headed analysts. They said fans’ emotional
attachment to their clubs—fan equity—you can put an
economic value on it, because they won’t substitute.
You know if you get relegated and you’re Leeds
United you will still have 28,000 supporters and you
can borrow against that. They did borrow against that
and it was a disaster, but that is not the point. The
point is that you can put economic values on these
factors. They understood the peculiar nature of fans’
relationships, and because they were clever and
imaginative, they were able to define it in financial
terms. That is the challenge here. Let us try to
understand the peculiar nature of this industry and to
come up with regulatory measures, like the
renegotiation of players’ salaries when you get
relegated, which are a moderate response to that
problem, unlike the radical response that would be a
closed league.
Q12 David Cairns: As a Merton councillor at the
time that the local community was stabbed in the back
by Wimbledon FC, I entirely agree with you about
AFC Wimbledon.
May I change the subject and ask a question about
supporters who are, after all, at the heart of all this?
At the risk of coming over all jumpers for goalposts, I
remember as a boy hanging around outside Cappielow
asking random strangers for a punt over the turnstiles.
Obviously that does not happen any more and I do not
encourage children to ask random adults for that, but
is there any cause for concern that according to the
Daily Mirror, an outstanding organ, the average age
of a Premier League football fan is 43? Speaking as a
44-year-old, that is still young, but it cannot be good
that the average age of a football fan is 43. The
corollary of that as well is, maybe not outside London
but certainly inside London, it is becoming
increasingly a middle-aged middle-class pastime, and
our future players are not coming from the ranks of
the middle-aged middle-classes. It may be sustainable
at the minute but long term is there not a problem if
you get an ageing middle-class fan base?
Sean Hamil: Yes, there would be.
Professor Szymanski: I think you will get the pattern
here. No, it is not a problem: think of the Premier
League as a luxury car. Who has luxury cars?
Typically, middle-aged wealthy men, no kids. Are
Porsche saying, “Crikey, the average age of our
owners is 43. Have we got a long-term problem that
people won’t buy our cars?” Of course they are not,
because people know that that is something you only
get to have if you have a high enough income. If you
cannot afford a Porsche—I cannot afford a Porsche—
you go down the ranks. We have tiers of football as
well that people can go to. It is noticeable that, while
the Premier League’s attendance has grown by only
70% in the last 25 years, against a background when
prices have increased more than seven or eightfold in
real terms. What has happened in the Championship
is attendance there has risen by 180%. That is partly
because prices have not risen by so much. Back in
1985, you could go to a Premier League game or a top
division game for £2.80, that was the average price of
a ticket, which in today’s money is about £6.60.
Imagine if that was still the price today. The stadiums
would have lines outside of them going for miles
round the corner because you just could not fit all the
people who would want to go and watch. It is so
popular. Of course that overflow has gone down into
the lower leagues and it reflects the overall popularity
of the game. You might say, “Is it terrible that it has
become gentrified?”
Q13 Mr Sanders: It is interesting that overflow has
gone into the lower league. The fact is the lower
league attendances are lower today than they were
before the Premier League, if you go back 30 or 40
years.
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Ev 8 Culture, Media and Sport Committee: Evidence
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
Professor Szymanski: No, no. That is completely
wrong.
Mr Sanders: My club’s attendances are significantly
less than 40 years ago.
Chair: Adrian, we are going to have to move on, we
are very short of time.
Q14 David Cairns: I understand that as a model. I
do not accept it; I understand it. If I can’t afford a
Lamborghini, I buy a Ford Sierra, fine. If I’m a young
kind growing up in Tottenham and I can’t afford to
get into White Hart Lane, I am not going to go to
Torquay to get into it, so I think, the analogy is faulty.
But the question isn’t about whether or not it works
as a business model today but whether there are any
implications for the long-term health of the game if
young working-class kids are not getting access into
the grounds to see these things and inspire them?
Maybe this is tied up to our inability as Scotland and
England to produce decent players that can win
tournaments.
Patrick Collins: I think it absolutely is. I think too
that Premier League clubs recognise this increasing
problem. At the moment, the Premier League charges
the most for tickets in all of Europe; it is the dearest
ticket in Europe. The average price is difficult but in
London it is perhaps between £40 and £50. There are
family deals and concessions until the age of 16 and
then comes the gap. It used to be one of the rites of
passage that you went to football on your own, usually
when you were younger than 16, but certainly from
16 you went on your own. Now they cannot afford it
because they have to pay full price and they cannot
do it. So between the age of, say, 16 and 30 they are
priced out of the game. They still watch football, they
go down to the pub and watch it on television. They
watch the Sky broadcasts in the pub. Those are the
people who are most likely to be lost to the game
because you then take the risk that after all these years
of watching football relatively cheaply down the pub,
they are going to go off and buy a season ticket at
Highbury or somewhere and it probably won’t
happen. It is a real cause for concern that one.
Q15 Alan Keen: I want to give you the chance to
talk about debt, but first can I ask you a very basic
question. Who are we doing this inquiry for? When I
say “we”, I mean everybody. All the people here have
a great interest in football. I was brought up in a nonpolitical family. The first time I was offended by
something, which I didn’t know was political until
years later, was when I went to buy tickets at the old
Ayresome Park, Middlesbrough’s ground, came back
and asked my mother why it said Middlesbrough
Football and Athletic Company Limited on the doors.
I was shocked to find that there were shareholders. I
thought I owned it in the same way as I owned the
recreation ground equally. I mention it because of the
current debate. The other thing that offended me
around about the same time was finding that Imperial
Chemical
Industries,
that
saved
Teesside
economically, owned the Cleveland hills at the
beginning of the Yorkshire moors and that offended
me, and it is particularly pertinent with the forestry
debate that is going on.
Are we doing this because we care about the football
supporters? If they are offended, of course it will
affect the money people afterwards, and you have just
been touching on that. Why are we doing the inquiry?
What do you think we should be recommending at
the end?
Sean Hamil: You are doing it because football is not
just a business but it is a very significant national
cultural institution. I absolutely acknowledge the
tremendous success of the Premier League and the
Football League, and Stefan is right about this.
Crowds are up significantly and that is down to good
management, good marketing and improved stadiums,
and a lot of private investment as well as public
investment, but it is obvious that there are problems.
I make no bones about it: I do not think that you can
leave everything to the market because you end up
with negative equity and a lot of other nasty,
unpleasant things. There is a role for Government
intervention. Always remember that the Taylor report
was the catalyst for the reform of English football.
There is disquiet at the moment about what is
happening on a number of fronts. People are not
rejecting the genuine successes. I think it is legitimate
that the elected representatives of the people should
take an interest in a subject that is close to people’s
hearts.
Professor Szymanski: I have a very specific answer,
which again is in my written evidence, but I think you
should be guided by the Treasury Green Book when
you think about this, which recommends the basis on
which there is action justifying public intervention. It
has to be either some kind of market failure, and
specific types of market failure are listed in the Green
Book, or some need to redistribute income because
for some social basis it is not justified. My paper
explains that there is not a market failure that I can
see very obviously, and it does not fit the normal
characteristics. If you argue there is an income
redistribution element, I come back to my luxury cars
point. There is an income redistribution point in the
same way that poor people do not have access to
luxury cars.
Patrick Collins: I think you are doing it because it
matters. These things matter because football is the
game that the nation plays and it is the game that the
nation loves. As we have already said, it holds a place
in the history and in the affection of the country. You
can see it when the World Cup comes around and for
some people football is an expression of the
nationhood in a sense, and the disappointment is
always crushing when it happens. The game has lots
of things going for it: a large passionate fan base,
wonderful stadia, wonderful players. People know that
and it is frustrating because we know we can do better.
I heard the Minister for Sport talking about football
being the worst run sport in the country, and it might
well be. I do not know how he measures that. That is
not good enough. If overnight the television money
dried up—the Murdoch money dried up and Sky
walked away—and all we had done in that time was
create a lot of wealthy young men and rich agents and
a few very wealthy directors, it would not only be a
sporting tragedy but something of a national tragedy.
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Culture, Media and Sport Committee: Evidence Ev 9
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
Q16 Alan Keen: On the debt, because we are short
of time, I will restrict it to one question. The fair play
rules meaning that clubs will not be able to compete
in UEFA competitions from 2013, what effect will
that have? Will that solve the debt problem? In a way
it has got to, the clubs have got to solve that problem.
But we would love to hear what you have to say
about it.
Sean Hamil: We will not know until it is
implemented, but my view is that, for all the reasons
I have outlined, I just do not believe that you can run
an industry long term loss-making without problems.
I think that UEFA, for its own reasons, has realised
that. The European Club Association, which
represents the major clubs in Europe, supports them
100%. The proof of the pudding is will it be able to
force it through. If it is able to do it, if it is able to
establish the basic principle that you should not be
able to spend more than you earn and that money on
youth development, stadia development is exempted,
then everybody will benefit because what will happen
is the Delia Smiths and the Sir John Madejskis of the
world will say, “I don’t have to sell” and you will get
a step change in the quality of the owner, and things
will improve.
The problem at the moment is that there are too many
people with an unhealthy appetite for financial risk. I
am sorry to keep emphasising this point, but sooner
or later that ends in tears. The Portsmouth example,
they said there would never be an administration in
the Premier League. Well, there it is, read it. It is a sad
read. What went on at Manchester City with Thaksin
Shinawatra was absolute skin of the teeth escape from
a financial disaster. The same thing up at Liverpool.
Now, how long do you have to continue to be lucky?
The central point is English clubs will not be
disadvantaged because everybody in Europe, if it is
implemented correctly, will be subject to the same
rules. What is necessary is for the English football
authorities to now engage in active partnership with
UEFA. I am not saying they are not active partners at
the moment but just that maybe they could be more
active partners, because what English football has to
say is important for the future of European football.
Patrick Collins: I very much agree with that. It is
risking everything to speak about debt with two
economists here, but we are constantly told that debt
is no bad thing, that everybody has debt, that
sustainability is the thing. Then we see Manchester
United, a club that never owed a penny, suddenly
saddled with £750 million worth of debt and
Liverpool, run by the much loved Hicks and Gillett,
amassing debts of £351 million. Those are
extraordinary figures and the public thinks that is
wrong, and I think the public are right to think that.
But there was one thing I noticed. One of your next
witnesses, Lord Triesman, in 2008 said, and I quote,
“I don’t think anybody who is rational can look
around this environment we are in and think they are
immune. Football is obviously carrying a pretty large
volume of debt. People will be making business
judgements about whether it is sustainable or not but
it is carrying quite a large volume of debt. We now
have a position where it is very hard to track things.
It’s not transparent enough and we don’t know, if we
are able to track it, if the debt is held by people who
are financially secure or not.” Triesman was roundly
condemned for that but I think he had it absolutely
right and I think he is still right.
Q17 Paul Farrelly: The St John Ambulance situation
was mentioned earlier by Sean. If I am running a
business that is going bust and I do a special deal
with some creditors, that is illegal because it is called
preferential treatment. If I am a new owner of any
usual business, I do not pay off the previous creditors
unless it is worth my while, yet in football I am forced
to do so, setting up a post facto preferential treatment
of particular creditors. Is that wrong and should it be
made illegal?
Sean Hamil: There is an argument in sport, because
of its peculiar economics, for special arrangements.
You could have made an argument for the football
creditors rule in the past by saying that there is a need
to protect clubs who manage their businesses
reasonably effectively from the odd exceptional
reckless behaviour. But the trouble is the recklessness
now is absolutely endemic and therefore a direct
answer to your question: I personally do not believe
the football creditors rule is sustainable. I think the
football authorities, all three of them, have sort of
recognised that in their more assertive approach to
demanding that their clubs demonstrate they are
paying their tax debt they are sort of halfway there. It
is in their own interests to drop it now. Who knows
what is going to happen with the court case. The point
about the football creditors rule is that it is totemic,
because what they are basically saying is, “If you’re
in the club we are going to look after you. If you’re
outside the club…” I don’t think it’s sustainable.
Professor Szymanski: For once, I completely agree. I
think it is a crazy rule and it should be eliminated.
Once you start to treat football as a special case, once
you start to say, “Oh well, it has got this special
significance in our society”, that is when you go down
this route of having crazy rules that do not work. The
same thing is going to happen with financial fair play.
It is 80 pages long at the moment. In five years, it will
be 800 pages long. The lawyers are going to crawl
over it and money, a lot more money, won’t be going
to agents, it will be going to lawyers, but once you
start to regulate these things, it mushrooms and you
get into inconsistencies and regrettable situations.
Patrick Collins: I agree totally with my colleagues
here. It is very difficult to make the case for being a
force for good in society when you attempt to enforce
such an antisocial rule. The idea that football must
look after itself first and that everything else comes in
a distant second is offensive.
Q18 Paul Farrelly: There is a bigger question on the
financial fair play rules, which have been welcomed,
as to whether they will bite, because they seem to me
to be terribly open-ended and subjective at the end of
the day. That is something for the future to resolve.
But currently, for good or ill, across all sectors of
business, leveraged buyouts happen. As long as they
are conducted legally, it is very hard to stop them, but
they certainly make business more risky. Is it time
for the football authorities to act and put in greater
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Ev 10 Culture, Media and Sport Committee: Evidence
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
disincentives? In particular, is the nine points
deduction rule sufficiently strict or should clubs that
go bust be made to start right at the bottom again?
Professor Szymanski: I do not think that leverage has
a huge amount to do with the reason that clubs go
bust. The fundamental reason is ambition, the
ambition to be successful or the desire to avoid
relegation. It is inherent within the system that clubs
will take every risk available to them. It is perfectly
reasonable to say the football authorities can invoke
rules and regulations, and probably quite sensible if
they do, to try and limit some of those financial risks,
and maybe this Committee can encourage them to
develop those rules. But right now, of all the 53
administrations that Sean referred to, where are the
victims? Okay, the teams get relegated and the fans
are disappointed. Are the fans disappointed that the
club lost money and went into financial administration
or are they just upset that the club got relegated? I
think it is the latter. I do not think anybody, apart from
the owners, cares about the money. What is important
is the level at which the team plays. But the point
about that is nobody wants to abolish promotion and
relegation. We want teams to fail. In other words, you
could get rid of all the financial problems of debt and
so forth, and the fans are not going to be any happier
on average because they will still be losing out when
their team gets relegated.
Sean Hamil: In 1999, in answer to the minority report
of the Football Task Force, the football authorities
said, “We don’t need any regulation”. Post ITV
Digital, they introduced points penalties because they
recognised the insolvency process was being abused,
notably by Leicester. Since that time, they have
produced a whole series of reactive measures, which
fundamentally come back to this problem of financial
instability. They already know there is a problem with
the insolvency situation, otherwise we would not have
the points penalty. They already know all this. UEFA
already knows it, because it is a problem all over
Europe. What UEFA has done—John Henry, the
American guy who bought Liverpool, acknowledged
it. He said that it has recognised there is a need for
action a little ahead of everybody else. What Henry
said, one of the reasons he bought Liverpool was he
thought that financial fair play might create an
environment where at least he would not lose his
money. I think the football authorities privately
already know that they are at a place now where
something needs to be done; it is just the form of it.
That is the part of the role of this Committee.
Fundamentally, it comes back to quite a simple
problem at the heart of all this, and the football
creditors rule and all these other things are just the
same: it is the question of how you can get these clubs
to at least break even, because ultimately debtfinanced success is financial doping. That is what it
is. It is an attempt to rig the competition by spending
more money than you generate. Therefore it goes
against the entire sporting ethic, never mind financial
common sense.
Q19 Paul Farrelly: Patrick, should the penalties be
harsher?
Patrick Collins: Do you know, I think it touches on
the fit and proper person test. If you had fit and proper
people running football clubs, there would be fewer
bankruptcies and administrations. The one that is
always picked out is Portsmouth, of course. They had
four different owners last year. This is one of the great
stories of modern football. One was a fantasist who
made lots of promises that were quite baseless.
Another, much more intriguingly, it was reported, did
not actually exist. People doubted the existence of this
man. He was said to be a figment of somebody’s
imagination. I do not know how true that is, but that
is how bizarre things became and yet everybody was
deemed fit and healthy according to the Premier
League. I find that bizarre, and I think much flows
from that.
Q20 Paul Farrelly: One was the son of an arms
dealer, as I recall.
Patrick Collins: It is reported, yes.
Q21 Damian Collins: Following on from the fit and
proper person test, should there be sanctions against
directors involved in a club that goes into
administration? Without wishing to sort of pick on
anyone in particular should, say, someone like Peter
Ridsdale have been banned from football?
Sean Hamil: If you get a club into administration
twice, you are banned now. I think one of the exdirectors of Rotherham was in that situation. That is
something for the football authorities to decide. There
is a wider issue about who should own the clubs and
their competence to mange, but the fit and proper
person test is certainly something that should be
looked at. I don’t think Thaksin Shinawatra was a fit
and proper person. He obviously bought that club for
purely political reasons. He spent all the money off a
three-year TV deal in the first year. Potentially, he
could have destabilised the whole competition. If they
had gone bust halfway through the season when they
could not pay their wages what would have happened?
A team in the Belgium league last year dropped out
halfway through and then there was 15 teams instead
of 16 teams. There is an issue of sporting integrity
there as well.
Professor Szymanski: You can impose all sorts of
regulations but you will not change the fact about
owning these clubs—these are honey pots, these are
some of the most attractive assets in the world.
Powerful people everywhere want to own them, and
it is true in every country. Whatever regulations you
impose, that is going to continue to be true. If a
powerful person cannot get ownership directly, they
will find proxies, or whatever way they can, to seize
control of these assets, and there is going to be huge
competition. My view is that it is better to have open
competition and be able to see what is going on rather
than have some of the rather less transparent systems.
I emphasise that we have one of the most transparent
systems of anywhere in the world. The finances of
English football clubs are far more transparent, for
example, than the finances of German football clubs,
which I know everybody admires as the great model
right now. I think that is crazy. Most of the German
football club finances you cannot find anything out
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Culture, Media and Sport Committee: Evidence Ev 11
8 February 2011 Patrick Collins, Sean Hamil and Professor Stefan Szymanski
about, going back five years. French football, that is
admired but it is not very transparent. The Americans
have very stable systems but no transparency, so you
cannot see what is going on. So I think it is more to
do with rather than putting on more and more tests
and regulations, it is creating transparency so that
people know what is going on.
never have been allowed and it is only in the last 18
months that that problem has been got to grips with
and only because HMRC has said enough is enough.
You might want to look at the Leeds case three years
ago where there was a spectacular attempt to use the
insolvency process in a way that personally I do not
think was terribly edifying.
Q22 Damian Collins: We had a submission to the
Committee from a law firm that does quite a lot of
work with football clubs and they touched on points
to do with tax, which Sean mentioned at the beginning
of the session. I wonder whether this makes it a
legitimate area for Government to look at because
there were financial consequences for the Treasury.
They talked about the level of tight financing and
indebtedness of clubs that they said: “Had led to a
practice of using cash set aside for Revenue &
Customs as working capital for the club. In any other
industry this is an incredibly serious offence that
typically leads quickly to a winding-up petition and
personal consequences for those involved.” What are
your comments on that?
Sean Hamil: What can I say? They are right. It should
not have been allowed and it was allowed because
football has the power to emotionally—I need to
choose my words, but the non-payment of taxes as an
unofficial overdraft was custom and practice and was
tolerated within the industry, and HMRC didn’t
challenge it. Now, you could argue that it should have
done, but in reality football should never have allowed
that to come about because that was a sign of a club,
or many clubs, out of their depth financially. It should
Q23 Damian Collins: From what you have said, it
sounds like we could consider not necessarily special
rules and regulations and extra burdens for footballs
clubs but simply applying some of the normal
business practices that everyone else has to work to?
Professor Szymanski: Absolutely. The more we treat
these organisations as special cases, the more
exemptions and loopholes we are going to create for
them. So I would say, yes, as far as we can, accepting
there is something special about the way sport is
organised, but as far as possible let us treat them as
ordinary business organisations to the extent that they
are businesses.
Sean Hamil: A very clear area where sport is treated
differently is in the collective selling of broadcasting
rights. Anywhere else that would be an illegal cartel
but it is recognised by everybody now, after two
inquiries, that it is legitimate. There is a balance to be
struck between what is appropriate, the specific
regulation for the sector, and where it goes too far. I
think the tax payment, everybody can see that that
was not acceptable.
Chair: We have to move to our next session, but I
thank the three of you very much for your evidence
this morning.
Examination of Witnesses
Witnesses: Lord Burns, Graham Kelly, former Chief Executive of the Football Association, and
Lord Triesman, former Chairman of the Football Association, gave evidence.
Chair: I welcome our second panel of witnesses this
morning, in particular Lord Burns who chaired the FA
Structural Review in 2004, Graham Kelly, the former
Secretary of the Football League and Chief Executive
of the Football Association, and Lord Triesman, the
former Chairman of the FA.
Q24 Mr Sanders: Mr Kelly, is the Premier League
today the Premier League you envisaged during
negotiations for its establishment?
Graham Kelly: No, Mr Sanders, it is considerably
different. If you were to read the Blueprint for the
Future of Football you would struggle to reconcile
that with the animal that exists today in the form of
the FA Premier League. I do not know if the coalition
that runs the country at the moment is the coalition
that emerged from the negotiations back in May but
it seems it is rather different. The football that existed
in the middle of the 1980s has already been referred
to this morning. It was thundered during the middle
of the 1980s by one eminent leader writer that football
is a slum sport played in slum stadiums followed by
slum supporters and we had to break out from that
situation.
After the Taylor report, the Government report into
the Hillsborough disaster of 1989, I commissioned the
FA blueprint on the instructions of the FA executive
committee. The FA executive committee was 12
leading members of the FA Council; there were no
directors of the Football Association at that time. The
FA Council comprised 92 members of the FA. The
board members of the FA were those 92 members of
the FA Council. The FA did not have a board
whatsoever at that time and one of my first duties
upon taking office as FA chief executive was to
attempt to institute some reform of the FA but we
were unable to effect any significant change. Upon
taking office we tried to effect some reform. Be that
as it may, the Hillsborough disaster sadly occurred and
the Taylor report was the outcome.
A lot of things happened in the 1980s, as you have
heard already this morning. The Taylor report came
about, the blueprint happened and the FA Premier
League was formed in 1991–92. The model for the
FA Premier League was the French league, the French
football federation or the German football federation,
both of which entail vertical integration. The league
in both those two countries is an integral part of the
Football Association and the key members of the
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Ev 12 Culture, Media and Sport Committee: Evidence
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
league were intended to have key roles within the
Football Association Council. Nine members of the
Premier League were intended to have seats on the
FA Council, but because of challenges to the blueprint
and because of various litigation and recriminations,
the original plan for the blueprint was not
implemented.
Q25 Mr Sanders: With hindsight, should the FA
have secured more commitments from the Premier
League with regard to supporting the national team
and the lower leagues?
Graham Kelly: I think probably it should. As Mr
Collins said this morning, one of the prime aims of
the FA Premier League was to improve the conditions
of success of the England team. At the time, the
number of teams in the top division was 22 clubs; that
was reduced. There was to be a phased reduction from
22 to 18 and that was one of the aims of the Premier
League, to come down to 18. That came down over
four years from 1992 to 1996 and I think probably
the commitment should have been or could have been
stronger. There was, as I say, a lot of recrimination
between—
Q26 Mr Sanders: Do you mean stronger in the sense
it should have gone down to fewer clubs or do you
mean stronger in other ways?
Graham Kelly: Not necessarily fewer. There perhaps
should have been a stronger commitment from the
Premier League to the success of the England team
perhaps in the initial stages maybe, but I don’t know.
Q27 Mr Sanders: Lord Burns, how happy were you
with the FA’s reaction to your review?
Lord Burns: A certain amount of the
recommendations that we put forward have been
implemented and some have not been implemented.
There has been, undoubtedly, progress since I did that
report. We have had the introduction of an
independent chairman, and the chief executive is now
a member of the board. The process by which the
rules and regulation are implemented has improved
since that time. Some of the proposals we made about
the national game were partly followed: having a
separate board and a funding rule that means it gets a
proportion of the revenues from the FA. It has been
left to manage them itself, and that has worked pretty
well. I think that whole national game board side has
worked pretty well.
The main recommendation, of course, which was not
followed was with regard to the board. I
recommended that there should be at least two
independent directors and if the chairman was an
independent director then there probably should be
another two as well. The pattern whereby the board,
which essentially I think now consists of a chairman,
a chief executive and five members from the national
game and five members from the professional game is
really not a sensible basis for going forward. I do not
want to put too much emphasis on this because
England’s performance in the World Cup has very
little to do with governance. The fact that we did not
get the World Cup here in 2018, I am not sure has an
enormous amount to do with it. But I listened to the
conversation this morning in terms of how the game
is being taken forward and how the FA really needs
to become an effective regulatory body. If we are to
have regulation of football, which I assume we do
want, and as we implement the rules that have now
been developed in UEFA, then it needs a board that is
constituted differently from that which it is now. The
present board, is as if with the Financial Services
Authority we had a controlling interest by the banks
whom they are regulating. I do not think anybody
would regard that as really being a satisfactory state
of affairs. So a lot depends on what you think the
purpose of the FA is. Is it to run the England team? Is
it to be an effective governing body and regulatory
body of football? The more you want it to play the
second role, the more that it has to have some people
on the board who do not have vested interests in the
regulation that is taking place.
Q28 Mr Sanders: Lord Triesman, when the former
Government engaged with football bodies on football
governance, your response to the then Secretary of
State was to refer him to the responses submitted by
the Premier League and by the Football League. Why
did the FA not submit its own?
Lord Triesman: The former Secretary of State asked
the three organisations to prepare a joint response to
his questions, and I thought that was absolutely right.
It would be very good if it was possible to come to
some amicable agreement about how to carry forward
the regulation of the game. The Football League was
completely willing to engage in that with the Football
Association; Lord Mawhinney was completely willing
to do so; the Premier League was not. After some
period of trying to persuade everybody to come
together to do it, the Premier League produced—I
think we have probably all read it—its own response
to Andy Burnham.
The Football League then produced a response to
Andy Burnham and the FA, which had been doing
very considerable amounts of work on football
regulation for some time past and discussing it with
all the partners, produced a document that was
submitted to the FA board, having been discussed with
a number of other people. The professional game
representatives on the FA board took perhaps a
maximum of two minutes to say that the document
should not be submitted and to issue a board
instruction that a response should be made simply
referring the Secretary of State to the wisdom of the
professional league, and in particular the Premier
League. I thought that was a grave disappointment
and, Mr Chairman, just in case it is helpful, I have
brought the response that we would have made.
Q29 Mr Sanders: I was going to ask were there any
substantive proposals that you would have liked to
have submitted but were unable to do so?
Lord Triesman: There were a significant number of
substantive proposals, some of them were to do with
tightening the overall arc of financial regulation,
because it was very apparent that we were in
extremely choppy waters financially and that you
could see very great football clubs with very long
histories in severe trouble. It was by no means clear
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Culture, Media and Sport Committee: Evidence Ev 13
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
that they would all pull out of that severe trouble. We
could see a whole range of difficulties in the fit and
proper persons area. I heard earlier the example of
Manchester City being mentioned. Quite aside from
the financial thing, as a former Foreign Office
Minister, I thought that there were other very, very
grave doubts about the person who had taken over
Manchester City and, indeed, had been sent by the
Foreign Office to encourage him not to dispose of his
political opponents in quite as ruthless a manner. But
none the less, he was able to take over that club.
I believed that it was entirely possible to have one
set of regulations for finance. It might, rather like our
company law, have a different requirement for plcs to
limited companies. Of course you could have
something that graded the level of difficulty so that
you would not be asking a very small club to perform
as though it were a massive club, but none the less
one set of regulations, preferably coherent with the
emerging UEFA regulations. It would be possible to
have one set of regulations about fit and proper
persons and so on, right through the regulatory
system.
I answer the question in that way because one of the
things I have found, not least with colleagues in the
media, is trying to describe how the bodies all have
completely different approaches and how things fall
through the gaps between the different approaches is
very difficult. When you try and describe that to
football supporters, it becomes almost impossible. It
is a thoroughly unsatisfactory system with the key
consequence that the FA itself, in my judgment,
having been its first independent chairman, has, apart
from on-field discipline—red and yellow cards and the
like—has backed out of regulating altogether.
associated with that individual. While there are rules
about who is and is not a fit and proper person, it is
extremely unlikely that somebody at that stage, a head
of state or immediate past head of state, is going to
fall foul of the courts in that country. That is not what
is going to happen. Consequently, you know that these
are issues, that they have not been tested in law, but
the body of public knowledge about the individual is
quite large enough to say, “Is this an appropriate
way?” I can answer the question a little more by
saying that were this to happen in a plc, I have no
doubt whatsoever that the board of a plc would say,
“We’re not going to do that”.
Q30 Chair: Lord Triesman, we are extremely
grateful to you for bringing a copy this morning of
the submission that was not put forward by the board.
Are you providing that to the Committee?
Lord Triesman: I am, Chairman, because I think that
the response of the FA must have been all but
unintelligible to the rest of the world. It was to me.
But I thought it best that people should see the body
of work, and very kindly a former colleague at the FA
last week sent me a copy and I have brought it.
Chair: Thank you. We will read it with considerable
interest.
Q32 Damian Collins: I would like to pick up on the
fit and proper person test, just to follow up on the
question I asked in the previous session. Do you think
there should be greater powers for redress against the
directors of football clubs who preside over their club
going into administration—clubs like Leeds and
Portsmouth are particularly strong examples—to act
as a disincentive for people to engage in bad practice
and as a message to say that if people have done that
in the past, “We don’t want you in this game”?
Lord Triesman: I think there is a very strong case for
that. The principal reason that I say that is because
most of the clubs that have got themselves into that
position—and this would not be 100% of all clubs that
have got themselves into that position—have got into
that position by spending money, as I think was
described in the last session, related to their ambition
rather than to their business model. They want to beat
other clubs; they spend what they believe is necessary
to do that. The model falls apart—Leeds is a very
strong example of that—and they are left with a huge
financial crisis on their hands. People in other clubs
reflect not only on the amounts that were spent but on
the unfairness to the competitive regime that it creates.
I know people think that “financial doping” is a rather
dramatic term but it is a pretty accurate term for what
is described. From my own experience, this is not a
matter of an outside observer believing that that is the
case. Most of the people I spoke to who ran football
clubs were among the people who were fiercest about
it, fiercest about the points deductions, argued often
for greater points deductions or for other kinds of
sanctions. People want it to be a fair competition on
a level playing ground, and they are right.
Q31 Dr Coffey: I have to declare an interest. I am
undertaking a sports parliamentary fellowship with the
Football Association. I have done one day. You
specifically mentioned the former owner of
Manchester City. Is it your view then that the Foreign
Office, either proactively or reactively, said this
person does not pass the fit and proper test? I am
trying to understand what you just said, because you
were saying as a former Foreign Office Minister there
is no way he would have passed the smell test, but
are you sure that the Foreign Office said that, either
proactively or reactively?
Lord Triesman: I do not know, because I had left the
Foreign Office by that stage. All I can reflect on is
that there were severe difficulties, which you can find
in the human rights annual report, which were
Q33 Damian Collins: Lord Triesman, following
your comments earlier, you talked about the fact that
the FA, other than regulating the rules of the game,
does not get that involved any more in the regulation
of football more broadly and I just wanted to ask a
couple of questions about that. Do you think there is
scope on certain issues that are linked to the way clubs
are run where the FA should have more of a voice?
David Cairns mentioned Wimbledon in the previous
session. Should we have clearer rules that say you
cannot pick up football clubs from one part of the
country and move them somewhere else? Should the
FA have a voice on whether it is desirable for
Tottenham to move their club from north London to
east London? Should those be the sorts of the things
where the FA speaks for football?
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Ev 14 Culture, Media and Sport Committee: Evidence
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
Lord Triesman: That is a very sensitive question to
ask me. The FA has a large book of rules, much as
the Premier League and the Football League do. The
question is whether it applies any of those rules in any
systematic way. My view is that it should do so: it
should do so systematically, it should do so
transparently and everybody should know the reasons
for a decision, including on-field decisions
incidentally. I see no reason why those should not be
publicly disclosed; not just the penalty but the
reasoning. One of the key reasons for doing so is that
under FIFA’s statutes, the FA is supposed to fulfil that
role. That is one of the things of the independent
football associations of each of the countries that are
members of FIFA are supposed to do. Subcontracting
it is obviously a model that does not fit with the
international regulation of the game. I have no doubt
that in the course of hearing evidence you will hear
people who will say “The FA does do all of those
things and it is not realistic to say that they don’t, and
here is the book that sets out all the regulations.” I am
just saying at first-hand experience that it has
subcontracted and does not question the subcontractor
in those key roles.
Q34 Damian Collins: Do you think the way in which
the game is run drives this incentive for clubs to take
financial risks and spend more than they can earn?
Does the way the game is structured encourages that?
I am thinking particularly of the transfer windows. We
have just seen the very large expenditure at the end of
the January transfer window. Do you think that acts
as an incentive to clubs to pay higher signing fees and
salaries, because they know they have literally a
rapidly closing window of opportunity and that can be
exploited by other clubs and agents to drive up prices
in a sort of shotgun transfer?
Lord Triesman: It does do so. It certainly does for
clubs fearful of relegation, although I do not think
they were the main people spending money in this last
transfer window. It does it for clubs who are fearful
of not getting a European slot at the end of the season,
because that is the key to the door of very, very much
larger sums of money. The answer to it, I am very
confident in my own mind, lies in the arrangements
that Michel Platini has advocated. Sadly, because he
is French or because it was not made here, he also
was attacked very roundly and very frequently. But
saying to a business that over a period of time it really
ought to wash its own face, that it should not drift
further and further into debt as an attempt to buy that
kind of success, seems to me to be absolutely right.
Believe me, I am no mad advocate of massive
regulation. I would like to think of myself, particularly
when I was in Government, as a deregulator rather
than a mad regulator. But with a little further
adjustment in, for example, debt ratios—excluding the
building of new grounds and improving facilities,
which is a different sort of borrowing usually secured
against the asset—you could probably get fair
competition across Europe and without the excessive
risk.
Lord Burns: Can I just comment how it seemed to
me from an historical perspective? The FA grew up in
much the way that many of the governing bodies of
sports did whereby there was a Council of people who
came up through the national game- effectively,
through the county football associations— and they
had a whole series of committees. The tasks that they
set themselves were basically to do with running the
England team, running the FA Cup, the on-field rules,
regulations and discipline. They really spent relatively
little of their time in these other matters that we have
been talking about with regard to regulation. Then we
had the emergence of the Premier League and the
huge amounts of money that have come from
television, including the FA Cup, the European
competitions and the vast amounts of money that are
involved in these. The game became a very different
game. The role of the FA in principle then, of course,
became much wider as far as regulation is concerned
and they also set up a board of the FA that initially
had the job of trying to simply deal with the financial
aspects of the Football Association.
I would not like the idea to emerge that somehow
historically the FA had played a very important role
in off-field regulation of football or of the structure of
football and it has retreated from that area. It seems
to me what has happened is that the game has changed
and the requirement and the interest in some of these
off-field aspects of regulation has become much
bigger, because the sums of money involved are much
greater. It has become a much more international
business, both in terms of the matches that are played,
in terms of the ownership of clubs, in terms of the
interest worldwide in watching the games on
television and therefore the value of the rights. That
has set up a different set of issues.
My perspective on this is that the FA has struggled to
come to terms with the extent of the change in the
game and therefore the burdens and the requirements
that have been placed upon it. It has operated a sort
of subsidiary model as far as the management of the
leagues is concerned. We now have the slightly
strange situation where the lead has been taken by
UEFA in terms of the fair play rules and they are
beginning to carve out an approach to it. Our FA, I
have to say, looks to me to be being dragged along
behind that rather than, as one might have expected
given the historical position of the FA, having been
more in the lead on these issues.
Q35 Damian Collins: Do you think UEFA can create
an equitable system for the European leagues? There
has always been a lot of competition between the
European leagues and one thing we might credit the
Premier League for is that there is a lot more money
in the English game and a lot more of our players play
here. I looked up that when England played Germany
in 1990 in the World Cup, seven of the starting 11 had
either or did go on to play football in European
leagues. In the last World Cup when we played
Germany, none of the England starting 11 had. Now,
you can draw your own conclusions as to whether it
is a good or bad thing for players to play abroad but
it used to be a big factor that we supplied the
European leagues with players and now they come to
us. We cannot turn the clock back and we must be
concerned that we might hamper the Premier League
in that regard.
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Culture, Media and Sport Committee: Evidence Ev 15
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
Lord Burns: First of all my perspective on the way
that UEFA has approached this. It has not been that
its seeking to regulate our leagues or our games but it
is seeking to regulate fair play among its own
competitions. Therefore, it all comes down to the
licensing of the clubs who might be eligible for the
UEFA competitions. The rest, I am afraid, is a matter
of judgement. My observation would be that the huge
amount of money in England for football has meant
that this has become the real marketplace where
everyone is competing to be—much the same, say, as
with financial services. The result has been, of course,
that it has become more and more difficult for our
players to get into the Premier League teams. Also the
people who are very good, the outstanding players,
can make a very good living here by comparison with
going abroad, whereas once upon a time some of the
more successful teams were overseas. So there has
been a shift in the balance.
Graham Kelly: The shift has been over here because
the majority of the money is here. The Sky money,
the satellite money, is here and it has attracted more
of the players here.
Lord Burns: And kept our good players here.
Graham Kelly: Our clubs are more able to retain the
best players and to attract the best players here.
Q36 Damian Collins: The Minister for Sport, Hugh
Robertson, said that he thought football was the worst
governed sport in the country. I know Patrick Collins
was asked this question on the radio this morning, and
he said that, with all due respect to the Lawn Tennis
Association, it was. Do you think that is a fair
assessment by the Minister for Sport on the
governance of football in this country?
Lord Burns: I do not want to answer that directly. But
if we were looking at this in terms of outcomes I find
it very difficult to imagine that that was the case
because we do have the most successful football in
the world. It is taking place in the UK on our
television screens, that a huge amount of people can
watch. We have wonderful stadiums and we have
wonderful playing surfaces. I compare this to the kind
of football that I watched when I was much younger,
and it is completely different, looked at in terms of
what is it that is being produced. It is really quite
remarkable what has taken place over this period in
terms of the quality of the football that is now played
in this country and that you can turn up and see at the
stadiums in this country. You cannot say that that has
been a result of brilliant governance or management
by the football authorities. It has been a combination
of events, as has already been mentioned. But in the
light of that, it becomes quite tricky, and I would say
quite difficult, to substantiate the charge that this is the
worst managed sporting organisation in the country. I
would not like to have to justify that. David may have
a different view.
Lord Triesman: I think in terms of outcomes we
obviously have fantastic success in the Premier
League and that is to be applauded. It is an amazing
competition; last weekend was an amazing example
of that competition. If we look at outcomes for
England as a country playing international football,
the outcomes are very poor and I do not think they are
satisfactory to England football fans. I count myself as
a straightforward England football fan in that sense
and I think that we have done very poorly. As a
system, if the Minister was thinking about whether we
have a good system, we have systemic failure. The
board is heavily conflicted. By the way, Terry—if you
do not mind, Chairman—I ought to say that after a
small while I learned that I should never use your
name in FA headquarters. I could talk about the
reforms but if I wanted some sort of means of
frightening the children I would quote you.
We are deeply conflicted. Terry was saying would you
have a banking regulatory system. The model that
always went through my head was would you have
Ofcom exclusively made up of Sky, ITN, the BBC
and possibly ESPN now. The answer is you would
never ever construct something that way, which is
why the original recommendations on independent
members is such an important proposition. The reality
is we have now seen some extremely good and
extremely sophisticated people coming into the
management of parts of the football business: Ivan
Gazidis at the Arsenal, not my club, as many people
here will know. There are people of great quality who
have come in, but generally speaking as you go round,
is this broadly a successful group of people running
such an incredibly important institution as well as
business in our society?
Other sports have changed in those last areas, in their
systems and in the people. They have become diverse;
we did not. They have not the same conflicts of
interest in the way in which they govern; we do. Hugh
Robertson has made a point that should not be
dismissed. Cut into the layers of it, it is a serious point
and should be taken seriously.
Graham Kelly: I’m sure, Mr Chairman, the FA fully
accept that they must take on board the concept of
independent directors. They know they have to go for
independent directors. They know, the Premier
League know that there must be independent directors
at the FA. I’m sure they will welcome that
recommendation. They have to be committed to that
now. They have to go for that now.
Chair: They didn’t welcome it before.
Lord Burns: It was very interesting because the
people who are on the FA board from the national
game see this as the pinnacle of their life in football.
This enables them to be on the various committees,
go down and shake the hands of the England football
team, go down when the FA Cup final is taking place,
nice seats to watch the games, and they are highly
respected by their colleagues. They see that they have
worked for years and years and years through the
county associations and therefore this is an honour
and it is the peak of their ambitions in football. To
then say to them as I tried to, “Well, I’m sorry, you
can’t have five or six people from the national game
on the board of the FA, it should be reduced to three”
and all of a sudden there is panic as to, “Which three
of us are going to have to leave and over which period
and what does it mean?” The professional game was
not so concerned about the number. They would have
reduced their numbers, but of course it wanted
equality with the national game. You cannot have a
system whereby you simply increase the total numbers
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Ev 16 Culture, Media and Sport Committee: Evidence
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
of people on the board otherwise it would have
become unmanageable.
So, whereas most of them would agree about the
principle of independence they had two problems.
One was, “What does it mean for me and therefore
what does it mean for my colleagues and for the
number of people who will be able to be on the
board?” The second, which was put to me more than
once, is they would say, “What is the point of having
independent directors because independent directors
clearly don’t know anything about football and what
is the point of having people here who don’t know
anything about football?” Whereas the idea was, in
principle, acknowledged—I’m sure Graham is right
that many people would like to see it—there is an
awful lot of built-in resistance to this. I am not holding
my breath about a big change in this area unless there
is some real push from someone.
Q37 Chair: Do you stand by the recommendations
in your original report?
Lord Burns: Yes. Everything that has happened
subsequently confirms that this is the direction of
travel. Indeed the only slight regret I have is that
maybe I should have been more ambitious about it. I
was hoping to have a set of recommendations that
went in the right direction, that went far enough to
make a real difference but which had a reasonable
chance of being accepted, because I knew the whole
problem about turkeys voting for Christmas. It may
be that instead of saying there should be two or three
independent directors, if I was looking at this now I
would be looking for a larger number of independent
directors.
Graham Kelly: I wouldn’t want there to be any
misunderstanding about this. I am very, very proud of
the Premier League for a lot of reasons. Last year, £36
million was distributed by the FA and the Premier
League via the Football Foundation. You talked to the
previous witnesses who talked about the trickle-down
effect: £36 million trickled down and was distributed
by the FA and the Premier League throughout football
through the Football Foundation. That goes down
throughout football to all levels: to stadiums, to
grassroots, new pitches, new small sided pitches.
It isn’t the Premier League that was originally
envisaged, I know that, I’m not stupid, but before it
came into effect, ITV had a cartel. Patrick Collins
talked about Derby winning the first division
championship, and they did because they had a
brilliant manager and they had a good team, brilliant
team, but by and large Liverpool had pre-eminence
over a lot of years in the 1980s. There was the big
five and in 1988 to 1992, ITV signed a secret
agreement with five clubs. Nobody knew about that in
1988 and the money—only a small number of clubs
were guaranteed exposure under the television
contract in those four years. So until that was broken,
there was not the spread of television matches like we
saw last week with West Brom versus Wigan
midweek. So there wasn’t the spread of matches like
there is at the moment, so there isn’t the concentration
of power in the Premier League like there was in the
old first division. So, football isn’t quite so romantic
as sometimes we like to think it was.
Q38 Chair: Lord Triesman, Lord Burns suggested
that he might have been even more ambitious had he
been able to. Going on your experience when you
were chairing the FA, do you think the Burns
recommendations would have done a lot to make the
FA a more effective organisation and would you like
to go further, as he is now suggesting that he would?
Lord Triesman: We would have been more effective
if we had adopted all the recommendations and it
would have been good to go further. The reality is
that what counts in this country as being an insider in
football or somebody who comes in who is
independent is probably a rather blurry line. I do not
know whether I would have counted—I was
independent, I was the first independent chairman, but
I had played football right the way through to my mid30s, got to the bottom ranks of the senior categories
of referees and had my coaching awards. Apart from
occasionally going and earning a living, I always felt
that I was deeply embedded in the sport and probably
people who would have come in as independent
directors would have also had that love and
engagement in the sport.
Lord Burns is completely right, also to say, as people
used to say to me, that there was no appetite for
changing the personnel at any level. That was not
because members of the council had not made a great
contribution around the counties. I can think of one or
two of them: Ray Kiddell from Norfolk who had been
one of the great driving forces in women’s football,
for example, and should get great credit for that, and
David Elleray in refereeing. But if you try to raise the
question of, “Why is it that this room is entirely made
up of men, bar two, that there are two black faces,
one of whom came in partly because of the report,
Lord Ouseley, why is it that hardly anybody here has
played professional football or has been a coach in
professional football?” the answer, of course, is you
do need those voices and you need that knowledge
and that experience in any professional and amateur
sport but they weren’t there and no one was going to
change it. I understand that people see it as the summit
of a great deal of very valuable work. Of course that
is true, but other sports have managed to change and
other sports reflect what Britain is like today in ways
that have not damaged those sports.
Q39 Paul Farrelly: Thank you, Lord Triesman, for
providing us with the FA’s proposed response. It is
has helped save the FA time, effort and expense in
complying with a polite request from this Committee
to provide it, so hopefully it will go on our website as
soon as possible for the world to read. The title of this
inquiry is football governance and I wanted really just
to probe further into how the board of the FA operates.
Lord Triesman, you have given me the perfect
example when you cited the case of the
representatives of the professional game taking just
two minutes to look at your document and then it was
decided not to submit it. By my arithmetic, the board
is made up of 12 people, five from the professional
game, and that leaves seven others. What happened?
The numbers were with you.
Lord Triesman: Just so you get the sequence right,
the professional game board meets usually the day
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Culture, Media and Sport Committee: Evidence Ev 17
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
before the FA board and it comes to a conclusion. It is
led by the most powerful force in professional football
because the most powerful force in professional
football controls such a high proportion of the money
that flows through. At that stage, there were 11
because we were between CEOs; there were 11 people
rather than 12. When you get into the room the point
was made, as it happens, by the chairman of the
Premier League, that this should be disregarded from
that point on and we should simply acknowledge the
work that had been done by the Premier League
principally, but by the professional game, and
reminding the members of the national game, the
amateur representatives there, where their money
came from.
Q40 Paul Farrelly: So in good Leninist style, the
representatives had had a pre-meeting—we
encountered this in the Labour Party not too long
ago—but still there were six. So are you saying that
the representatives of the national game are all too
easily cowed into not standing their ground?
Lord Triesman: On issues which are regarded as
absolutely critical to the professional game, they may
not vote with them but they will not vote against them.
Q41 Paul Farrelly: You mentioned the chairman of
the Premier League, Sir David Richards. Can you just
give us a flavour of how, following these pre-meetings
where the line is decided, he conducts himself at FA
board meetings when issues of vital interest such as
this come up?
Lord Triesman: Let me preface this by saying that I
believe the problem is systemic rather than the
personalities. It is to do with the balances and the
interests and the conflicts of interest. My experience
is that he will put his point politely in a board meeting
but discussions outside, across football generally but
certainly with some people, are extremely aggressive
discussions, really aggressive discussions. The points
are made in a very colourful way.
Q42 Paul Farrelly: How colourful?
Lord Triesman: Very colourful. I would not—
Dr Coffey: So it would be unparliamentary language,
would it?
Lord Triesman: I wouldn’t use that language.
Q43 Paul Farrelly: One of the things that we hear
from time to time is that the premiership represented
by its chairman occasionally might threaten to
withdraw its clubs if the FA did not toe the line. Can
I quote from The Beautiful Game by David Conn, who
is a Guardian journalist, “I have it from three
members of the FA’s main board that Dave Richards
was constantly threatening to withdraw the
premiership clubs from the FA Cup, or saying the
clubs would withdraw if he didn’t get his way on an
issue, usually over money. The sources complained
that they could not debate with Richards in any detail.
He would fly off, be dismissive or issue a threat.” On
the following page, 365, the book also quotes Dave
Richards’ response to that as, “Bollocks”. Do you
recognise that sort of behaviour?
Lord Triesman: That has a terrible ring of
authenticity.
Q44 Paul Farrelly: Is it right that the chairman of
the Premier League, who does not represent a Premier
League club, although I think he was involved in
Sheffield Wednesday many years ago—and we wish
Sheffield Wednesday the best of success in the
future—should be on the FA board, and certainly after
10 or more years should still be on the FA board?
Lord Triesman: I think there is a good principle in
trying to get a circulation of people on the boards of
any enterprise. It is inevitable, and I am not making
this as a comment about anybody in particular, that
you get a little stale if you are doing the same thing
year after year after year. Of course you bring growing
experience but you do not necessarily bring new ideas.
So circulation would be a good thing. The structure
of the FA board puts the chairman of the Premier
League on the FA board. That is a structural decision;
whoever it was would be there. The reason I am so
supportive of Lord Burns’ view is that we could have
done with probably even more independents than
appeared in his report is because it is extremely hard
for anybody who comes in representing the Premier
League to do other than represent the Premier League.
It is not the FA that is being represented at that stage.
There will be a great deal of courtesy about its history
and why it is so important, but that is not what is
being represented and that is the problem.
Q45 Paul Farrelly: Is it the case that if you have
been around for a long time and you have a certain
way of behaving and a certain track record in getting
your way, you might lack some of the self-awareness
where other people independently might say that you
don’t recognise that your behaviour might be a
problem and also for the reputation of the Premier
League itself as well?
Lord Triesman: The reality is this is a very, very
macho sport and I think some people have cultivated
what they think is the language of the dressing room
as being appropriate everywhere.
Q46 Paul Farrelly: After a decade or more, do you
think it is right for the Premier League to question
who it has as chairman and who it chooses to
represent it on the FA board and whether, indeed, Sir
Dave Richards, with that description of authenticity
about the behaviour—some bullying behaviour as
many people would categorise it as—has really had
his day?
Lord Triesman: Whoever the Premier League decides
it wants as its chairman or therefore wants on the FA
board under its current arrangements must be a matter
for the Premier League. It has a board of two people
with, I think, a third person attending. I think that is
right. It may be three but I think it is just two with
one other person attending. It comes to its decisions
and it must be for the shareholders in, I suppose I
should give it its proper title, the FA Premier League.
It is still its actual title. We held a golden share; I
could never find out to use it. But the decisions are
taken by that board of two people and I guess with
the support of the clubs. I’m not trying to avoid your
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Ev 18 Culture, Media and Sport Committee: Evidence
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
question. I do think, though, that bodies that are
constituted properly in their own right need to take
those decisions. I would like to think that they looked
at things afresh from time to time, because it is in the
interest of the sport to do so.
Q47 Paul Farrelly: I would like to put a couple of
questions to the other panel members but, Lord
Triesman, you mentioned you have heard also that the
board of the FA and perhaps the FA itself—you tell
us—could be categorised as white, middle-aged and
male. I do not have a bone of political correctness in
my body, but you said that there were certain interests
that should potentially be more widely represented
throughout the FA. Did you try yourself, when you
were the chairman, to bring more people through and,
if so, what was the response at the board?
Lord Triesman: There was no appetite for change. I
think that sums it up pretty much. When Ian Watmore
was the CEO—in my view, an exceptionally talented
person—and stayed for just nine months, he also made
real efforts to see if change could be achieved. You
may well be seeing him and you can ask him the
questions for yourselves, but he did not believe that
change was going to be achieved. He had, as an
alternative, come up with a proposition, which I
supported because I thought it might at least make
some progress, to get a group of people in who would
be advisers who were drawn from the game, who were
more diverse, both in ethnic and gender senses. That
idea was dismissed. I do not know that it took much
more than the two minutes either. That idea was
dismissed on the grounds that the talent that was
needed was in the room and so there were a small but
very significant number of people who, in my
judgment, would have been very valuable advisors to
us, but that was not possible either.
Q48 Paul Farrelly: I hope we will get a chance to
ask him. What do you understand was the straw that
broke Ian Watmore’s back?
Lord Triesman: I think you need to ask him that. He
was managing director of Accenture. That is a post I
believe you get by being elected by your partners. It
is probably not the easiest job to win in the world. He
had vast experience in business way before he came
into senior positions in the civil service. If I were on
your Committee, I would ask him whether he
believed, based on all of his experience, he thought
that he could contribute to getting any change at all.
Q49 Paul Farrelly: Lord Burns and Graham Kelly,
can I finish my questions by asking two linked
questions? Who would be responsible for appointing
independent directors so that they are not creatures of
one constituency or another? In appointing an
independent chairman and independent directors, what
is the problem that we are trying to fix?
Lord Burns: The problem that we are trying to fix,
and we have been through in some detail already, is
the fact that the board is dominated by people whose
main interests lie on one side of the game or the other.
If the board is going to carry out a regulatory role then
it needs some rebalancing, and for the reasons also
that Lord Triesman has explained, independent
directors do bring a different perspective on life. They
are usually working elsewhere, they are seeing how
other boards work, they see standards and practices
and the way that things are done, and they are able to
help in terms of the whole culture of the way in which
a board operates. I have spent the last 13 or 14 years
on a whole variety of company boards and the
independent directors really do bring a very different
perspective. They ask the questions that very often are
not being asked by the executive team or the people
who are not independent.
Indeed, following my report, I notice that there has
been an introduction of independent directors on to
the national game board. I think there have been
independent people brought on to the regulatory body
that has now been established. So the principle does
not seem to be lacking in the FA. It is just that when
it comes to the FA board itself, the vested interests of
the people who are on that board are making it very
difficult to get any real breakthrough on this. Having
one person who is independent—and all credit to Lord
Triesman for seeking to carry out that role—it’s an
enormously lonely role to be the only independent
director. Frankly to be chairman and the only
independent director I think is even more lonely.
Q50 Paul Farrelly: Who should do the appointing to
make sure they are truly independent?
Lord Burns: In the end that has to be a process of
nominations by the board itself, but the council then
should have a role in terms of approving them. The
council are effectively the shareholders or, in a sense,
the parliament of football. I think they are the people
who are best placed to do that. I can’t quite see what
other body would do it. I do not think there would be
any great shortage of candidates. I think there would
be a lot of really very good people, as we see from lots
of regulatory bodies, who are able to do those jobs.
I should also say that there has been some shift, too,
since my report,in the make-up of the council itself.
Some of the bodies that Lord Triesman mentioned are
being represented: the referees, the professional
footballers themselves and various minority groups,
women’s football and so on. So there has been a bit
of opening up of that but it is still very much
dominated by the same groups and the same methods
of working their way through the national game. It is
a structure that makes change enormously difficult to
bring about because of the positions. There are one
or two people who were on the council, who were
representing positions, which it is very difficult to see
how in this day and age they should have been
representated. I will not name any but you just have
to go down the list to see some of the anomalous
positions that are there. They came to me and
protested about the suggestion that some of them
should no longer have seats on the council. It was
clear to me that one of the overriding concerns they
had was that they would be seen as the last person
who had been a representative of this particular
organisation and they would go down in history as the
person who had lost their seat on the FA Council. This
was something that they were not quite prepared to
live with. So you have these enormous forces for no
change that are built into it all.
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Culture, Media and Sport Committee: Evidence Ev 19
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
Graham Kelly: No, I can’t add to that, Mr Farrelly,
It’s just too entrenched. The structure of the council
at the moment is just too entrenched. It needs opening
up to support the independent chairman. I do not
know how Mr Bernstein is going to approach it. They
have made the appointment of a different independent
chairman now, but he needs the support to make
progress.
Q51 Jim Sheridan: The turkeys at the Scottish
Football Association have some difficulty in agreeing
with Christmas as well because they want to cut the
numbers but see it as somebody else’s job that they
want to cut. On this bullying, harassment and threats
of the Premier League, if I was a supporter of a lower
league club hearing that this sort of behaviour is going
on and that the FA, the body that is supposedly
looking after my interests, is being bullied and
threatened, that would give me some concern. I would
be looking for the current board of the FA, or if
necessary the Government, to take some sort of action
to stop this behaviour. What help or advice could you
give the current board to stop this?
Lord Burns: I believe that the board has to be the
agent of change for itself and it then has to carry on
the process of changing the constitution of the council
itself in terms of opening it up to other groups. I fear
that I share a view that I heard expressed in the earlier
session today: it is not easy to see where Government
has any real purchase on this. I think you have to ask
the question whether there are any built-in advantages
that football has, which in a sense have been provided
by Government, either in relation to tax or the way
that it deals with administration or whatever. To
simply have Government march in and try to exercise
a role would be quite difficult. I think it has been
mentioned again earlier that one of the requirements
of FIFA and of the international bodies is that the
Football Association should be independent of
Government. So Government has to be very careful
about how it sets about this.
I worked with John Major back in 1991 in terms of
putting together the proposals that eventually led to
the all-seater stadiums. If I remember, we channelled
some of the pools betting duty into the Football Trust
to support the all-seater stadiums on the basis that the
clubs were themselves going to also put in money.
This provided Government with a certain amount of
leverage because it was doing something itself. But
without that leverage, and without something that
Government is putting in or has some role or where
there are some special privileges that football is
having as a result of Government action, I think
Government has to tread very, very carefully.
Q52 Jim Sheridan: The status quo is not an option,
is it, if you are a supporter of a lower league club?
Lord Burns: There is one route that is proving to be
quite important in bringing about change. As I
mentioned earlier, that is coming, through UEFA
which has done a lot of work on fair play, particularly
with regard to financial matters. It has its leverage
because it has to agree that the teams that may be in
the Champions League, or the other competitions, are
licensed to do so. It then passes on the job of doing
that licensing, I think, to the FA. That in turns gives
the FA a certain amount of power. The process has to
be one of persuasion. I think that Government simply
stepping into this area and seeking to impose solutions
will run up against considerable obstacles.
Lord Triesman: Obviously, I have thought about that
issue at some length. It seems to me that there are
three ways in which you can potentially get people to
change what they do. The first is that you persuade
them and if there is a process of persuasion and
authority that is fine, that will always be the best, but
I think that is pretty hard. UEFA will help in that, I
suspect, but it would not necessarily have an impact
on the clubs going right the way down though the
system.
The second is finance and finance has been used for
leverage purposes. I do not mean debt leverage but
leverage on the FA. For example, there was a lot of
reluctance to accept the new anti-doping regulations
of WADA and we were put under considerable
pressure to do that. The paradox, of course, was that
we would lose Government money if we didn’t do it
but the money we lost was essentially money that was
going to the amateur game; the issue about doping
testing was in the professional game. There was a
mismatch and it was very hard to make that work. I
hope that it now potentially can work.
The third is, and I think this is an interesting debate
to be had, is that it is certainly true that FIFA does not
want the intervention of Government in football but
there are a number of countries that have a basic
sports law. It covers all sorts of things like mounting
Olympics and world cups and so on, so you can then
do with secondary legislation what we trawl our way
through dealing with primary legislation. You can use
it for all sorts of purposes but it can also, and it does
in some countries, allocate the key responsibility for
the regulation of sport to the sports governing bodies
so that they must do it and they must be accountable
for it. After that the Government stands back. I have
not known FIFA withdraw its authority or threaten to
exclude any one of those countries from its full role
in running the sport. It would be a great pity to have
to consider legislation as a means of doing it but it
would not be right to rule it out. It certainly would
not be right to rule it out on the ground that FIFA
would automatically object to it if the consequence
was that that sports governing body—in this case the
FA or the SFA—had the absolute clear responsibility
for the regulation of the sport.
Q53 Alan Keen: If I could make three quick points.
First of all, did we not get a timely reminder last week
of leverage being available with the woman who was
buying TV coverage of football from Greece? I went
to Brussels as part of a small team of people to lobby
the European Union when there were threats to the
ability to negotiate the Premier League games as a
total rather than let it go to individual clubs. That is a
very big issue if European law was brought to bear. I
think Damian was a little bit unfair on Peter Ridsdale;
he was sort of saying he is a bad man. I think there is
no comparison between Peter Ridsdale who did what
the Leeds supporters wanted him to do—it was bad
financial and technical football decisions that he made
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Ev 20 Culture, Media and Sport Committee: Evidence
8 February 2011 Lord Burns, Graham Kelly and Lord Triesman
and it failed—but you contrast that with the Glazers
who have no interest in Manchester United or their
supporters. There is no comparison. I think we did
Peter a disservice.
Secondly, David, you gave Michel Platini the credit
for the fair play rules. The all-party parliamentary
group plan in 2009 recommended that. My sparring
partner and friend, Richard Scudamore, straightaway
said it was impossible to define. It was not impossible
to do because they have found ways to define it, so it
is going to happen.
I wanted to ask about FIFA. Is it true that the FA has
not really over the years made proper efforts to engage
with the international game through FIFA? We
complained when we did not get the 2018 bid—I was
as disappointed as anybody—but really we, as part of
the international game, should be looking to spread
the World Cup around the world. Maybe one time it
should be a well-established nation like us and the
next four years it should be a developing nation. But
the main question is has the FA failed to engage with
FIFA. Going right back in history, we felt so important
that we didn’t even join. Is that right?
Lord Triesman: Over a long period, apart from the
process of bidding for the 2018 World Cup, the only
real link with FIFA has been Geoff Thompson who is
one of the vice-presidents. Aside from that and efforts
made in special circumstances, I don’t think there has
been any real engagement at all.
There is one area in which we do engage, along with
the Scottish, Welsh and Northern Ireland FAs, and that
is in the International Football Association Board
where those four FAs and FIFA are responsible for the
on-the-field laws of the game. That is a fantastically
nice piece of history to still have in place. But it is
certainly true that to have a great sense of the internal
councils of FIFA you have to have vastly more
engagement than we have had. Sometimes we have
backed out and had none.
Q54 Chair: Lord Triesman, I can’t resist: Alan
mentioned FIFA and the World Cup bid. Do you have
any observations on the outcome?
Lord Triesman: Very, very acute disappointment. I
think there will be a time, Mr Chairman, when the
contacts that I and others had with members of the
FIFA executive should be described in detail, because
some of the processes I don’t think really stand up to
proper scrutiny.
Q55 Chair: When should that time be?
Lord Triesman: I think it would be a long part of a
session here. I am not averse to doing that, but it
would probably be rather longer than you intend for
this morning’s session, given where we are at this
moment in time. When we set off on the bid, there
was a huge amount of encouragement from FIFA who
said that they weren’t certain about how the finances
of South Africa would work out or how the finances
of Brazil would work out. There were risks. Their risk
registers on whether these tournaments would return
a substantial income to FIFA were very high. There
was, for those reasons, a lot of encouragement for
England to go for it, because we could do it, we could
produce tremendous returns, we can organise events
of that kind and complexity and handle security and
all the other things that you have to do. Had they said
at the time that the aim was to break into new
territories, I would have advised the FA board not to
start in the first place. We started on what turned out
to be a completely false prospectus.
Chair: Tempting though it is to go on for some time,
I think we should probably draw a line there. I thank
the three of you very much.
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Culture, Media and Sport Committee: Evidence Ev 21
Tuesday 15 February 2011
Members present:
Mr John Whittingdale (Chair)
Dr Thérèse Coffey
Damian Collins
Paul Farrelly
Alan Keen
Mr Adrian Sanders
Jim Sheridan
Mr Tom Watson
________________
Examination of Witnesses
Witnesses: Greg Clarke, Chairman, the Football League, and Andy Williamson, Chief Operating Officer, the
Football League, gave evidence.
Chair: This is the second session of the Select
Committee’s inquiry into football governance. I
welcome for the first part of this morning’s session,
Greg Clarke, the Chairman of the Football League,
and Andy Williamson, the Chief Operating Officer.
Q56 Mr Sanders:. On balance, has the introduction
of the Premier League weakened or strengthened the
football pyramid?
Greg Clarke: On balance, and this is a personal
opinion, it has strengthened it. I think we have some
of the best club football in the world. We have some
of the most valuable media rights in the world on the
back of that. I have worked all over the world,
working for large corporations and running large
corporations, and everywhere you go you can see
English football on the television. That is a big
strength, but with every big strength there are some
downsides too.
Q57 Mr Sanders: And what are the downsides?
Greg Clarke: There is the usual sort of club versus
country conflict. If you have teams largely full of the
best players in the world, not all of them are going to
be English. That means on occasion that English
players get into first teams later than they could have
done, but that is a classic club versus country issue
that many countries have.
Q58 Mr Sanders: That is not an issue of the
pyramid, is it? That is a separate issue.
Greg Clarke: You could say that. I am only bringing
it up because the pyramid, when you don’t get English
players at the top of that pyramid they don’t get into
the national teams quickly.
Andy Williamson: We have had to rise to the
challenge that has been set, effectively. I was there
before the creation of the Premier League so I know
what those days were like. Indeed, at the point that
the Premier League was formed in 1992 there was a
lot of uncertainty. At that time, we lost two clubs, in
Aldershot and Maidstone United, but it is fair to say
that we have risen to that challenge within the
Football League and we have seen the popularity of
the game get back to the days of the immediate postwar period.
Q59 Mr Sanders: When Aldershot went, effectively,
bust and Maidstone went bust, Aldershot have come
back, but remind me, did they drop down into a lower
division or did they just go out altogether and start
again at the bottom?
Andy Williamson: They went out of business
altogether as Aldershot FC.
Q60 Mr Sanders: My next question is about
parachute payments, which exist from the Premier
League to the Championship. They also exist, very
helpfully, for some clubs who drop out of the Football
League into the Blue Square league. But is there a
danger that those parachute payments distort
competition, both in the Championship and in the
Blue Square?
Greg Clarke: That is one of the most contentious
issues that the Football League has debated, the extent
to which parachute payments distort competition.
Currently, the Premier League gives its relegated
clubs £16.5 million in the first season and in order to
equalise the playing field somewhat they give £2.2
million to the other Championship clubs. If we get a
situation where the clubs that are relegated are
automatically promoted, that is not in the interests of
a fair competition because you just cannot win unless
you have access to Premier League funding.
Interestingly, the trend is changing. This season,
because of the large debts some Premier League clubs
have, they spend quite a lot of that parachute payment
servicing and paying down their debt. If you look at
the current three relegated clubs, and one that was
relegated a couple of years ago but still gets parachute
payments, none of them is in the automatic promotion
slots or the play-off slots. Most of them are mid-table;
some of them are down towards the bottom.
Andy Williamson: Just to put the parachute payments
at the bottom of the Football League into perspective,
the amounts paid to the clubs relegated from the
Football League is considerably less, of the nature of
£170,000, so it does not create, in our experience, any
significant difficulty at that level.
Q61 Mr Sanders: But isn’t that just a reflection of
the distribution of the funding from the top to the
bottom that the payments are so small and yet for
those small teams they can make a big difference,
even though they are tiny payments?
Andy Williamson: Certainly they reflect the
distribution of wealth, if you like, within the
professional game.
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Ev 22 Culture, Media and Sport Committee: Evidence
15 February 2011 Greg Clarke and Andy Williamson
Q62 Mr Sanders: If you are a small league two
team, possibly with a turnover of a couple of million,
then £175,000 is a significant amount of money.
Greg Clarke: I do not think we are here trying to
convince you £170,000 is not a lot of money. What
we are trying to do is convince you it is not as good
as £16.5 million.
Q63 Mr Sanders: I think what some of us are
thinking is that £175,000 is not enough for the small
teams and more should trickle down. Is the
redistribution of income from individual Premier
League clubs to Football League clubs, for instance
through transfer payments and compensation for
youth development, fair and equitable?
Greg Clarke: I think it has become accepted that clubs
under the current scheme can get fair value for their
players. If a small club spends money on player
development, brings in youth talent and develops that
talent, the current system means that the tribunal
usually gets fair value about right. The club selling
will think it is not enough, the club buying thinks it is
too much, so arguably it is probably about right. We
have serious concerns about youth development.
Should we be forced on to the FIFA model, which is
designed in a completely different way, the amount
smaller clubs will get could decrease markedly, which
could once again seriously prejudice the finances of
smaller football clubs and potentially force many of
them out of youth development. Currently, only two
of our 72 clubs have no youth development facilities.
Should they become less and less profitable, because
many of them make a bit of money selling players
to big clubs, they will not be able to afford youth
development. Some of them, for example Crewe,
make about £1 million a year from youth development
because they have a real investment in both people
and facilities. If that is undermined by the new
proposals it will change the business model for a lot
of small clubs.
Andy Williamson: In terms of the transfer system, I
was aware that comments were made about the lack
of redistribution of wealth that the transfer system
once did. It is fair to say, however, that there is still
profitability for Football League clubs, which in the
main are selling clubs in that area. For example, on
the domestic market the profit that is made
collectively by the 72 Football League clubs in their
trading with 20 Premier League clubs is still £62
million for the last complete contractual year ending
30 June 2010. It is still considerable, but it is perhaps
not as good as it should be. Given the amount of
money that there is in the game and the redistribution
mechanism that it once represented, it is not as
effective as it once was. Obviously the Bosman ruling
had an effect on player registrations, and more
recently, of course, the introduction of transfer
windows had a similar effect. We comment in our
submission to this Committee that that is one area
where we would seek the support of your inquiry,
Chairman, to try to inject new life into the domestic
transfer market.
Q64 Mr Sanders: Why was the transfer window
brought in?
Andy Williamson: That is a very good question.
Going back to the intervention from the European
Commission which was looking at the validity of the
transfer system around the turn of the millennium,
ultimately an agreement or accommodation was
reached, it is fair to say, following political
intervention, between the Commission and FIFA. That
involved the creation of a number of changes in the
universal transfer system that applies across the world
and is governed by FIFA rules. But at the same time,
FIFA chose, I think with the encouragement of UEFA,
to introduce transfer window restrictions, and we have
received confirmation in writing from the then Culture
Commissioner at the European Commission, Viviane
Reding, that that was not at the insistence of the
Commission, it was a football invention. So it was
FIFA and UEFA who chose to include transfer
windows as part of the package that came out of
those negotiations.
Q65 Mr Sanders: Do you subscribe to the view that
perhaps the transfer window has weakened the
position of League clubs in the transfer market and
that they have not benefited as greatly as they might
have done had there not been a restricted period for
transfers?
Greg Clarke: I do. I think that when there is an
economic imbalance between buyers and sellers, the
pressure to get a deal done within a limited period of
time can favour the buyer, usually in the larger club,
usually the Premier League club.
Q66 Mr Sanders: The £62 million you mentioned
earlier is of course not evenly distributed, is it? It is
terribly unevenly distributed. I think there is a great
danger in this inquiry that we get given a lot of
statistics that show a fairly rosy picture, but when you
start to unpick it, there is an enormous amount of
difference between a small group of clubs and the
vast majority.
Andy Williamson: Those are the receipts from
transfer sales of professional players, effectively, and
that is the profit from the dealings between the 72
members of the Football League as against their
counterparts in the Premier League. The total turnover
when transfer fees are spent and re-spent within that
domestic market is in the order of £350 million. If
you add in the amount that is spent abroad, I think the
figure for the year ending 31 January this year, the
closure of the transfer window, was something in the
order of £600 million. So, it is a significant amount of
money that is being spent by football clubs on
transfers, either at home or abroad. That might
produce a mechanism, for instance, for funding future
youth development and perhaps a levy on transfer fees
overall could provide the funding going forward.
Q67 Mr Sanders: That was going to be my final
question: what can be done to help fund these
developments outside of the premiership?
Greg Clarke: The levy that Andy has talked about,
which could potentially be a levy on transfer fees,
would allow reinvestment in the game because the
Football League spends in excess of £40 million a
year developing talent, and if the new system
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Culture, Media and Sport Committee: Evidence Ev 23
15 February 2011 Greg Clarke and Andy Williamson
envisaged by the Premier League reduces that number
markedly, many of our clubs will not be able to do
that.
Mr Sanders: Will that be a percentage on the gross
transfer fee?
Greg Clarke: We believe that would be a good idea
to fund youth development throughout the game.
Q68 Dr Coffey: Is that not the role of the FA though?
Greg Clarke: We are not claiming credit for it. I met
with the new chairman of the FA, David Bernstein,
and said, “Look, we want a constructive fraternal
relationship with you. We want to work together and
support you in getting change into the game.” So we
are happy to support initiative from the FA on that.
Andy Williamson: There is already a levy on transfer
fees to fund the players’ pension scheme. Strangely
enough, it has just been reduced from 5% to 4%
because 4% takes care of the premium that is required
for that purpose. But that single 1% with a £600
million turnover would produce £6 million on its own.
Q69 Damian Collins: Mr Clarke, you were critical
about the elite player performance plan in reports in
today’s newspapers. Would you like to say more about
that to the Committee?
Greg Clarke: Of course. I fundamentally buy into the
proposition that we need to do more to develop our
youth talent, but I am a businessman. I have spent 30
years working for and running large public companies,
so I try to start from where do we need to be in five
years and what do we need to do to get there and
examine the parameters of the problem, because I am
always frightened of unintended consequences of
action. If, for example, we attract all the best talent to
the Premier League clubs and cut off youth
development inadvertently, because I do not think the
Premier League are trying to put the small clubs out
of business, I just think they have not thought through
the economic consequences. Some clubs are good at
developing talent. Middlesbrough are good at it,
Southampton, Charlton, Crewe. If the economics of
that proposition goes away so they can no longer
afford to do it, you are forced into a model where a
few clubs will develop our top talent. I believe it is
better for the game that all clubs embedded in the
community develop their talent. Of course the top
clubs will have an advantage, I accept that, but I
would not want to see them create that advantage,
then abuse it by undermining the economics of the
smaller clubs, because I think that would be bad for
English football.
Q70 Damian Collins: What do you think is best for
the development of young players?
Greg Clarke: The first thing we need to be cognisant
of is the well-being of the young lads being trained for
football. It is all right looking at this as productivity,
economics, games, returns, net present values, cash
flows and all the other rubbish we talk about, these are
human beings, most of whom end up on the football
scrapheap and never become a paid professional
footballer. We work very hard, for example, with the
PFA, with League Football Education, to try and keep
them in education, to try and make sure they have
qualifications outside the game. I would like to see a
real emphasis on making sure we develop wellrounded, successful human beings who, great, if they
make it as a professional footballer but their life is not
over if they do not.
Q71 Damian Collins: But the current rules would
mean that David Beckham would not have been able
to sign for Manchester United’s youth team, for
example.
Greg Clarke: Yes, and I am not necessarily against
scrapping the geographic limit. For example, we have
lots of clubs who are good at youth development in
London and they are just around the corner from
Arsenal or Tottenham or West Ham. If you are going
to take a young child out of their community and send
them a couple of hundred miles away to a boarding
school where they are educated with the objective that
they are going to be a professional footballer, what
happens if they do not shape up or if they break their
leg? Do you just dump them back where they have
got no friends and no network? I would just like to
see all the welfare issues around children factored into
this in case we become too economically grounded in
our analysis.
Q72 Damian Collins: But presumably these are
decisions that are taken by the children themselves
and their families and so the bleak picture you paint—
I think you referred to kids being dumped back on
their council estate at 16 with no friends or future—
seems a bit dramatic.
Greg Clarke: Well, as a guy who grew up on a council
estate, I have got some form in that area and I know
what it is liked to be dumped on a council estate, and
I know what it is like to kind of be beaten up on the
way back from the chip shop. What I was trying to
say is, once you come out of that and you lose your
friends and your network—let’s not put kids in the
position where their only value is football. That is the
only point I am making. I am not saying I am against
the geographic idea; I am saying the first issue on my
agenda is the welfare of the kids.
Q73 Damian Collins: Around the discussion of the
elite player performance plan, the idea of establishing
a programme of 10,000 contact hours with the young
players, do you think the investment that is required
to run programmes like that inevitably means that it
will be only the big clubs that can afford that type
of investment?
Greg Clarke: That is the paradigm that I am
concerned about. If it is only the big clubs that can
afford to develop talent, we are fundamentally
changing our game. I return to my remark about
unintended consequences: are we sure about what that
will do for small and medium-sized professional
football clubs in the communities? Do we want to lose
them as a consequence of that or can we protect what
is good in the Premier League proposals but not
undermine the economics of the clubs, smaller clubs,
and the welfare of the kids?
Q74 Damian Collins: I think you are right to focus
on unintended consequences. I am sure it is not the
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Ev 24 Culture, Media and Sport Committee: Evidence
15 February 2011 Greg Clarke and Andy Williamson
intention of the Premier League that it has a financial
consequence there. But another question might be put
to the Football League that are you seeking to
influence the way these rules are established for the
financial benefit of the Football League clubs
primarily and the development of the players is a
secondary issue?
Greg Clarke: Don’t get me wrong, we are absolutely
trying to look after the financial welfare of the
Football League clubs. I am happy to talk about that
in detail, but there is nothing like—I am a Leicester
City fan, we’ve had our ups and downs. Nothing
excites the crowd like having a lad that grew up in the
city and came up through the youth team making it
into the first team. I can still remember Emile Heskey,
Gary Lineker; having one of your own you have seen
in the bus queue actually playing for your local
football club is a great feeling and I don’t want to
lose that.
Andy Williamson: We need to emphasise that all we
are looking for in terms of compensation for
schoolboy players is fair compensation that continues
to incentivise clubs, those same clubs, to continue to
develop. If there is no incentive then they may as well
give up, but what we have presently is a very broadbased scheme that has the benefit of uncovering the
best talent. You see in the present England setup some
of the players who have been either developed partly
or wholly by Football League clubs, and that we want
to preserve. The participation of as many Football
League clubs in this process as possible is what we
want to encourage, but at the same time we need to
ensure that they are adequately compensated if clubs
higher up the ladder come in for some of their younger
players. Going back to the distance rules, many
Football League clubs are already close to Premier
League clubs in their own region and suffer that effect
in any event. Clubs in London have to compete with
Tottenham, Arsenal and Chelsea, for example; clubs
in the north west compete with Manchester United,
Manchester City, Liverpool, Everton.
Q75 Damian Collins: It is a two-way street though,
isn’t it? There are plenty of players that have been
developed by the Premier League clubs who end up
playing in the Football League.
Andy Williamson: There are, and one of the keys here
is to ensure that there is adequate provision for players
who are developed to graduate into first team football.
That is one of the critical areas and we can provide
the solution to that dilemma, both in terms of clubs in
the Football League producing their own players and
getting them into their first teams that much earlier,
which is the experience. Debuts in the Football
League very often are at the age of 17 or 18. So they
are getting into Football League teams that much
earlier and being introduced into competitive football
that much sooner so their development is enhanced.
The danger with development football is that players
are not prepared, even in their late teens, to move back
into competitive men’s football because they have
never been exposed to it. That is one of the problems
that we can help resolve.
Q76 Jim Sheridan: Still on the question of youth
development, could I ask specifically about these
compensation payments for youth players? The reason
I am asking is parliamentary colleagues in Scotland
are asking the same question: kids as young as eight
years of age are entering into contracts, and indeed
the Children’s Commissioner in Scotland has already
expressed concern about people as young as this
entering into contracts. Certainly when the footballing
authorities in Scotland were asked the question about
compensation payments for youngsters, they accepted
there was some concern but they did say that the
problem was even worse in England in terms of the
payments that these children get paid. Could you give
us a flavour of the criteria for these contracts or how
much money do the kids get paid and when do they
get paid?
Andy Williamson: Under the rules of the FA, the
Premier League and ourselves, schoolchildren and
their parents are not allowed to be offered incentives.
Those are the very firm regulations that are long
standing. In terms of the compensation that we were
referring to earlier, we are talking about compensation
paid for the time spent in training a youngster by one
club if and when that player moves on to another club,
and that is the fair compensation that I was referring
to. But in terms of payments to individuals, that is
strictly against the rules.
Q77 Jim Sheridan: So no kid or their family gets
any direct payments?
Andy Williamson: Only travel expenses for attending
coaching.
Jim Sheridan: That seems to contradict what the
footballing authorities in Scotland are saying.
Q78 Chair: Obviously one of the major sources of
revenue into the game is the sale of broadcasting
rights. Now, the Football League has had a slightly
chequered history in terms of its income from
broadcasting rights, but can I just ask your reaction to
the opinion of the Advocate General about the legality
of using foreign broadcasters’ decoder cards in this
country? Do you think that has implications for you?
Greg Clarke: It certainly does. It has multiple
implications. Our main issue is that if you imagine a
small football club, Macclesfield or Chesterfield Town
or Notts County, who are trying to get 2,000, 3,000,
4,000, 5,000, 6,000, 7,000 people to turn up to their
game on a Saturday and pubs around the corner are
showing Manchester United versus Liverpool live on
the telly using a foreign decoder, it strikes me that that
is making life more difficult than it needs to be. The
agreements we have with the broadcasters at the
moment are that Premier League football, like
Manchester United versus Liverpool, is shown either
early or late so it doesn’t coincide with the kick-off.
One of our major concerns is that people might find
it so easy to watch top-quality Premier League action
at the same time as League 1 and League 2 are kicking
off that it is just easier to stay in the pub, have a pint
and watch the game, and that will undermine our
football.
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Culture, Media and Sport Committee: Evidence Ev 25
15 February 2011 Greg Clarke and Andy Williamson
Q79 Chair: So you regard the 3 pm blackout as
absolutely critical?
Greg Clarke: We do, absolutely.
Q80 Paul Farrelly: I want to come on to debt but,
while we cannot stray too widely on this Committee,
part of the issue is how fairly money is shared out
and we were talking about young players and player
development. To what extent is it right to ask whether
money is shared out as well as it could be to support
academies, to support your league clubs, even
sponsoring schools as academies to develop young
players? Is that a relevant question to ask about the
purpose to which money is put in the game and is
shared out?
Greg Clarke: I think the question of fairness in
football, in its economic sense, is an interesting
question. I have given this a lot of thought since I
joined because I come from, as I say, a business
background.
Paul Farrelly: But on the specific worthwhile point.
Greg Clarke: Yes, the specific worthwhile issue. Each
Football League club makes a decision on how
seriously it is going to take youth development. Some
we have talked about, like Crewe, Charlton or
Southampton, spend a lot of money and they have a
lot of well-qualified staff working with a lot of kids,
artificial pitches, indoor facilities, so they can train
and get the best out of the kids. Some of them, such
as Hereford or Morecambe, do not have youth teams
at all. They have decided that they just cannot afford
to be in that business; the business model is too tight.
There are funding allocations from within the game
that help those clubs stay in the youth development
business and they are vital because it gives smaller
professional clubs within the Football League a leg up
so they can afford to develop their local talent. We see
that as vital to maintaining fairness in the game.
Q81 Paul Farrelly: On debt, is the inability to
service debt through cash flow a problem in the game
and to what extent?
Greg Clarke: I think it is the problem in the game. If
I had to list the 10 issues that keep me awake at night
about The Football League it would be debt, one to
10. Let us take Deloitte’s, which—you have all seen
it—is quite a good analysis, and just take its figures,
because then we do not have to argue about where
they came from, we can just all talk about the same
figures. It talks about debt in the Football League this
year in excess of a third of a billion pounds. That for
a football league that, if you aggregate across all the
clubs, makes no profit. You are trying to service a
third of a billion pounds worth of debt with no
positive cash flow and no profit. If we were a
commercial organisation, we would be out of
business. As a board and as an executive within the
Football League, we’re saying, “Okay, where will we
be in five years?” Just extrapolate trends forward,
“What if we do this?” and then we can do a what-if
analysis. If we can cap the wage budgets, what would
that do? If we adopt UEFA fair play rules, what would
that do? If we can find new sources of commercial
revenue, what would that do? It gives us the ability to
do a what-if analysis. The board are taking the results
of that to our chairmen’s conference, where we get all
the chairmen together in June, because we are only
part way through, which will say in five years this is
where we will be if we don’t tackle the problem.
The thing that I would encourage you to focus on is
that there is a real misperception in football, which is
that football clubs go out of business. Actually they
do not, largely. It is owners that go out of business.
When owners go out of business, you then get into,
“We better get a fit and proper persons test” because
sometimes bad people turn up trying to own football
clubs but they always turn up trying to own distressed
football clubs that are desperate for the owners. You
end up talking to fans and they say, “Why are you
trying to stop us save the football club? Why can’t we
just have Fred or Bill or Mary owning the club?”
We’re saying, “Well, actually, they’re not the sort of
person we think should own a football club.” But then
there is a tirade of, “Well, if it’s either a bad owner or
no football club, we’ll take the bad owner”, because
we are putting the fans in an awful situation.
If we do not tackle the fundamental economic
problems of our game, all the issues about not being
able to pay debts, insolvencies, bad owners, all that
sort of thing will get worse and worse. The one thing
we have learnt from the global financial crisis,
whether it is countries or corporations or households,
is that people who have too much debt end up in a lot
of trouble. It is a good proxy for risk. The level of
debt within the Football League is absolutely
unsustainable, and we have got three working parties,
one for each division, working really hard on how we
bring our level of debt down.
Q82 Paul Farrelly: Would you like to see your rules
incorporate provisions that would mean that anybody
involved in insolvencies previously, either personal or
corporate, subject to rights of appeal, should not be
appointed as directors of football clubs or be able,
either themselves or through proxies, to take
significant stakes in football clubs?
Greg Clarke: We have some quite good rules in place.
We innovated back in 2003, because what we try to
do in the Football League is get ahead of the game.
Andy will talk you through how the fit and proper
persons test morphed into the owners and directors
test to make sure that we get a hard look at who is
going to take over our clubs.
Andy Williamson: Indeed. We do have, coming to
your question, a two strikes and you’re out policy in
relation to previous football insolvency events, not
looking at the wider business record, because there are
people obviously involved in businesses that rescue
companies for a living and have been involved in
various insolvency events previously that clearly
wouldn’t be appropriate to exclude. But we have a
policy in relation to people who have a record in the
game and also if they have a poor record in other
sports, and so those are a couple of examples of the
disqualifying conditions that are embraced into our
what was fit and proper persons test and is now called
owners and directors test.
Greg Clarke: May I just add a subsidiary point, which
may be useful? I have done business in Pakistan,
Colombia, Saudi Arabia, Australia, all over the world.
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Ev 26 Culture, Media and Sport Committee: Evidence
15 February 2011 Greg Clarke and Andy Williamson
I have just come back from running an Australian
multinational for seven years. I used to run Cable and
Wireless. When we used to do business with people,
if we were setting up a joint venture in Russia or in
Saudi Arabia or doing a major development in one
part of the world, the first thing you do is absolute
complete due diligence on your partners because you
cannot afford to undermine the ethical foundation of
your business. If people do business in a different way
to you, you will have a problem at some point in the
future.
We used to use agencies like Control Risks and
Pinkertons and the main accounting firms to go and
say: who are they, where did they get their money
from, are they ethical people, do they have a good
track record, do they treat their employees right, they
don’t pay bribes, could they sign the Foreign Corrupt
Practices Act? The average project that we did cost
between £300,000 to £500,000 to get those answers.
Now, if you’re doing projects on average in the £1
billion to £5 billion range as we did, that was just a
sensible thing to do. Trying to get Football League
clubs to come up with sums like that to back up the
owners and directors test is just never going to
happen. So, largely our process is self-certification by
owners. If we find out they have lied or misled us we
kick them out, but we have to take their word on a lot
of issues because largely we can’t afford to go to a
country and dig into their background.
Q83 Paul Farrelly: I have been involved in the due
diligence business all my life. I just want to come on
to a couple of things that you have mentioned, very
briefly. But firstly, you agree rules, you agree
protocols, but what about deterrents? Do you think
strengthening the nine points deduction—even to the
extent of you go bust, you start at the bottom—would
be a deterrent, or would it be a penalty for supporters
because of bad ownership?
Greg Clarke: Well, the Premier League deduct nine
points, we deduct 10. There is a slight difference
there, but your point is absolutely valid. We had a
very lively debate at our last chairmen’s conference. I
had been in the job about four weeks last May when
we had the conference, and there was a motion from
the floor from a very respected chairman of a Football
League club. He has been a long time, high quality
owner who said, “I’m sick of bad owners going out
of business and besmirching the game and what we
should do is automatically relegate by two divisions
anybody who can’t pay their debts and is insolvent”.
There is a lot of sympathy for punishing people who
don’t pay their debts, but the vote did not pass, and if
I can try and give you a thematic approach to why it
didn’t pass rather than quote lots of different people
who had nuanced arguments. It was because you
aren’t actually punishing the people who screwed up
the club. You are punishing the football club and the
fans and the community, because the guys who have
gone out of business have gone, largely. We were in a
situation of how much do we want to hammer a local
community and football club who largely have been
mismanaged by a bunch of people who have moved
on and left the club in a mess. There are a new bunch
of owners, so they are trying to raise money to
refinance a football club, which may be impossible if
you relegate them into the Conference. Largely we
felt that the 10 point deduction was the best solution
to not penalising the club and the fans.
Q84 Paul Farrelly: Let’s take a specific example,
just to give us an idea of how you can or do get your
hands dirty. Let’s take Crystal Palace. Crystal Palace
does a sale and leaseback of its ground to a property
financier whose company subsequently goes bust. The
terms of that sale and leaseback are so onerous in
terms of rent that Crystal Palace goes into
administration because it can’t pay it. Then the
property owner goes into administration as well. To
what extent do you look at those sorts of deals and
get involved, or can’t you?
Greg Clarke: Philosophically there are two issues
here: there is the practice of what we do, which Andy
will talk about in a minute, and then there is the
practicality. When I hear of a financial restructuring
of a football club, which involves the ground going
one way and the football club going another way, all
my hairs stand up on the back of my neck and the
alarm bells start ringing, because when a football club
loses its football ground usually bad things happen. It
can happen for many reasons. It can happen because,
actually, this isn’t someone trying to buy a football
club, it is a property play and if they can shed the
football club at some point in the future and end up
with a nice property development, they are very
happy. That is not in the best interests of the club, the
community and the fans.
But sometimes you sit down with owners. I sat down
with one the other week. I have been to 60 clubs in
10 months, because I am trying to do 72 in the first
season. I am going to Torquay tonight. When you talk
to them they are all under phenomenal pressure, and
sometimes the last thing they can do is take a
mortgage on their ground to release cash flow to keep
the club going. I go to a lot of clubs, the majority of
clubs where good, decent local people are putting a
significant amount of their net worth to keep their club
alive, and they are in situations where they just can’t
do any more. They haven’t got any more. What they
have to do then is give someone—they take a loan
from somebody who takes a security over their
ground. Sometimes I can’t think of a better idea for
them to keep them out of administration. The
practicalities are, for every time we come across a
slightly dodgy owner there are another 20 doing their
best to keep their club alive in the community and
sometimes they have to mortgage their ground.
Q85 Paul Farrelly: Internationally, what lessons do
you think you can learn from the German licensing
model on insolvency, and also with respect to UEFA?
Do you think you might move towards adopting
financial fair play rules yourselves in the Football
League?
Greg Clarke: I am hopeful that financial fair play will
be a way of managing our businesses into a cash flow
breakeven. The good thing you can say about a cash
flow breakeven model is your debt stops growing at
that point, providing you’re sensible. If we can stop
the debt growing we are halfway to getting a
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Culture, Media and Sport Committee: Evidence Ev 27
15 February 2011 Greg Clarke and Andy Williamson
sustainable business. If we can start paying the debt
down we can maybe have businesses that can stand
on their own feet and be less distressed.
The UEFA financial fair play model is quite
interesting because I believe it offers a template
potentially for the Championship to adopt, to say if
we have to break even on a three-year period that is
just a soft way of introducing a wage bill cap because
that is your biggest amount of disposable cash, what
you spend on your wage bill. But just to be clear, I
am not advocating a wage cap of individual players. I
think we had that battle 50 years ago, and you can’t
tell people what they should and shouldn’t earn. What
you have to say is how much can a club afford to
spend in total on its wages, and not just on players
but highly paid executives, for example. Let’s make
sure we treat everybody fairly. How much can we
afford? If they have to break even over a three-year
period there is a reasonable chance that the biggest
lever they have to achieve that is to drive their wage
bill down. I believe we should do that.
I was at an airport watching one of the financial
channels, I can’t remember whether it was
Bloombergs or one of the others, and they were
interviewing a New York banker about the new Basel
III regulations for banking. He said, “We’ll have to
find a way to work around—I mean, with these rules.”
We all laughed in the departure lounge thinking,
“Here we go again,” It is the same. There will be
smart people trying to figure their way around
whatever set of rules are in place. So our job is not
just to put a way in place of driving this business on
to a sustainable economic model; it is making sure we
have the sanctions in place to get the people who
cheat.
Q86 Paul Farrelly: My final question: you have
gone some way in League 2 on salary protocols. Can
you give us a flavour of how that has worked and tell
us how many clubs have gone into administration in
League 2 since that has been introduced? More
broadly, as you try to encourage it further up the
pyramid, having secured, hopefully, the base, under
what circumstances do salary caps work?
Greg Clarke: Do you want to do the details?
Andy Williamson: Certainly, yes. We introduced the
60% ceiling based on turnover in League 2 as long
ago as six years now, so it is well embedded. I think
it is fair to say the salary increases in League 2 are
much lower than they are elsewhere, so there is
evidence that it has worked in terms of ensuring that
clubs are sustainable. In terms of the clubs that have
still suffered financial difficulty, because at 60% you
can still lose money, and Darlington were one club, in
fact the only club, that were a resident League 2 club
that got into difficulty during that period. Other clubs
that had been relegated from League 1 and came down
with the problem may have also caused us problems
along the same lines, but only one resident League 2
club has fallen into difficulty since the introduction of
that salary cap. So it does work. Now we are seeking
to shadow those processes in League 1 and, as Greg
mentioned earlier, we have working groups looking at
cost controls across each division on an ongoing basis.
But it is also fair to say probably there isn’t a single
solution to this problem. We do have to look at
different solutions because there are different
circumstances at play in the different divisions. We
have already mentioned, for example, the parachute
payments that come down with relegated clubs from
the Premier League in the Championship, so that
creates a different dynamic at that level. So we have
to look, perhaps, at a different way of approaching
financial
viability
and,
more
importantly,
sustainability of clubs at Championship level. There
isn’t likely to be one single solution, one panacea that
could be applied across the whole of football.
Greg Clarke: The psychology of football is quite
interesting because in business, and many of us have
worked in business, you are taught that you have to
be better every day, the culture of continuous
improvement, otherwise your competition is going to
eat your lunch if you get lazy. We can all think of
great corporations of 30 or 40 years ago that don’t
exist any more. Imperial Chemical Industries: where
did they go? But football can be a bit backward
looking and when you engage senior people from
within the game there is a penchant not to change, and
when you talk about the problems of debt and the
problems that we need to deal with, whether it is
salary costs, management protocols or financial fair
play, it is, “Yes, but we’ve always had these problems,
life goes on”. You get them in a room and they will
say, “Yes, we must do something about this” but they
never do. One of the reasons we are spending so much
time generating our five-year plan with numbers and
with a vision is to show them where you will end up
if you don’t do something and say, “This is not an
intellectual exercise and it has always been like this
so don’t worry about it, the problems will go away.
We are heading for the precipice.” We will get there
sooner than people think and we will hope to catalyse
change when we validate that, share it with our
chairmen and say, “This is where you are going unless
we change now.”
Paul Farrelly: I hope we can have a look at a draft
before we finalise our report.
Q87 Damian Collins: With regards to the salary cap
operating in League 2, are all the clubs in the division
complying with that protocol?
Andy Williamson: They are indeed. If a club reaches
the 60% limit then they are immediately registration
embargoed, so they can’t increase that exposure.
There is no facility for them to exceed it because
those—it is a self-reporting process but we obviously
now have the experience over six years of
understanding individual club turnovers and we have
a plethora of information to validate the projections
that are submitted. We keep a tight rein on the amount
that is spent on the player budgets and I am pleased
to report that there aren’t any that have reached the
60% currently.
Q88 Damian Collins: The fit and proper persons test
has been in place since 2003; how many people have
failed that test?
Andy Williamson: I don’t have the figure. Certainly
some have.
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Ev 28 Culture, Media and Sport Committee: Evidence
15 February 2011 Greg Clarke and Andy Williamson
Q89 Damian Collins: Would it be 10, more than 10?
Andy Williamson: No, it will be single figures, but I
think what we will never know, of course, is how
many people have been deterred by that test, who
have been frightened away because of the rigours of
that test. I am not saying it is the be all and end all, but
it certainly has created a different approach to people
coming into the game and they are aware. We now
have a pre-approval process as well. If ownership of
a club changes they have to seek our approval. In
fairness, that is a procedure that we copied from the
Premier League so maybe they have inherited some
of our ideas and likewise we have inherited some of
theirs.
Greg Clarke: I can give you an example of that. Last
week a chairman and chief executive of a reasonably
large Football League club asked to see me at short
notice. I said, “Sure, come on in.” They said, “We
were approached by this group of people to do some
attractive financial deal and we know they have
approached another two clubs in the London area and
the guy leading it is on his third alias and has a
conviction for fraud”. So we just put the word out, all
the clubs were phoned up and said, “Watch out for
this lot”, because they sound compelling and there are
a lot of clubs who would like to hear an easy story to
get their hands on some more revenue and they’re a
bunch of crooks. So we do try to deter at an early
stage
Our biggest problem isn’t necessarily people in the
UK, because you can phone around in the UK and
you can get a reasonable off the record view of most
people. What if someone pops up from—let me pick
a country at random where we haven’t had anyone
from, so they can’t say, “Hey you’re talking about
him”—the Philippines. How do you find out about
someone who has made some money in the
Philippines? You can phone up the embassy and
they’ll say “Oh well, don’t know much about him.”
intent and having the resources to dig into every
person who wants to be part of a consortium to buy a
football club just provide practical barriers. They are
no excuse for lack of performance and we are trying
to do better all the time.
Q90 Damian Collins: We had evidence submitted by
Steve Beck on behalf of York City Supporters Trust.
He is a former chairman of York City, and he said, “I
had personal experience of dealing with an owner who
went on to try and obtain ownership of at least three
other League clubs over a period of years and would
have passed the fit and proper persons test after almost
bankrupting my club.” Quite a serious charge about
the test. Do you think the test is stringent enough? Do
you have enough power to enforce this, given the
bleak picture you have painted about clubs going into
administration and some of the business practices that
put these clubs right on the edge?
Greg Clarke: Let me say that I am hoping that over
time all of our tests and our penalties get stricter,
because I believe in a well-regulated business
environment that we have here, with real duties to the
stakeholders, like the fans and the communities and
so on. But the issue is we also have to protect natural
justice. If we have any evidence we will act. I mean,
for example, if someone comes into a nearly bankrupt
football club in good faith and tries to save it and it
still goes over the edge does he become a bad person
because he has got an insolvency to his name? The
nuances here of real hard evidence and looking at
Q92 Damian Collins: Sorry to hurry you but I know
there are lots of people who have questions. The last
thing I want to ask about is the football creditors rule.
If that rule went, for example if you were a football
club and the football creditors rule did not exist,
would you be less likely to sell a player to another
club that you thought was in financial difficulties
because you might know that you might not get that
money?
Greg Clarke: Let me just tell you a slightly expanded
answer to your question. I came in here from a
corporate background thinking the football creditors
rule was an outrage. I came in thinking the sooner we
see the back of that shoddy practice the better off we
will be. When you talk to club owners and you would
say it they would say, “Okay, we are a private
members club. We play each other in league, we play
football together. Would you be a member of a club
who didn’t pay its bills? Would you support their
ongoing membership?” I said, “No, probably not”.
They said, “What happens is, if they don’t pay their
fellow football clubs we will kick them out of the
Football League. They will cease to exist. We won’t
have them.”
Q91 Damian Collins: In our previous session, there
are some business practices people have been critical
of. Olswang, the law firm who worked with a number
of football clubs, raised one of these, which is the use
of VAT money basically as working capital on behalf
of football clubs. They said, “In any other industry,
this is an incredibly serious event that leads quickly
to a winding-up petition and personal consequences
for those involved, but this seems to be not just one
or two clubs involved in these sorts of business
practices but a big problem.” Do you think that is
something that you, as the League, should take a
position on?
Greg Clarke: I think we should, yes. We at the League
and the clubs that drive the League—because the
Football League doesn’t run the clubs, the clubs run
the Football League; we are a democracy; there are
72 votes and they all count the same—are vehemently
supportive of HMRC. We sat down and came up with
a set of measures about people start using the
taxpayer’s money as a bank—because, to be frank,
without declaring any form of political opinion, the
Government has got better things to spend its money
on than football clubs at the minute. If people don’t
pay their tax bills, for example HMRC say they
haven’t paid their PAYE, what we should do is
immediately put a transfer embargo on them so they
can’t sell players. That is a big stick in The Football
League. If you ask me would I support extending that
to VAT, yes, absolutely I would. We need to improve
our sanctions all the time to stamp out bad business
practices.
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Culture, Media and Sport Committee: Evidence Ev 29
15 February 2011 Greg Clarke and Andy Williamson
Q93 Damian Collins: Gordon Taylor, who is coming
in next, said in his evidence, “The football creditors
rule protects the integrity of the game and ensures that
the club cannot achieve success beyond their financial
means.” But that is what they are doing. They might
be protecting each other in the way they do that, but
that is what they are doing.
Greg Clarke: What I am trying to say is, we are
searching—I mean, for example, there is a lot of
debate within the Football League and the Football
League board, for example, the Football League
policy is to support the football creditors rule for the
reason that the default position is if the club doesn’t
pay its other football clubs they will kick it out of the
League and it is gone forever. It can maybe start up
round the corner on a park and rebuild itself.
Q94 Damian Collins: Sorry to interrupt, but if the
football creditors rule didn’t exist, would it help the
clubs to police each other? They would be more aware
when dealing with each other that if I’m buying a
player from another club and they are in financial
difficulties or are selling to another club, I might not
get my money, and therefore they are helping to
regulate each other, but at the moment there is no such
incentive at all because they can take each other’s
money. They know the transactions are protected and
that if the club goes into administration they won’t be
the ones that will lose out; it will be a local business
that supplied that football club.
Greg Clarke: Let me answer specifically your
question, because it is a fair question. Some of the
biggest organisations in the world mispriced
counterparty risk over the last three years. They lent
to organisations that could not pay them back.
Expecting half of our football clubs to quantify
counterparty risks—the football clubs—where they
don’t know what their finances are, what assets they
pledged, what securitisations they have got in place;
what that will do is stop them selling to each other
because they don’t have the resources or the
information to make a well-informed decision on
counterparty risk.
Q95 Damian Collins: My original question was if
the football creditors rule didn’t exist would clubs be
more careful about buying and selling players to each
other. Would they?
Greg Clarke: Absolutely. I think there would be a lot
less buying and selling.
Q96 Damian Collins: Given one of the pressures in
the game seems to be inflationary pressure on player
salaries and on player signing fees, that might be quite
a good thing. It might be a helpful way of helping
clubs be more sensible about how they do business
with each other.
Greg Clarke: Andy will say a few words in a minute.
I would be loath to leap to that position without a
thorough
analysis
because
the
unintended
consequences could be horrific. But they might be
good, and let’s work our way through it because we
are looking for a better way.
Q97 Damian Collins: Would you lead an analysis
like that from the Football League? Would you say,
“This is something we should do”, because a lot of
people are questioning why this rule exists?
Greg Clarke: One of the scenarios we are generating
as part of our five-year plan is what happens if we
move away from the football creditors rule. What does
it do to the game? What we are trying to do is have a
way of testing ideas and finding out where we end up
if we adopt them rather than just saying, “Let’s give
it a go and see.”
Q98 Damian Collins: The final question on this—I
have probably taken up quite a lot of the Committee’s
time—is that you have spoken a lot about something
I think we all agree with: football clubs, particularly
Football League clubs, are a key part of their local
community. People are right to ask the question of
why is it that if that club goes into administration, its
debts to other Football League clubs and other parts
of the country are taken as a priority, while its debts
to local suppliers that it probably deals with are not.
It is the local businesses in the community that
football club serves that are more likely to suffer if a
club goes into administration than a football club 500
miles away.
Greg Clarke: I cannot construct an argument that
allows me to defend the morality of football creditors
and we are working hard to find a more palatable
substitute.
Q99 Paul Farrelly: Just on this very briefly, you say
in your evidence if the football creditors rule is
removed, there is a greater risk of clubs ceasing to
exist. I would say, “Up to a point, Lord Copper.” It is
post facto preferential treatment of creditors, and it is
simply an extra obligation and condition that a buyer
has to take on, and therefore it will reduce the price
they are willing to pay for the club and therefore the
surplus is available to other creditors. Is that not the
case?
Greg Clarke: In any normal business that statement
would be true. If you go through the last restructurings
that Football League clubs went through, and there
are plenty you can get on the public record, the price
paid for a club, largely, people pay you to take it off
their hands. If I had sat next to just one chairman who
said, “If I could find a good owner who would give
me a quid for this place I’d take it tomorrow.” The
banks take a haircut, the creditors take a haircut. It is
a situation of it is not a compelling asset to own.
Largely good owners see it as, “I’ve made some
money and I’m going to pay it back into my
community and I am going to try and keep the local
football club going”.
Q100 Jim Sheridan: The last question I asked about
compensation for young players; what kind of money
does change hands for compensation for young
players?
Andy Williamson: That varies enormously. Under the
present system, clubs are left to mutually agree the
level of compensation. If they can’t agree, it would go
to a compensation tribunal.
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Ev 30 Culture, Media and Sport Committee: Evidence
15 February 2011 Greg Clarke and Andy Williamson
Q101 Jim Sheridan: What kind of figure is that:
£1,000, £10,000?
Andy Williamson: It could range from £1,000 to
several hundred thousand. I think in recent times there
have been figures as high as £500,000 or £600,000,
but I was on one of these tribunals as long ago as
maybe 10 or 11 years for a player called Jermain
Defoe. He moved from Charlton Athletic as a 15-yearold, and that tribunal set a base figure of £400,000 as
long ago as that with build-up payments. In fairness,
I think he is testimony to a pretty accurate decision.
Q102 Dr Coffey: Very interesting about debt but we
must turn to governance. Perhaps I will make a
controversial statement. Lord Triesman last week
sometimes had the tone of a jilted lover having had a
lover’s tiff, but the Football League has brought in
two independent directors, including a new chairman,
and six people involved formally in football. What
benefit has that brought to your governance and do
you think the FA and the Premier League could
benefit from adopting your board model?
Greg Clarke: I have been sitting on public company
boards for large corporations for the last 16 years. I
was on the board of Cable and Wireless, I was on the
board of BUPA, I was on the board of Lend Lease
Corporation, in Australia, and the independents are
there to see fair play. They are there to balance,
because there are always conflicts of interest. For
example, if the chief executive wants to be paid more
money, you have to balance the good of the chief
executive versus the good of the shareholders: what is
the right balance? The committees that make those
decisions are largely composed of independent
directors.
The Football League took the decision well before my
time that they would have a senior non-executive
director and an independent chairman who were
independent of football, who had been football fans,
had maybe worked in football a long time ago, knew
what football was all about, but came without any
vested interest to any divisions or any clubs and could
balance the needs, because we do have differences of
opinion between League 2 and League 1 and the
Championship. I spend a lot of my time trying to find
common ground, along with Ian Ritchie who runs
Wimbledon, the All England Lawn Tennis and
Croquet Club, I think it is called. We spend a lot of
time trying to broker agreements so we can move
forward, because when you have a number of
stakeholders in a decision-making forum it is really
easy to default to nothing ever happens because
nothing can be agreed. You end up with anodyne
statements that we are all going to work together to
solve the common problems of X, Y and Z, and
nothing happens. That is why you need independent
directors, and we have been very forceful in our
opinion with the FA that they need not just
independent directors but if independent directors see
bad things happening on that board, they can stand
up, make a fuss and be noticed, and if they resign that
is a big issue, not, “Oh, we’ll just get another one.”
We made that point in our submission and I have sat
down with the new chairman of the FA and
encouraged his desire to get independent directors and
pledged the support of Football League to that
initiative.
Q103 Dr Coffey: You have two seats on the FA
board, I believe.
Greg Clarke: We do indeed.
Dr Coffey: In the recent change where David
Bernstein came in, were you opposed to that, because
he still had formal links in a way with football?
Greg Clarke: I was not consulted, and rightly so. Let
me tell you what happened. One of the problems you
get in football is everybody wants to know what is
going on all the time, and the FA board were
exceptionally good at keeping their deliberations to
themselves so there weren’t leaks about Fred, Mary
or Bill is going to get this one. That was on the basis
that each member of the decision-making forum, of
which we had one, was sworn to absolutely secrecy
and Tony Kleanthous, who is chairman of Barnet, who
is on the FA board, was our nomination. Tony came
to me and said, “Greg, these are the conditions. Are
you happy with those?” I said, “Tony, you have my
support in keeping absolutely quiet but when you
make a decision just let me know.” He phoned up
straight after the board meeting, when it had been
announced, and said, “It’s David”. I said, “Oh great”.
So, I support the process. It is a tough job running the
FA, don’t get me wrong, and the best person, a really,
really good person is going to find that job tough. I
looked into David’s background and he is a tough guy.
He has worked in real businesses. He has managed
fractious boards and shareholders. He has been around
the block and he will have our support, but it’s not
going to be easy.
Q104 Dr Coffey: What about those structural
reforms that you have introduced in your governance
arrangements, that without question the FA are not
doing today, that you think could make a visible
difference into the future running of the FA, whether
that is the development of grassroots sport or whether
it is the success of the England team?
Greg Clarke: I met Lord Triesman. I think we
overlapped by a couple of weeks. I was there a week
and the CEO left, I was there another couple of weeks
and the chairman left. I thought, “Crumbs, I better not
start planning my pension in this job.” I sat down with
him and I asked him what he thought his role was and
he told me. I said, “Look, I’m here to try and build a
constructive working relationship to get things done,
so why don’t we all sit round a table and just say what
are three or four important things and let’s get them
done.” Go through a confidence building exercise and
say, “Hey, we can get things done” and move on to
even harder things.
I invited him, because he didn’t come to any Football
League games, and I said, “You’ve got to build—”
because one thing I know about football is you have
to build a support base. I have done 60 clubs, not
because I like spending five days a week travelling. I
am going to Torquay tonight; I was at Rotherham the
other week; I was at Bradford. I do five games a week
because I need to understand what is important to
football and I need to build a support base. I said to
him, “You don’t come to any of our games. You’ve
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Culture, Media and Sport Committee: Evidence Ev 31
15 February 2011 Greg Clarke and Andy Williamson
got to get out there. You’ve got to build a network.
You can’t be seen as a remote figure.” I didn’t see him
as a bad man; he just lacked the common touch of
getting out there and moving people his way. What I
have told David is he will have our support. We will
try and drive things forward. We are willing to attack
the contentious issues together in good faith. We are
not going to brief against him; we are not going to
undermine him. We are going to be a proper partner
and if we have an issue with what he is doing we will
sit down in private and hammer it out with him.
Q105 Dr Coffey: I think you said the new chairman
has a desire to bring independent directors on the
board. So that is stated?
Greg Clarke: Before he took the job he was one of
the people saying we need that. I would be amazed if
he doesn’t drive hard for independent directors. I am
not here to speak for him, but he comes from a
background where it is normal to have independent
directors. We are not talking about, “Shall we go into
genetic engineering of humans” or something beyond
the pale. We are talking about something that the
civilised world has accepted as a normal way of
running these sorts of organisations. Why wouldn’t we
do it?
Q106 Mr Watson: The former League club
Kidderminster
Harriers
nearly
went
into
administration last week. Do you think there is more
you could do to work with supporters’ trusts to help
lower League clubs or former League clubs improve
their governance model?
Greg Clarke: I am a big fan of supporters’ trusts. I
am not one of these people who just says, “Oh, they’re
great but we don’t want anything to do with them.”
Let me give you an example. When we were rescuing
Leicester City we did that in partnership with the
Leicester City Trust, and the supporters’ trust put
£100,000 into the rescue and nominated a director
who sat on the board. I sat down personally with the
management committee of the Trust and said, “Look,
I’m not being patronising but you have to understand
there are duties on a director of a company and if you
breach those duties there are sanctions that will be
applied by the DTI. You have to understand the
Companies Act, not in detail but broadly what you are
supposed to do and what you are not supposed to do.
We encourage you to put forward somebody who can
understand how to be an effective director and
understand what he can and what he can’t tell the
membership at the trust meetings.” They appointed
one of the senior partners of one of the biggest law
firms in Leicestershire. He was a cracking director but
he got in all sorts of trouble with the trust; not nasty
but they would say, “Well, who are we going to buy
then in the transfer?” and he would say, “Well, I can’t
tell you”. They would say “What good are you doing
if you can’t tell us what is going on?” It is a tough job
to have because the person who can discharge those
responsibilities has to say no to a lot of questions from
the people who put him in the job.
Q107 Mr Watson: Let me just ask you two practical
points. Do you think there is more you could do to
enable these kinds of trusts, whatever model they take,
to take a stake in their clubs? Presumably, given the
comment you have just made, you wouldn’t agree
with some rules around transparency so that
supporters’ trusts could see the accounts of the club,
for example?
Greg Clarke: I think every business should publish its
accounts and be transparent. For example, if I am
going to sell my club pies I would like to know that
they have some working capital next year. If I was
going to put supporters’ trust money into a club I
would like to make sure that club has plans to remain
solvent before I put my money in, otherwise I would
be breaching my duty of care to the people I was
looking after in the trust. So on transparency of
football clubs: the more we get the better off we will
be.
Q108 Mr Watson: Is there a role the Government
could play in making that happen?
Greg Clarke: I am not temperamentally inclined to
heavy duty regulation in football but we may come to
a point where, if football does not make enough
progress to get its house in order, we will need to go
down that road.
Q109 Mr Watson: Presumably if we can help you
find some practical ways the trusts can take stakes and
improve transparency, do you think the trusts
themselves might need to be governed at some point?
Greg Clarke: Once you are dealing with sums that run
into hundreds of thousands of pounds—for example, I
was with a club that was in all sorts of financial
difficulty and I was talking to the person who was
trying to help them out about two weeks ago. He said,
“I’m talking to the trust. They’ve got £300,000 in the
bank.” I said, “Let me get this straight. You are £4
million short of staying in business. Are you taking
their £300,000 unconditionally or part of a £4 million
package?” He said, “I’m just taking the £300,000.” I
said, “I wouldn’t do that if I was you, because if that
keeps you in business for another 10 days and they
lose all their money I will be really unhappy about
that.” I had no power to enforce that but at the time
he didn’t do it. We will need ways of protecting wellmeaning supporters from losing all their money in a
fragile football environment. Once we get football on
to a sound footing, if football trusts want to invest in
steady state businesses that can stay in business that
is great, but at the minute I am not sure all the trusts
have the expertise in place to diligently understand
what they are getting into.
Chair: I think that is all the questions we have for
you. Thank you very much.
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Ev 32 Culture, Media and Sport Committee: Evidence
Witnesses: Gordon Taylor, Chief Executive, Professional Footballers Association, and Paul Elliott, former
Chelsea captain and Professional Footballers Association Trustee, gave evidence.
Gordon Taylor: Brede Hangeland has been ill
throughout the night and he has had to apologise for
his non-appearance today. I hope you will understand.
Chair: Thank you for that. In which case, may I
welcome to the second part of the session this
morning, representing the Professional Footballers
Association, Gordon Taylor, the Chief Executive, and
Paul Elliott, who is a PFA Trustee. We send our best
wishes to Mr Hangeland and hope he recovers soon.
Q110 Mr Sanders: A similar question to the last
session: how robust do you think the English Premier
League and Football League pyramid structures are?
Gordon Taylor: By robust, do you mean how can they
protect the existence of the clubs, bearing in mind
what we have talked about with the debt?
Mr Sanders: Is there a danger of fragmentation? Are
they secure?
Gordon Taylor: Considering, I suppose, they started
with 12 clubs in 1888 and it never ceases to amaze
me—bearing in mind the economic difficulties we
have had in the last few years—how many full-time
clubs we have in this country. It is unique in the whole
world to have 92 full-time clubs and, in addition, in
the Conference as well, over half those clubs are full
time. We have the highest aggregate attendances, we
have the highest number of full-time players, so it
would be a little perverse of me to say it was not
robust.
But, of course, we have probably never had a time
like this—I have been involved as a player and
administrator through very difficult times. The 1980s
were terrible times, both for health and safety reasons,
principally when the Government got heavily
involved, and since that time, of course, with the
advent of satellite television and the back-up
sponsorship, the game has never had more income.
On the other hand, it has never had more debt and so
we have that dichotomy. But I like to think when the
PFA puts what assets it has at risk when we try to
help clubs through financial difficulties—probably
two-thirds out of the 92 clubs have had financial
difficulties over the last few decades.
I never thought we would see clubs in the premiership
have problems but, in actual fact, you can name just
on the fingers of one hand the number of clubs who
did go out of existence and then, of course, even some
of them have restructured, got back, and we have seen
the likes of Accrington Stanley and Aldershot come
back. We should not underestimate the great strength
of football in this country and these islands, which is
quite unique, and how much a part of our social fabric
they are. So if you said, “How robust are they?” I
would have to say they have met some big challenges.
Those challenges in the 1980s were met with the help
of politicians and the legislators, together with police
and local authorities.
Those tragedies convinced me that sometimes
football—if you remember, I think the Prime Minister
at the time blamed football and football blamed the
Prime Minister but the answer to those problems came
about by excellent co-operation between everybody
involved in the game and then also supporters that got
themselves properly organised, Government, police.
There was no interaction between the different police
forces. I couldn’t believe it. At the time, they wouldn’t
give information, and since that time there now is a
national information network. When people said,
“You will never defeat the bad behaviour or the
hooliganism at football, you will never defeat the
racism at football”, I have seen football come together
with help from people like yourselves and do
precisely that. So there are times when, it has not just
been robust, it has been quite positive with regard to
social life in this country, not least of which, of
course, is its social responsibility programme that is
bought into by both clubs and players.
Q111 Mr Sanders: You mentioned debt. How
serious a problem is debt in the English game?
Gordon Taylor: Debt is a serious problem for all of
us in the world and nobody is more aware than you
are of the debt we have got ourselves into. I think part
of the problem is I have noticed it has been so much
easier—I get involved in the local citizens advice
bureau at Blackburn and Darwen and I have seen the
massive increases in debt, the way that we have
allowed people to run up credit cards, to run up debt.
On a bigger scale that has been done by the banks as
well so it was almost inevitable. Football is not an
oasis from what is going on out there in society. It
reflects it. So if there is debt out there, there is going
to be debt in football. In dealing with it, you have
covered the football creditors rule and you seem to
think that is particularly special to football, as though
we are looking for some actual special vested interest.
It was done with the purpose of trying to keep a club
in existence and its importance to a community and
to try and make sure that the supporters, who didn’t
run the club, weren’t discriminated against and that
the players who had signed in good faith suddenly
didn’t find their contracts not worth the paper they
were written on, and to try and make sure that a club
could not win a cup competition or a league on the
back of players whom they couldn’t afford to buy or
pay. We never had any objection, of course, because
we are all taxpayers, to the Inland Revenue being a
preferential creditor. I think it is just since they have
not been allowed to be that, because of European
legislation I believe, that that particular rule has come
under attack.
Q112 Mr Sanders: Has the number of clubs where
the PFA is helping to meet players’ wages increased
or is it roughly the same number that there has been
over the last 10 years?
Gordon Taylor: Of course, we did have Portsmouth
and we have had a number of clubs just of late. It has
definitely helped since both the Football League and
the Premier League implemented a better relationship
with the Revenue and tighter controls from the centre,
which is what was needed.
Q113 Mr Sanders: Has the number of clubs you are
helping gone down or has the number of clubs you
are helping gone up?
Gordon Taylor: It has gone down, albeit Portsmouth
was a massive amount of money compared with some
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Culture, Media and Sport Committee: Evidence Ev 33
15 February 2011 Gordon Taylor and Paul Elliott
of the lower Football League clubs. It is all
proportionate. Sometimes £50,000 or £100,000 could
cause a Football League club to really struggle,
whereas with Portsmouth in the Premier League you
were talking millions, as we were with Leeds when
they were in the Premier League. What we do in such
a situation is ask the players to hold together, not to
walk out of the club. If they don’t get their wages they
would normally be totally free agents to walk out. We
asked the players, as we did with Bristol City 30 years
ago, to try and hold together and agree to defer their
monies until the club got out of its financial problems.
Having said that, there were many in the league at the
time, before the Premier League was formed, who
said, “Let them wither on the vine. It’s natural
evolution.” I didn’t think so, because I am a great
believer in the history and tradition of the game and
many great clubs now in the lower divisions have an
illustrious history and vice versa, and that is the nature
of sport.
Q114 Mr Sanders: I think most football fans would
be very supportive of that view. But as a professional
body, at what point do you take a decision, “We can’t
keep paying these players’ wages”? Do you have a
formula that says, “We can do this for four weeks and
if X doesn’t happen that’s it”, or do you just make
up your mind with each individual case that comes
before you?
Gordon Taylor: It’s not a cavalier approach. We have
lawyers, we have accountants who will go to the club
and look through the books and see whether it is
possible to save it and try and work with them to look
at what measures we can use to save it. We don’t have
infinite reserves with the PFA. In fact, the majority of
our funds are charitable funds for hardship, accident
and education, so we need to be quite careful on that.
We are a lender of last resort. We try to encourage the
players to defer some of their monies for a period of
time during which we hope the club can get out of
trouble, and I have to say for the most part that has
worked.
Q115 Mr Sanders: Are you currently lending to any
League club at the moment?
Gordon Taylor: At the moment there are one or two.
Q116 Mr Sanders: Have Plymouth Argyle
approached you?
Gordon Taylor: Yes, Plymouth have approached us
and Plymouth is a club we are looking to help at the
moment and working with the players to try and do
our best to keep that alive, because we don’t have too
many clubs in the south west and, goodness knows,
we need to keep them alive. You go down on your
holidays and the youngsters there, they like the
Manchester Uniteds and Arsenals but they also relate
to the local club. I think it is important that we do all
we can to keep Plymouth alive; and you think it was
Michael Foot’s team, wasn’t it?
Mr Sanders: Indeed.
Q117 Dr Coffey: On debt, you made a submission
about gearing being required in all industries. Is there
an element here that leveraged buyouts are a poor way
of trying to own a football club or is it simply that the
tax incentives on a leveraged buyout are perhaps
better for financing a club than the all upfront cost of
putting in equity?
Gordon Taylor: Are you referring to my reference to
America? We have had certain problems in this
country where there has been big leveraged buyouts
of some of our major clubs—
Dr Coffey: Yes.
Gordon Taylor: That situation would not be allowed
to happen in the USA where, as you know, they have
different franchises and at times they even move cities
and towns. That doesn’t happen in this country;
maybe just once.
Q118 Dr Coffey: You have made some very
interesting comments about liquidity.
Gordon Taylor: I mentioned a limit of 20%, where
they talk about a limit of 20% of leveraged debt, yes.
Without being so specifically involved, I am aware
Manchester United need to keep being successful
because there is a big amount of debt and likewise
Liverpool found it hard to service their debt.
Q119 Dr Coffey: I have a personal perspective about
limiting gearing as well, which would be sympathetic
to your general perspective, but you talk here to some
extent about one of the things to follow from Germany
may be about the liquidity. As a former accountant,
the one thing you can guarantee is a forecast is always
wrong. How do you feel that is working?
Gordon Taylor: None of us can see into the future but
I think we do, at times, need to pay respect to
Germany, and not just because they keep beating us
at times in international matches. They did have a
time when they didn’t achieve the international
success that they wanted to and they had a root and
branch approach, to youth development. There is good
co-operation between their national association and
the Bundesliga and they set standards for trying to
make sure that a club could, as we have heard before,
at least say they had a balance sheet that could keep
them in existence, to see them through the season and
the next season. They have tried different approaches.
They have emphasised the priority, which is good, of
having full stadiums. They have managed to lower
ticket prices and not affect them badly financially and
have full stadiums.
You can never just transplant a culture. Germany is
different. Holland, for a small country, does
tremendously well internationally. You can look at
best examples of other countries. Not too long ago,
France was the best example for youth development
and bringing it through. Now that has moved to Spain
and then you see the predominance of Barcelona and
Madrid, which is not necessarily healthy, bearing in
mind they do monopolise success in that country
because those two clubs have their own individual
television agreements, which we don’t have that in
this country.
It has needed support from Parliament at times to have
a collective deal on condition that the Premier League
does give a very significant amount of money to
grassroots and, of course, also to the Football League,
albeit in the Football League we have almost
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Ev 34 Culture, Media and Sport Committee: Evidence
15 February 2011 Gordon Taylor and Paul Elliott
replicated the problem with the Premier League.
There was a time when one club probably had more
money from television than all the clubs of the
Football League and now the Championship is almost
becoming a Premier League division 2. So we are
finding the way they split their money—80% to the
Championship, 12% division 1, 8% division 2—is
almost now making it hard for division 1 and 2 clubs
to stay in the same ballpark.
Q120 Mr Watson: Could I ask you about the role of
agents? Currently players’ agents are paid by players
and clubs. Do you think clubs should be allowed to
pay players’ agents?
Gordon Taylor: What has become quite apparent once
we had Lord Mawhinney with us was that to be
transparent with regard to what clubs paid agents, for
the Football League initially and then to some extent
in the premiership, is the massive amounts of money.
When you think of the battles the PFA had to get any
share of television rights for its members who people
paid to see and sit down and watch at home, and that
that money goes into charitable causes and community
programmes and anti-racism programmes and help for
old players, the PFA’s share of that is a drop in the
ocean compared to what has been paid to agents. They
have become very much a part of the game used by
clubs. This isn’t for me to beat them on the head.
FIFA tried to regulate them and could not; it was put
in the hands of the national associations. We thought
we were making some progress with transparency and
the full knowledge for the player and the club of what
offers had been received and what monies had been
received. Now it looks as though it is going to be open
house again.
I am just reminded, the more you try and look into
agents, there was an inquiry into American sport as to
whether they should be governed by national law,
state law or by the sport itself. One of the classic
quotes was that they found quite a number of agents
had first class degrees from Harvard and Yale but
there was quite a significant number who had just had
the third degree from the local police. They are in a
world that is very difficult to control. They are
attracted by the money in the game, like they were
involved in the film industry and the pop world.
I thought we were making some progress with that
transparency and regulation and exams and
monitoring by the FA but it looks as though it is going
to be open house if we’re not careful. If you are
talking about financial propriety in the game, the
transfer system can be a vehicle for abuse because of
the vast amounts of money and the money that goes
on what is called magic roundabouts. Unless you get
transparency with all the people involved in a transfer,
and these days of third party ownership of registration,
some players have about five or six agents involved—
so it’s no use me saying it is a clear transparent world.
It is a murky world and the game and FIFA needs to
keep a grip on that and, of course, FIFA needs to keep
a grip on a few other things of that direction. But it is
not a time for letting go of a compliance hold on
agents. It is a time to be probably tighter than ever.
Q121 Mr Watson: So if FIFA and the national
bodies have failed in their obligations to regulate
agents, do you think the Government would need to
step in?
Gordon Taylor: It is like I was saying about the
Government stepping in: you probably have enough
on your plate with legislating on criminal law and
everything else without football agents. Far be it for
me to say, but sometimes it is as a result of Inland
Revenue inquiries and our national media. They can
do a job sometimes if there has been corruption. I
think they are either in the game or they are out of the
game. If they are in the game then they need to be
under some form of control. I referred you to the
problems of the 1980s when everybody was passing
the buck and it was only those problems of safety
and violence and other problems were addressed by a
combined approach. That approach needed legislation
from this House and, of course, closed circuit
television was massive, but many other areas were
brought into play that were a good sign of how
football could work together with Government.
Q122 Mr Watson: I am going to put a question to
you that I am sure you have heard many times before.
It has been said that players’ high wage demands are
responsible for the level of debt that clubs carry.
Would you like to address that assertion?
Gordon Taylor: Last Friday afternoon I was
answering questions, because the former Archbishop
of Canterbury—I think it was George Carey—said it
is up to the bankers and Liverpool players to help
Liverpool. I always find myself on the back foot. The
game is about players. It is the players whom people
pay to watch. I don’t think anybody goes to see a film
and complains about Brad Pitt’s wages, or perhaps I
should talk about a new potential Oscar winner’s
wages, and the same if you go to an Elton John
concert or a Take That concert. I have never heard a
fan yet say, “It’s terrible the money they get.” It is a
question of they either pay it or they don’t.
I am amazed at the money that television pays football
but, on the other hand, football has been good for
television. The price is higher than what you would
necessarily want to make sure people who are
unemployed could go there but they seem to keep
people coming. It is a very short career; an average
eight-year career. We lose 50 players a year with
permanent injury. People seem to forget that they pay
over half their money, in spite of the fact—and a
limited number of players have image rights and
because they have an image in their own right,
particularly the Beckhams, of course, and maybe the
Wayne Rooneys, but that’s a very small percentage.
The vast majority are on a pay-as-you-earn system
and will be paying more than half the money back to
the Treasury.
It is not for me to say but when you talk about bankers
getting bonuses, people seem to forget if they get the
bonuses over half of that is going to come back to the
Treasury. It is the same with footballers. I just think
every labourer is worth his hire. They don’t hold a
gun to clubs’ heads; they never have done. When in
the past out of about 70 clubs where there has been
financial problems and there were no wages on time
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Culture, Media and Sport Committee: Evidence Ev 35
15 February 2011 Gordon Taylor and Paul Elliott
and those players could have walked out for free and
got another club, they held together for the sake of the
club. At times they don’t get acknowledged for their
loyalty. When everybody says they were loyal in the
old days, I’m not having a go at the players before
the maximum wage was removed. They were loyal
because there was no incentive to move, because if
you moved to another club you were on the same
wage. It is only since the likes of Bosman has
happened that there has been a greater mobility—an
average probably three years at a club now.
Q123 Chair: Paul, you had a very distinguished
playing career; what is your view on that?
Paul Elliott: I think football is like a lot of other
businesses insofar as always the top half or the top 1%
always earn the big money. Whether you are playing
basketball, baseball, or tennis, it is all relative.
Footballers are getting commensurate to their values
and what they bring, because ultimately they drive the
values. Everybody fills stadiums, whether it is 75,000
at Manchester United every week down to 60,000 at
Arsenal and so on, to watch the best people and the
entertainers. Football is a global sport and I have to
endorse what Gordon was saying. I myself as a player,
having played at the various highest levels, was one
of those players who came out of the game through
injury.
The PFA has been very instrumental in that because
we talk about the 1% but are we talking about the
95% of kids that come into the game at 16; at 18 they
don’t even get a professional contract. Less than 5%
of those are still in the game at the age of 21. So we
are talking about the ones who are at the outstanding
level and the risk of injury is extremely high and their
average lifespan within football is from eight to 10
years. As a former footballer, I suppose every now
and then I have a thought at the back of my head,
“Maybe I should have sued my mother and father
because the timing wasn’t quite right.” But
realistically, as a professional footballer, I wish
footballers all the best because I have heard of stories
where things have gone wrong for many of them and
they have been bullied out of football clubs. They
have not had the support that they would have liked
to have had, for young players. I think it is so
important. There are so many intangibles—that is the
point I am trying to make—at all levels of the game,
so those that get to the very top and stay there, they
are very dedicated, they are very focused, they make
a colossal contribution back into the community. They
set up their own foundations and they have a
tremendous consciousness about what is going on in
this country.
I think that is exemplified if you look at the PFA and
the 4,000 existing members that they have but also
about 50,000 that they serve outside of the game and
over the last two years over 25,000 community visits
all over the country in a number of areas: crime,
drugs, anti-racism. So, everyone wants to talk about
the salaries, and I understand that, but equally, as well,
you have to look at the other areas where they make
a commensurate positive contribution, too.
Gordon Taylor: The PFA doesn’t work just for what
is good for players and see a club go out of existence.
We are one body that has been determined to try and
keep clubs alive. We are obviously conscious that they
not only employ our members but many other people
as well. Everybody talks about salary caps and it is
about wages of the players. The game is about the
players, but a club like Manchester United manages
to attract some of the finest players in the world and
yet, of course, keeps its salary levels to below some
50% to 55% , I believe, and manages to manage
perfectly adequately.
Q124 Mr Watson: Can I ask about the governance
arrangements to provide new protections for the
pressures that modern players find themselves under?
They are not just on the back pages for what they do
on the football pitch. They are on the front pages for
their private lives. They are in the financial pages for
their financial arrangements. Do you think the current
governance arrangements in football adequately
protect players and is there more that can be done to
give them support?
Gordon Taylor: What we are finding in this day and
age is probably young men who are a little bit
cocooned. You have heard about youth development
and a club can approach a youngster virtually in the
cradle now, from eight and nine and all the way up to
16 before they can join a club full time. That worries
me a great deal because there are so many things that
can happen with growing up even before they have
reached adolescence.
As Paul said, all I know is that of the 600 who join at
age 16 we will lose 500 by the time they are 21. Those
youngsters are disillusioned, their parents are
disillusioned; they need picking up, they need looking
for alternative careers. We provide that but if there is
going to be a lot more emphasis and money spent on
these nine, 10 and 11-year-olds and the 16-year-olds,
we want to see a better success rate, otherwise there
has to be a much better exit route, that these
youngsters are guaranteed a career outside of football
as well, otherwise there is going to be a big wastage
and a great deal of disillusionment.
In cocooning them, every youngster they get is told
he is going to be the next John Terry, David Beckham,
Wayne Rooney. Their parents are convinced and, of
course, life does not work like that. It is a good thing
but the PFA has taken on the responsibility of
educating them, together with the Football League and
the Premier League. Life skills—the more money
these youngsters have, they can have problems,
addictive problems. So, it is life skills. It is preparing
them psychologically. There is a lot more effort given
to psychological care of these youngsters and the
pressure on them. I am not saying they would swap
it, it is a great life. But exactly what you say, it needs
a lifestyle programme and clubs need to accept that if
they are going to spend thousands of hours on trying
to make them footballers, you can’t succeed with
every one and there has to be a great deal of time and
effort on trying to keep them as human beings and
contributing, because football is such a short career
even if they make the grade.
Q125 Mr Watson: How many of your members have
told you they thought they had their phone hacked?
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Ev 36 Culture, Media and Sport Committee: Evidence
15 February 2011 Gordon Taylor and Paul Elliott
Gordon Taylor: Right, that is a bit of a switch. I’m
not sure what that has to do with the governance of
football but the fact of it is that the media, as you
know full well, this Committee, is interested in all the
lives of footballers because they are the new
celebrities. I mentioned film stars and pop stars, but
probably footballers and the likes of David Beckham
and his wife get on the front page as much as the back
page. Let’s just say I am aware of very intensive
media scrutiny of them, as you will see when people
are encouraged to tell tales about footballers and are
offered payment for it. It is part of that life skills
programme that we try and give to our youngsters to
make them aware of what is happening away from the
pitch on a 24-hour basis, to be very mindful and to
be careful.
Q126 Mr Watson: So the responsibility to protect
privacy or for players to conduct themselves and take
extra precautions to protect their privacy would lie
with the PFA or with the—
Gordon Taylor: No, the PFA can’t be responsible for
everything. Every individual is responsible for himself
to some extent. But there are parents there, there is
family there, there is his club there. The club and the
manager are a big influence because they are at that
club every day, and a lot of clubs do. Some people
say footballers don’t associate with the supporters like
they used to and it is perhaps not surprising because
they feel quite exposed and vulnerable because of that
stronger world from the media and the stronger
pressure.
Q127 Mr Watson: Have you given guidance to
members on how to guard against phone hacking, or
would that be a club responsibility?
Gordon Taylor: Well, both really. It’s both. It is a
responsibility of the club and the individual, any
advisers he has in lawyers, and also from the PFA as
well, yes.
Q128 Mr Watson: Did David Beckham have his
phone hacked?
Gordon Taylor: You have to ask David Beckham that.
Mr Watson: Has he told you that?
Chair: I think we are going to move on. This is not
an inquiry about phone hacking
Mr Watson: No, it is about governance of football
and that we need to protect the privacy of footballers.
Gordon Taylor: Certainly when he was so-called
“kidnapped” the cameras were there, weren’t they,
so—
Mr Watson: So it is possible?
Gordon Taylor: Everything is possible these days
with the technology we have, isn’t it?
Q129 Jim Sheridan: I apologise because I will have
to leave soon as I am meeting the Speaker. Gordon,
you referred in your opening comments to the
question of racism in the game in the 1980s and
1990s. I would like to put on record my recognition
for what Paul did in Scottish football in trying to
address the question of racism in football. It is not
perfect but a million times better than where we were
before Paul came. Perhaps this is a naive question,
Gordon, but millions of workers depend on trade
unions recognising or negotiating on their behalf.
What is the difference between footballers simply
because of the money they earn? Just finally, I know
that you said that the major grounds are full and no
one is twisting their arms to go in there but I would
argue that there are an awful lot of people at a lower
income level that are excluded from the game,
particularly the top game, because of the prices.
Gordon Taylor: I agree with you and I get very
worried at the priority of professional sport. We need
supporters and we need them live and if our grounds
are not full there is nothing worse coming over on
television. When Italy had a situation where it had
individual clubs doing individual TV deals and they
showed so many live games virtually of every club,
that then affected the attendances and to see big empty
spaces, suddenly television is not quite as interested,
neither is the armchair supporter. The atmosphere is
not there. That is the one of the areas with our
community programmes that we have tried to make
sure they look to accommodate the unemployed,
particularly those less fortunate members of a local
community—it is not just a business but within that
business concept and knowing they have to break
even—to try and make sure the stadiums are full and
make sure we educate a generation of youngsters, if
they are not playing the game, to at least be watching
the game in the future, otherwise we have no divine
right to be the major spectator sport or participant
sport. So I do agree with that.
Jim Sheridan: I think at a previous session we were
told that the—
Gordon Taylor: Sorry, a lot of clubs are mindful as
well, to be fair, and will give special reduced prices
for different graded games.
Q130 Jim Sheridan: We were informed that not
many young people come through the gates—I think
the average age was 45 years or something.
Gordon Taylor: I think part of the price of television
is the fact that everybody could rely on a 3 o’clock
kick-off on a Saturday afternoon or perhaps one
midweek game and that has gone. So it is a lot more
difficult.
Q131 Jim Sheridan: Why can’t trade unions do what
the agents already do and so keep the money in
football?
Gordon Taylor: I am all in favour of that. The only
thing is sometimes when we have been asked by
parents—and we have handled many top-quality stars
of today when they were youngsters—they get doorstepped and they get offered things that the PFA
couldn’t do because it would not be within the rules,
which is a bit in line with what you were saying with
your experiences in Scotland, I think.
Q132 Paul Farrelly: I just have a couple of questions
going back to agents and who makes what out of
player transfers is as important for the reputation of
the game from the infamous quote, “Cloughy likes a
bung”. Paul, as a player, do you feel uncomfortable
that agents can, without disclosing it, take a cut from
both sides of the deal? Would you, as a player, feel
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Culture, Media and Sport Committee: Evidence Ev 37
15 February 2011 Gordon Taylor and Paul Elliott
that they are necessarily acting in your best interests
or their own in that situation?
Paul Elliott: It is an interesting question. I think you
can either look to yourself personally, because during
my own career I always negotiated my own transfers
because I made it my business to get myself educated
and understand about the business. Therefore, I was
always confident enough to represent myself. So, in
that scenario, from my perspective it is hypothetical.
Q133 Chair: Is that still done or would all Premier
League players now essentially use agents?
Paul Elliott: I think there are a lot of players who
obviously have agents and I think there are a lot of
very good agents there that serve their clients very
well indeed. Equally, I think it is reasonable to say
that there are players there that don’t necessarily need
an agent but would have an accountant or a lawyer,
because obviously they are very intrinsic skills that
are very important. Possibly a player would not
understand the legality of a situation but certainly
when it comes to understanding their own values and
what they are worth, I think most players are very
comfortable to articulate that and don’t necessarily
need a third party to do that.
Q134 Paul Farrelly: Are there any requirements at
the moment for an agent to disclose to a player what,
if anything, he is getting from the other side?
Gordon Taylor: Yes, there were. That is what I was
referring to. We have made some progress and it was
that they needed to give full information of the
different offers they had had from different clubs: the
offers made, the wages along with the transfer fee.
That is when we felt we were making some progress,
but now it has gone back a little bit. Having said that,
in this country we felt we were making progress, so
whether we could do that on our own remains to be
seen. If we do it on our own and other countries don’t
do it then it will be said to be impossible because of
the nature of international transfers. But the points you
make are very valid, how you can properly act for
both the club and the player in the same transaction,
but, of course, that has happened and agents have been
paid by both parties.
Q135 Paul Farrelly: I am asking because this is
about governance and governance is all to do with
reputation in the game. In the City of London it is
frowned on but not necessarily unusual for people to
take fees from both sides, but the Takeover Code, for
instance, will enforce disclosure. The Guy Hands case
with EMI in court recently, most of the controversy
was about taking a cut from both sides. But do you
think disclosure is enough?
Gordon Taylor: I think transparency and disclosure is
enough, and from that point of view that is the case
with most things in business.
Q136 Paul Farrelly: What about penalties then to
make it worthwhile people being truthful in their
disclosures?
Gordon Taylor: That needs a good compliance unit.
Everybody said, “Why don’t you monitor it at the
PFA” and this and that, but it is such a world. It
involves almost a fulltime squad. The banks obviously
got in big trouble, didn’t they? There was supposed to
be the Financial Services Authority. They were
fulltime. So you definitely need a fulltime unit looking
at the activities of agents. But, as I say, it is mainly at
times of re-signing contracts or a transfer from a club.
Part of the problem that FIFA has not grasped the
nettle of is there was a great uncertainty over the
validity of transfer fees. This was part of the
discussions.
We were involved with the Worldwide Players
Organisation, FIFPro when Andy Williamson referred
to the European Commission and FIFA and transfer
fees and the fact that it is quite unusual for a player
to go for more than the value of his contract, and that
happened. So, as a result there is a great opportunity
for corruption with transfer fees and that is probably
the time when there should be the most transparency,
particularly with the registration of a player at a club
in certain countries in South America, for example,
whereby the value of a player, his registration, is
owned by a third party who is prepared to put some
money into the club on a short-term basis. But, of
course, when the player’s value increases, that value
is all down to this third party. In that instance, in the
Tevez and Mascherano case, it looked bad from the
start and it never got any better. I think that is one
area where the game needs to be properly governed
because, you are quite right, the transfer system is one
that needs to be transparent and illuminated because
the opportunities for corruption with the amounts of
money involved are very big.
Q137 Alan Keen: I just want to make a point. I think
we were in danger before of people comparing
footballers with bankers. It is not the players who
decide how much money they are paid; it is the club
who have their contracts. The bankers are using, in
many cases, our money to pay themselves. So there is
no comparison to players.
Gordon Taylor: Well, especially now we own quite a
few of them, don’t we?
Alan Keen: Yes, but we are still not making
decisions, the players are not making decisions—
Gordon Taylor: No, exactly; that is what I said. They
don’t hold a gun to the club’s head and if they did, if
they don’t have the money they shouldn’t be paying it.
Alan Keen: But the bankers are paying themselves.
They are making the decisions.
Gordon Taylor: Yes.
Q138 Alan Keen: It is difficult enough for a
committee like this to talk about regulation even
within this country, so it is even more difficult to talk
about the international game as a whole. While we
have the opportunity to have you in front of us, I just
wondered how you feel. You say you feel a great
responsibility to players throughout the world. We are
told all the time how proud we should be, and we are,
of the Premier League but how much damage are we
doing to the game of football internationally by
attracting the very best players here? When FIFA
made the decision to place the World Cup in Russia
they obviously are trying to do that, and set aside any
dubious reasons they may have, because they want to
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Ev 38 Culture, Media and Sport Committee: Evidence
15 February 2011 Gordon Taylor and Paul Elliott
extend the game internationally. What concerns do
you have, both of you, as looking after players in this
country, about the gravitation of the wealth that affects
the international game?
Gordon Taylor: Yes, I understand. I think it would
have been better if FIFA had come out and said. They
would have saved us a lot of money if they had said,
“The purpose of holding a World Cup is to try and
take it to countries that have never had it”, albeit I
think we’ve done enough since 1966 to justify holding
it when you look at the efforts we have made with our
stadiums, our safety, our diversity programmes.
Having been president of FIFPro, the international
players’ association, sometimes the feelings and the
perception of the culture and characteristics from
different countries—as you will be aware on your
international visits—is quite true and I think the fact
is there is a great deal of envy and perhaps jealousy
at the success of the Premier League, as was
witnessed when you saw the backlash with wanting to
take the 39th game to the rest of the world. FIFA gets
its money from international games, it needs a healthy
World Cup and it will say a lot of things but one of
them is, “We have far too many games” and then
organises its own World Club Cup competition
because that is what they have never been able to
match, that is why they are very much involved in
international football.
It is natural for FIFA to want that, in any sport it is
natural to want it, and as an administrator it is not
good for there to be a monopoly on success by fewer
and fewer clubs and fewer and fewer countries. So the
very fact that some of these countries are losing their
players to here makes it very cosmopolitan here and
with foreign owners as well it means they are not
necessarily going to work for what is best for English
international football because their first priority is
their clubs. That is one of the problems with the
Football Association because, while it took us 100
years to get a seat on the council of the FA, it is run
by the amateur game and the professional game and
there is no accommodation whatsoever on its main
board for either the PFA, the LMA—the League
managers with their experience—or the supporters’
organisation and that, I find, is quite offensive when
you think of the initiatives we have brought into the
game that I have talked about and that you are well
aware of.
The fact is that every other country in the world of
football actively encourages its former players who
are prepared to stay in the administration of the game.
You look at France, Spain, Germany; they have been
very actively involved and they have been a force for
good. From our point of view that has not happened
and that is one area where we can learn a great deal
from the rest of the world. The world perhaps has
been looking at us and seeing how cosmopolitan we
are. We have more players for World Cups in our
league than any other country in the world. That is
really going to be hard and what I find is every sport
has a duty to encourage its youngsters to aspire to
become that next generation of top class footballers
but the squad of players available for England has
been getting smaller and smaller.
In the same way that the Premier League now are
saying the more hours spent on learning how to
become a footballer, you’ll become a better footballer,
the same as you would a musician or what have you,
we are having more and more youngsters and players
from abroad and less and less players qualified for
England. It must impact on the success of our
international team. That has been one of the
disappointments of my life in football because I love
England to do well. I think there is no reason why you
can’t have a healthy club competition, as we do, and
have success for England as well and much more
proportionate, considering we are the wealthiest
football country in the world.
Q139 Alan Keen: One final question. You mentioned
the LMA and you have made great strides towards
trying to create a career structure in the game for
former players. We all understand a new manager
wanting to bring in his right-hand man, that is the
coach, when he gets a new job and push the others
out, and sometimes they bring in a team of six or
seven when they come in. Can you say more about
how along with the LMA you are trying to do that
and the attitudes?
Gordon Taylor: I feel it is sad when suddenly a club’s
results mean that staff depend week to week on those
results. I was hoping that with a good youth
development programme all the staff could stay in
place but the fact is, of course, they move the manager
out along with his staff these days and I think that is
unfortunate for consistency. Another area is, no matter
how much we talk of investment in youth
development and academies and centres of excellence,
the fact is between 18 and 21 there is a glass ceiling
that they can’t break through and they won’t break
through unless there is some security of tenure by
managers because their career depends on one week’s
results sometimes. So they never have the courage or
the necessary patience, which is understandable, to put
a youngster in, because a youngster needs to play for
a couple of games, take him out, bring him back in
for more, take him out, when they are getting
inundated with agents—this is one of the good things
of the transfer windows—to buy a ready-made
international player from wherever in the world.
These are big issues for clubs and managers. Clubs
don’t always respect management as it should be
respected, albeit the LMA have tried to get
qualifications being necessary for the job.
Compensation, it becomes very unseemly when
suddenly a chap is thrust out of work just because—
you have seen what has happened at West Brom and
a good young manager who has brought that club up
and suddenly hit a bad spell and there is suddenly no
faith and they’re out. That is not just West Brom of
course; you name a club, that has been the situation,
but there needs to be a recognition of football
management as a proper skill and a profession.
Alex Ferguson wouldn’t have been as successful as he
has been if his board at the time had been as
shortsighted as some of the other clubs. I can
remember Howard Kendall, he was on the brink as
well and then they had some faith in him and he won
the League. You just find those managers, given the
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Culture, Media and Sport Committee: Evidence Ev 39
15 February 2011 Gordon Taylor and Paul Elliott
chance, will inevitably produce, and it is like that with
youngsters. We’re getting into a world where
everybody wants instant success and it is just not
possible. Success needs time and football is as good
an example of that as anywhere else.
Q140 Dr Coffey: On players’ wages and the
financing of clubs, in a different industry actors are
starting to take a stake in a film and, if you like, have
a lower salary and benefit in the financial success. You
were talking earlier about loyalty. Players are
perceived to be sometimes disloyal; they can be a hero
one week, a Judas the following week. Is there a role
for perhaps part of a player’s remuneration to be
related to the financial success of a club and having
shares?
Gordon Taylor: Very much so. Paul made the point
that it is not just players who seem to want to go.
Often they are encouraged to want to go by other
clubs and often they are encouraged to want to go by
the manager who suddenly doesn’t pick them. I had
one youngster who has not had a game for 12 months
with a premiership club—the squad is that big and
they’re not getting games—and that is just not easy.
What you are talking about is there, of course but, on
the other hand, that is why the bookies are rich, you
can’t predict sport and you don’t know whether you’re
going to win or whether you’re going to lose. But, on
the other hand, it is a full-time commitment and
giving it a full-time commitment that needs time, that
needs energy. They are encouraged to marry young;
they have mortgages; they need a basic wage and they
need to plan for the future. But, in answer to your
question, they get extra money for winning things and
if they get relegated we are not averse—and we
believe it should happen and now it is probably not as
bad because of the parachute payments, but when the
gap was so big between the Premier League and the
rest we felt it had to be the case that that contract
had to be reduced because of the club’s income being
reduced. Now the same situation will arise if a club
gets relegated from the Championship to division 1;
the drop in its income from solidarity payments and
television will be considerable. But really that is up to
the clubs; it is up to anybody. I don’t think anybody
minds paying out if money is coming in; what is hard
is paying out more money if you’ve failed. It is just
like Mr Micawber and Charles Dickens: if your
income is comfortably matching your expenditure,
okay, and if not you know there is a problem. I know
maybe some people would say debt is okay, you
wouldn’t get debt if you weren’t in a strong position,
and football does survive sort of on a wing and a
prayer because the very nature of sport is it is
speculative.
As an administrator you want everybody in every
league to feel they have a chance of winning it but
sometimes clubs do need to be controlled for their
own good because they do get carried away. A bit like
Toad of Toad Hall, they think they’re going to win
and they spend and suddenly they’re in big trouble.
That is why it needs a strong Football League and a
strong Premier League to say, “Your spending is
getting out of line; you are not allowed to take on any
more players”.
In the temporary absence of the Chairman, Mr Tom
Watson was called to the Chair for the remainder of
the meeting.
Q141 Dr Coffey: I was going to ask Mr Elliott from
a player’s perspective—you just said the role of the
PFA—would that be attractive or would it be risky?
Paul Elliott: I think if you look at the current ratio
generally across the board of turnover a large
proportion of it is obviously made up in salaries and
I think there is a genuine, legitimate case for
performance-related structures. Obviously a player
has to have a basic wage but I think, obviously subject
to negotiation, there are grounds to have a more
rounded, inclusive, performance-related structure that
supplements that income and runs alongside that.
However, I think you have to balance that against the
player, the stature of the player, because ultimately I
think you have to understand when we are talking
about contracts and we are talking about transfer fees,
signing-on fees, football is a supply and demand
business and you have to accept that clubs are saying
if they want the best player they have to pay the best
salaries. I think as an ex-player, if I was discussing a
potential contract with a club, I know my own worth
and I’m doing my optimum and my level best to
optimise my value, that is my right. Obviously
looking at it now, everybody wants to be part of
football at all levels. I am involved in a game at a
number of levels from grassroots to the very top level
and you have got young parents sitting around all
wanting them to be the best but the reality is over
95%, 96% don’t even make the grade. I think it is
very important to highlight that point so I certainly
would be favouring it.
If I could slightly backtrack to a point that Alan made,
particularly about the World Cup and to reaffirm a
point that Gordon made. I was very fortunate to sit on
the board of the World Cup bid as a non-executive
director, and that was predominantly because of
Gordon and the influence that Gordon had in pushing
and promoting myself as a former player who has
served the game at various levels from grassroots to
the top of the tree. It is important to note in this
country that we spent a considerable amount of money
on that, the best part of, for argument’s sake, £18.5
million if my maths is correct. What was clearly
evident, there was a number of reasons why we didn’t
host the World Cup, politically and otherwise, but I
think also as well the process, there wasn’t enough
transparency in the whole process from the outset, and
if we are clear on that then obviously we can make a
conscious decision as a board: do we invest in that
money or do we say, “No, we’re not going to have
a real genuine legitimate opportunity. We invest that
money back into grassroots, back into CSR, back into
women and girls’ football, back into the disabled,
back into this country in terms of growing our own
and our facilities, assisting Trevor Brooking and his
age-appropriate coaching”? I’d be happier to have
spent the money doing that but it obviously wasn’t the
case; we weren’t aware of that. I think thereafter we
always said we would always be FIFA’s potentially
best commercial partner because of the stakeholders
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Ev 40 Culture, Media and Sport Committee: Evidence
15 February 2011 Gordon Taylor and Paul Elliott
in this game and the Premier League with the FA were
very intrinsic to that.
I think that with the foreign players, one of the
fantastic things that they provide in this country is for
young people to emulate their skills, to see them as
role models, to go into stadiums, because of the
emphasis that they have on young people. As an explayer, one of the things that I’m very passionate
about has always been about players. One of the main
reasons, I think, why we were unsuccessful in the
World Cup was because there weren’t enough
footballing people being part of that process. Michel
Platini is a great, great footballing man and on more
than one occasion he said, “I want to talk football
with footballing people.” I think it is very important
to highlight that point where players are very, very,
very influential.
The players within the PFA have a significant role to
play within the structure of professional football to
move professional football forward. We have a very
intangible balance at the moment between serving the
national team; we have looked at where the national
team is on the global level, we have looked now
where we are post-2018 and there is a lot of rebuilding
work to be done among all the stakeholders in this
country, because one of the unique factors is the
individual stakeholders, there are so many. What we
need to adopt is a more collaborative process between
all of the stakeholders to ensure that we can challenge
and deal with these issues and, very important,
reinstate our reputation, not just nationally, which we
need to do, but I think internationally with FIFA and
with UEFA because there are clearly fractured
historical relationships. I think the structure here that
we are talking about—the reform of the governance
and the structure in the game—is a gilt-edged
opportunity to look at ourselves as individually as
stakeholders within the Government, within the PFA,
within the Premier League, within the FA.
I think we have a very good chairman in David
Bernstein who has come in and he has shown
tremendous leadership very early on. He is a believer
in equality, he is a believer in diversity, and I think
equality and diversity has got to be glaringly intrinsic
to the future of this football, in this game, in this
structure within the FA, because if you look at the
game every Saturday, close to 24% to 25% of the
players in the game are all from the BME, black and
minority ethnic. But where is that visibility in the
boardrooms? Where is that in senior management?
Where is that in football administration? Where is that
at academy levels? Where are the women and the
girls? Where are the people that sit in stadiums week
in and week out: the disabled, women and girls,
footballers, the people who are big contributors into
football? Where is their presence on the boards, the
councils and the committees?
They are the defining issues. I think it is very
important for the FA to modernise and be fit for
purpose for the 21st century. The game has got to
be far more inclusive, far more diverse and far more
welcoming, because these are the key stakeholders
and there is room for everybody. I think it is important
that we recognise that and have what I call real
leadership, collective leadership, by all the
stakeholders to ensure that we are fit for purpose for
the 21st century, inclusive of all the parties that I’ve
just mentioned.
Q142 Paul Farrelly: Gordon, last week we had a
picture painted for us of Dave Richards, Sir David
Richards—
Gordon Taylor: Yes, Paul, just for one second could
I quickly say that with reference to Alan and yourself,
one of the areas where with regard to youngsters
getting a chance and regarding what is sometimes
envy of our Premier League, with regard to the
youngsters coming through and giving them
opportunities, sometimes we need rules. Sometimes
they will be challenged by Europe, but one good new
rule has been the home-grown player rule, irrespective
of nationality, to have at least eight out of 25 in your
squad. I think that needs to go further and we should
have at least three starting on the pitch and if that rule
is applied throughout Europe it gives a chance to our
next generation to have a chance. I think that is an
important rule that we need your support on.
Paul Farrelly: On governance at the top and the FA,
the picture was painted of the day before an FA board
meeting Sir David Richards and the Football League
rep, they all meet to agree the line. Come the FA board
meeting, the representatives of the amateur game
won’t vote against them if they disagree because they
know where their bread is buttered, and that leaves
the chairman and chief executive, if they disagree,
without a paddle between them. Hence, there has been
the recommendation, which the Football League in its
evidence has supported, of two independent directors
coming in on the FA board. That begs the question of
how are they appointed and who are they appointed
by and what role organisations such as your own
might have in that appointment. But you have
advanced a different model. You have talked about at
least representation from sectional interests on the FA
board and you have mentioned at least three: the
LMA, the PFA and the supporters’ trusts. What would
you like to see happen?
Gordon Taylor: I feel very strongly about that because
the Football Association is supposed to represent all
sectors in the game. The game of football, if nothing
else, the players have to be part of that game, it is
about playing the game, and from that point of view
I believe also the record of the PFA in introducing
initiatives. In 1994 we didn’t qualify for the World
Cup; we found we had just not been getting enough
coaches to coach the next generation. We developed
our own department of coaches. Our department at the
PFA of coach educators is higher than the FA’s. In the
1980s, we developed the initiative of saying to clubs,
“You can’t just be somewhere where people will come
if you’re winning and won’t come as much if you’re
losing. You need to be a focal point of community
activities.” We developed about the behaviour, about
the anti-racism. We have had good ideas that other
bodies have taken on board. We’re probably a strong
association because we have been kept out of it but it
doesn’t make it right, if you know what I mean. So I
say, yes.
The FA is very big insomuch as amateur and
professional, I suppose it is like having your local post
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Culture, Media and Sport Committee: Evidence Ev 41
15 February 2011 Gordon Taylor and Paul Elliott
office bank with Barclays Global, but the key factor
in there are the players and the mangers. We have
managers who are not mad, they are very dedicated
and they have a lot to offer the game. The football
supporters I talked about in the 1980s got themselves
organised. As you will know from the background,
they have combined together. They are trying to have
a voice. They are not lunatics who are going to go to
a boardroom and say, “We demand this, we demand
that”; they just care about the clubs.
But if the FA can’t accommodate—quite seriously,
after 100 years, they gave the PFA a position on the
council. I go because I respect that but I might as well
be, to be fair, a little bit of a nodding dog in the back
of the car because there’s an executive committee and
there’s a professional game board and we’re not on it.
If you think we must have an independent person,
well, that would be good if that independent person
were somebody like Paul or the trustees we have, your
Chris Powells, your Garth Crooks, loads of lads.
But I think at least bearing in mind the amateur game
is there, the Football League is there and the Premier
League is there, well, where is the PFA, where is the
LMA and where are the supporters? It is so glaringly
obvious it hits you in the eye. We are so archaic in
this country, not just in football but in other sports,
and I said to you sometimes we think we’re the best
in the world and hopefully sometimes we will be, but
when you wonder what happened in FIFA you look at
every other body. I go to Wembley because I support
every game. Their chairman inevitably gets up to say,
“Thank you for having us” and he’s inevitably a
former player who has wanted to stay involved in the
game. Everywhere I go it is a former player involved
in administration because they care about the game
and care about the future. I’m not saying the
volunteers don’t but I’m saying at least let somebody
who has put their life and soul and body on the line
for the game be involved in the administration. We
are blatantly ignored. From that point of view it is so
obvious, if you look for an independent person who
won’t have a fraction of some of the experience of the
people sat behind me.
Q143 Paul Farrelly: Okay, Gordon, it is very good
of you to mention an old Stoke City legend, Garth
Crooks, but just to use an analogy, yes or no. To use
an analogy, is your position on the future governance
akin to saying that the unions are on the supervisory
boards of German companies, why shouldn’t the
unions be on the supervisory board of the Football
Association, of the football game in the UK?
Gordon Taylor: We’ll still work for the good of the
game but I can’t believe why we are not inside there,
as we are with the League and the Premier League,
working for what is good with the Football
Association. It’s just so obvious. They need the
players for their cup competition and for England, and
it’s just so obvious, it’s so self-evident, to worry about
which independent people they should have when they
could have people from those sectors of the game and
for once claim to be at least all inclusive. By the way,
all those bodies then would have a collective
responsibility to make the decisions work but those
decisions would be better decisions because they
would encapsulate a lot more knowledge in making
those decisions.
Q144 Damian Collins: I just want to touch on the
football creditor rule which, as you know, we covered
in the last session, and ask first Paul Elliott, as
someone who has negotiated your own transfers, if
the football creditor rule didn’t exist and therefore the
club went into administration, players might have a
greater financial risk because they might lose salaries
and monies that are owed to them. Do you think
players would be much more careful about the clubs
that they sign for and whether the wage offers that are
made, attractive though they may be, are realistic and
affordable by their club?
Paul Elliott: I think there would be general
consideration financially but I think first and foremost,
as I speak as a former player, I would look at the club,
I would look at the people inside that club, I would
look at the aspirational levels of the club, whether that
is consistent with my own aspiration, and then
thereafter obviously you look at the financial
consideration to the club because I have a family, I
have other people, I have dependants that I have to
look after. But that wouldn’t be uppermost in my
thinking because first and foremost I’m a professional
footballer, I have very big aspirational levels. You
want to play in the best stadium, you want to optimise
and maximise your skills with the best players in the
best stadiums, playing around the country, nationally
and internationally. I personally would certainly look
at it from a very professional-minded aspect first.
Thereafter, obviously I’d give consideration to the
financial but ultimately there is a legislation. You have
got to think in terms of business, what is the fallout.
If you’re not going to get paid, then there is legislation
that protects the players where the players can go on
a free transfer. That is your worst situation but I have
never, fortunately, had to think like that or be
associated with a club that has obviously been
mismanaged in an inappropriate manner. But first and
foremost I would certainly look at it from a
professional perspective.
Q145 Damian Collins: Yes, because the football
creditor rule is there to protect the interests of players
and other football clubs in that regard and a lot of
what we have talked about today—the higher ticket
prices at the grounds, the difficult financial situation
of lots of football clubs, the role of television in the
game—all of that is linked to money and most of that
money is going to players. The machinery of football
has created huge amounts of cash and that cash is
being used to pay players.
Paul Elliott: Yes, and ultimately, if it wasn’t for
players there wouldn’t be spectators inside the ground,
that is the bottom line, and the players are the highest
form of entertainers and we are in a supply and
demand business. If I’m a player and a club is offering
me something that I think is commensurate to my
value—whether it be £100,000 or £50,000, whatever
the case is—I wouldn’t say no to that. If you were a
player you would not say no to the same.
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Ev 42 Culture, Media and Sport Committee: Evidence
15 February 2011 Gordon Taylor and Paul Elliott
Q146 Damian Collins: I think it would be wrong if
football was being run for the benefit of the directors
of football clubs.
Gordon Taylor: May I just say, Damian, I remember
there was a time when there was a limit on players’
wages, up to 1961 since about 1888. There was
massive crowds, multi-millions, 20, 30, 40 million;
we didn’t see any great investment in stadiums or
wonder where the money went then, from that point
of view.
Q147 Damian Collins: The purpose of the question
is not to say we should go back to that at all. The
question is, to what extent do footballers themselves
share the risks that other people in the game do when
they are the beneficiaries of the way the wage
system works?
Gordon Taylor: Footballers would have to share that
risk if you decided there couldn’t be a football creditor
rule, but what we would do, there would be no player
would ever go to that club again. If it reconstructed,
it would be at the bottom. The supporters would be
absolutely aghast. There would be a terrible loss. Most
of those players at that club would walk out and get
another club the next day but those supporters
wouldn’t have a club to support and all the contingent
work that is created by that club, with the caterers, if
I go through it all it’s almost like match funding, if
you like. There would be a massive loss and it isn’t
such a bad rule.
Reference has been made to the St John Ambulance
not getting paid. That I can’t believe because you see
these days they employ their own people. If St John
Ambulance needed funding I can assure you there is
enough millions going from the PFA and Government
and from the Premier League to charities that any
local St John Ambulance Brigade need not worry
about its future.
Mr Watson: Thank you. Gentlemen, on behalf of all
the Committee members can I thank you for a very
entertaining session. Gordon, you shared great insight.
Paul, can I also say on behalf of the constituents of
mine in the north-east part of my constituency in West
Bromwich, particularly a Mr Adam Smith, I have to
tell you you are a living legend and I have to say hello
to you. So, thank you very much.
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Culture, Media and Sport Committee: Evidence Ev 43
Tuesday 8 March 2011
Members present:
Mr John Whittingdale (Chair)
Ms Louise Bagshawe
Dr Thérèse Coffey
Damian Collins
David Cairns
Paul Farrelly
Jim Sheridan
Mr Adrian Sanders
Mr Tom Watson
________________
Examination of Witnesses
Witnesses: David Gill, Chief Executive, Manchester United, Peter Coates, Chairman, Stoke City,
Tony Scholes, Director, Stoke City and Niall Quinn, Chairman, Sunderland, gave evidence.
Q148 Chair: Good morning, everybody. This is a
further session of the Culture, Media and Sport Select
Committee inquiry into football governance. I would
like to welcome this morning David Gill, the Chief
Executive of Manchester United; Peter Coates and
Tony Scholes, the Chairman and Chief Executive of
Stoke City; and Niall Quinn, the Chairman of
Sunderland FC.
Dr Coffey: Mr Coates, why did you decide to become
a football club owner and what encourages you to
keep pumping money into your club?
Peter Coates: I am a Stoke boy, I have supported the
club since I was a boy and I have had two comings at
Stoke—an early one in 1985, after which I sold the
club to an Icelandic consortium and then bought it
back again in about five years ago this summer. I
bought it back again against my better judgment, in
some ways, and my family’s, who all thought I was
daft to do it. The club was in a mess at the time and
I thought I could help it and do things for it, and I
was a bit disappointed with my previous time, a there
was little bit of unfinished business about it and all
that sort of thing. But I thought it would be important
for the area if the football club were doing well. Stoke
was having a difficult time. It has lost the pot banks
and the mining industry. I thought that if Stoke could
get in the Premier League it would give the place a
lift and would be good for it. I think that that has
happened, I am pleased to say.
Q149 Dr Coffey: Would you say it is a kind of
philanthropy that you do as opposed to, say, putting
money into the Potteries Museum or—
Peter Coates: There is an element of that, because I
don’t expect to make any money out of it. I do not
think you can make money out of football at Stoke’s
level. I think you can at a certain level, but not at the
level of a club of our size. I think it is almost
impossible, but obviously I enjoy it as well. Obviously
football is important to me and I enjoy it when we
win, yes.
Q150 Dr Coffey: Let me come across to Mr Quinn.
What inspired you to get that consortium together to
form Sunderland?
Niall Quinn: I suppose that the potential of the club
had not been reached. Having been a player there and
having seen the journey going really well and then
having come to a shuddering stop, I felt something.
“Unfinished business” is probably not the correct
term, but I felt at the time of my departure that things
were not done properly. I bore that for a couple of
years in my mind. I worked as a journalist and in TV,
and the opportunity came to go back and—Peter said
the same thing—to make the place go and reach its
potential and work, and therefore the spin-off was the
region would benefit. My belief was that the football
club that I was involved with, which had won one
trophy since the war, was managing to have 47,000
people at matches when it was about to be relegated.
How good could that be if we got it up? Could we
become a much bigger force? That is what drives me,
and it still drives me today. That is the reason I came,
although I also came because I had had such a good
time as a player there. I had played for big clubs—
Arsenal, Manchester City—but I never had the same
feeling of potential and collectiveness between fan
and club as I did at Sunderland, so I am trying to push
that on.
Q151 Dr Coffey: So for Stoke or Sunderland, what
are your aspirations or targets as owner and chairman?
Peter Coates: To stay up.
Dr Coffey: To stay in the Premier League?
Peter Coates: That is it, yes. We want to move on
from there, obviously, but the truth is for us staying
up is a considerable achievement and that is what we
have to do year in, year out. It is immensely difficult.
It is hugely competitive and in every game we play,
we do not know whether we are going to win at all.
Every game is difficult and is a battle, but that is what
we are there for.
Q152 Chair: Can I just follow that up? To what
extent does it matter to you that your two clubs—
we will leave Manchester United for the moment—
realistically do not stand any chance of winning?
Niall Quinn: If I went to a fan’s forum and said that,
I would be chased out of Sunderland. We have to
believe that we will make progress. We started the
Premiership journey a couple of years before Stoke
and we are now beginning to feel, with the investment
and the policy that we have and the way the club is
run, that we can look at playing European football at
the Stadium of Light. That has to be the next realistic
target for us now. I would like a few more points on
the board this year. We are not mathematically safe at
this moment in time, but we are up in eighth place in
the Premiership. We are looking to a consistent run of
top 10 finishes which allows us to join the Evertons
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Ev 44 Culture, Media and Sport Committee: Evidence
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
and Aston Villas—Tottenham and Man City seem to
have moved on a level lately. I am of the opinion that
there is a top half of the league. Initially, there was
the top four, who everybody thought was
impregnable, and City and Spurs seem to be doing
something about that. Everton and Aston Villa were
the next clubs and we would like Sunderland to be
part of that group. That is a realistic target for us and
if a cup competition came along—
Q153 Chair: That is not winning. It is playing in
Europe, which is an aspiration. You say that your fans
want to believe, but do they actually believe that one
day Sunderland could win the Premier League?
Niall Quinn: Win the Premier League? I guess they
do not. I guess they don’t, but what they expect of me
and expect of everything that is drilled down to our
club is that when Manchester United come to town,
that we give them a game, and we have done this year,
and when Arsenal have come to town we have given
them a game. That is what keeps us going. There is
only one winner every year, but there are three people
who burn, and lots of disgruntled fans. We love this
Premier League so much. The world loves it.
Sunderland itself loves it. It is vital to be in it, and in
itself that is good success.
Q154 Chair: Is that the same in Stoke?
Peter Coates: We try to get better every year. We
think that the longer we stay in, the better we will get,
because knowledge and infrastructure will be
improved. Also I think that there is some evidence
that the longer someone stays in, the better chance
they have of staying in. We want to get better every
year and I suppose the first thing would be to become
a solid Premier League club—one that does not have
to worry quite as much about relegation. The truth is
that probably 12 or 14 clubs have that concern at the
start of the season. If the number is 12, say, there will
be a 25% chance of being relegated. Those are quite
high percentages, but equally we play some of the best
clubs in the world. We play Manchester United, and
we play Arsenal and Chelsea and other such clubs.
They are world-class clubs. That is good for Stoke
City and it is great to have them in the city. Playing
with them is great, and we like to give them a game—
and usually we do. We do not play them thinking we
are going to lose. We play them hoping that we are
going to beat them and certainly give them a good
game. I think that means a lot to the supporters.
Q155 Chair: But realistically that is the height of
your aspiration, to stay up in the Premier League and
to regularly play against Arsenal and Manchester
United?
Peter Coates: No. We have a big game on Sunday;
we play West Ham and we could get into the semifinals of the FA Cup. It will be great if we do that.
That is further progress. We have not done that for 40
years, so it would be excellent. There are things for
us to go for, and the higher up the better. One day we
might have a terrific season and play in Europe. You
do not know, but we are trying to get better all the
time.
Niall Quinn: It is possibly worth noting that when
we play Championship football, our fans are not as
invigorated and as in love with their club as they are
when we are in the Premiership. When you make the
comparison you sound as if it is deflatory to not be
able to win, but on being in the Championship or
Premiership, ask our fans. There is only one place
to be.
Q156 David Cairns: Mr Gill, I have a general
question. What do you think are the biggest challenges
facing you as the Chief Executive of Manchester
United?
David Gill: If you look at the level of the club, you
will see that we have always had the team as our
focus. Everything we have done has been about how
successful the team has been. The challenge for us is
making sure that we have the best team on the pitch.
We have to make sure we have the best manager.
Obviously, Alex Ferguson will retire in due course.
The replacement for that is clearly a key business
decision—
David Cairns: Feel free to tell us who it will be now
if you like.
David Gill: Those are the key things, but obviously
we want to make sure that we play a role in the
development of football generally. We need to have
competitive games against Stoke and Sunderland, for
example. We need to ensure that it is a competitive
game. We need to make sure that the English game
develops and continues to be as successful as it has
been so that we can benefit from that. We play within
a game. We cannot go and buy five other clubs so that
there are only 15 in the Premier League every year. It
starts with 20 teams. We start in the third round of the
FA Cup, the opening stages in Europe and so on. The
biggest challenge is to ensure that the team remains
successful, and our goal is to be the best team in the
world, both on and off the pitch—things which are
clearly interrelated.
Q157 David Cairns: As Chief Executive, on a dayto-day level, how large does the debt loom in your
management of the club as a business?
David Gill: It doesn’t. The debt level that we have is
£500 million in gross terms. There is roughly £130
million in cash in the bank at the moment, so there is
a net debt of £370 million. We have gross interest
costs per annum in the order of £45 million, and our
cash profits are around about £100 million. So we
have more than two times interest cover. The bonds
that we have in place are covenant light—in other
words, we do not have quarterly reporting in terms of
covenants and so on—and we are very comfortable
with that. We have seen great growth in the last five
years in terms of our turnover. Also it is a profitable
business if you get it right and that has generated cash
profits. From my perspective, we know that the debt
is there but it doesn’t impact on what we do. We look
at trying to grow our revenues and invest in the
business to make sure that we can continue to expand
and be successful.
Q158 David Cairns: We are going to talk about debt
financing in more general terms a bit later on. It does
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Culture, Media and Sport Committee: Evidence Ev 45
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
not impact on what you do, but surely servicing that
debt, and interest payments and fees and all the rest
of it, are money that is not being spent on players or
improvements of the facilities or whatever?
David Gill: No; let us look at improvements to
facilities. We have spent a lot on Old Trafford in the
last few years. We have just had approved a £13
million improvement to our training ground, which
has been open 10 years, upgrading it to reflect what
has happened in football in the last decade. There has
been no impact in terms of our transfers.
Q159 David Cairns: But you would rather you did
not have this debt, presumably?
David Gill: Well, not having the debt is one thing, but
the other point to note is what the owners have
brought in terms of growth in certain aspects. For
example, when they bought the club they saw lots of
opportunities on the commercial side. Our commercial
revenues in 2006, the first year after ownership, were
£40 million. Last year, to June 2010, the amount was
£80 million; this year it will be over £100 million. So
they have grown that. We have invested in people. We
had 460 employees then and we have 600 now. Yes,
in answer to your question, simply the amount is £45
million. If that was not there it would be better in
some respects, but at the same time it is not hampered
us in developing the club. The net spend on players
since the owner has taken over is greater than in the
five or six years before that.1
Q160 David Cairns: I am sure that that is true, but
there can’t be any ambivalence about this. Obviously
it would be much better if Man United was not
carrying those levels of debt and servicing them,
surely?
David Gill: In isolation, yes, but there is no issue in
terms of asking whether Manchester United has been
hampered in terms of what we have had to do as a
club in respect of investing, as you quite rightly say,
in facilities, players or player contracts. I personally
believe that there has been no impact in that respect.
Q161 David Cairns: What kind of communication
do the owners make with you in terms of setting out
their strategy and so on? How do they communicate
that to you? How do they set out their vision for the
club on a year-to-year basis?
David Gill: We have both annual budgets and fiveyear plans, and we have constant dialogue in board
meetings, in calls and so on. That speed of decision
has been very positive, and I think that they have
taken a view on longer-term investment which
perhaps we would not have undertaken if we had been
a quoted company. Who is to say? But that is the view,
so I think they are intricately involved. As I said to
you earlier, they clearly saw the commercial
opportunities for Manchester United. They liked how
the Premier League was run. They thought it was a
very well-run league in comparison, say, with some
aspects of the NFL. They felt that they could use the
strength of the Premier League, but also the strength
1
Witness correction following the evidence session:
Excluding the sale of Cristiano Ronaldo to Real Madrid CF
for £80m in 2009.
of Manchester United, to push the club forward. I
think that they have demonstrated they can do that.
Q162 David Cairns: Would you prefer it if they were
able to demonstrate that to the fans? There is clearly
a breakdown in communication somewhere. The fans
say that the Glazers do not talk to them, and they are
not getting the positive message that you are getting.
David Gill: The owners have delegated to me—to the
team that we have, and to Alex Ferguson and so on—
the task of doing that. That is a model that other
owners have copied within the Premier League. I can
give you other examples where owners have not
spoken directly to the fans. The sheer size and nature
of Manchester United perhaps means that we get more
coverage on such matters, but as an executive team,
on behalf of ourselves and the club, and so on, we
have extensive communications with our fans. Yes,
we do not communicate with certain fan groups, but
they have an avowed aim to change the ownership. It
would be slightly strange to enter into dialogue with
those groups who have that intention or that objective.
I am not sure where it is going to lead. We have to
take all those elements of fan communication very
seriously.
Q163 David Cairns: Why do you think so many of
the fans just simply loathe the Glazers?
David Gill: You say “so many.” They are well
organised. They are very domestic. We have done
studies which show that we have 333 million
followers around the world. Our mailbags are large.
We get thousands of e-mails; we had 36,000 phone
calls last month. Not everyone hates the owners. The
success that we have delivered on the pitch in the last
five years is significant. There have been seven
trophies since they have taken over. A lot of the fans
want to ensure that there is money to spend on the
team. They want to come to a safe modern stadium
and see exciting, attractive football—and I think we
have delivered on those counts.
But that has always been the case. Looking at
Manchester United pre the Glazers, when we first
went public in 1991, a lot of fans did not like the club
at that time. We couldn’t understand why it was. The
share price dropped. They didn’t buy the shares, then
it went back up. They loathed the Edwards family.
There are a lot of examples, not only around this table
but across the Premier League, of fans who do not
like the owners or management. That is one of the
strengths of football. It creates opinion.
Q164 David Cairns: The situation of Man United in
relation to the Glazers is no different to any other
club?
David Gill: I am not saying it is no different. The size
of Manchester United and the coverage means that
perhaps it is magnified, but without doubt, there are
issues at other clubs. You just have to read the papers
or watch the television to understand that.
Q165 David Cairns: Mr Scholes, I have a similar
question for you. What are the biggest challenges
facing you in your job?
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Ev 46 Culture, Media and Sport Committee: Evidence
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
Tony Scholes: The No. 1 challenge, as Peter has just
said, is putting a team out on the pitch that is good
enough and competitive enough to stay in the Premier
League—to stay in the best league in the world.
Bearing in mind that we were out of the top league
for 23 years, when we got promoted in 2008 we were
some distance behind everyone else. By keeping the
team in the Premier League we were able to build the
club up, to build the support base and to pick up on
those lost generations, if I can put it that way, derived
from our being out of the top league for 23 years.
Being in the Premier League gives us the opportunity
to do that. The No. 1 objective is to stay in the Premier
League, and doing that enables us to fulfil our
objectives, which are to build a support base and the
infrastructure of the club, and ultimately to build a
sustainable Premier League club.
Q166 David Cairns: In day-to-day terms, what
would you characterise as the main difference
between being in charge of a football club in the
Championship and being in charge of one in the
Premier League?
Tony Scholes: I guess that running a football club is
the same as running any company in many respects.
You have to know what your objectives are, and you
have to have good management to achieve those
objectives. That is the same in the Championship and
the Premier League. The differences, of course, come
from the fact that we are playing in the biggest and
best league in the world and the money that that brings
with it. Obviously our income level went up
substantially. That makes some things a lot easier, but
it also brings some new challenges. Perhaps one of
the key challenges is always managing the downside
as well, so that if things do go wrong, we are strong
enough to come back.
Q167 Ms Bagshawe: What do you think makes
Premier League clubs so attractive to foreign
investors? Could we start with you, Mr Gill?
David Gill: You are quite right; it is admired around
the world. The way the league is structured is a factor,
and it has clear objectives. The collective selling of
the television rights has clearly been a success and it
has made things more competitive.With regard to how
the league is organised, there is light-touch regulation
from the centre of the league but also an
understanding what the commercial parameters are.
The clubs get on very well. We all support the
collective selling. We understand that strength behind
that. Within that we have seen a sport that is growing.
The sheer interest of this Committee shows that, and
what is happening in football around the world,
whether in the World Cup, the Euro or the Champions
League. We are the most admired league in the world.
We travel a lot with the club. Our following in Asia,
and also in North America, is fantastic. If you ask all
those people what their favourite league is, it is the
Premier League, because the Premier League is one
of the best leagues in terms of selling those rights on
a collective nature in those markets. You can pick up
all the teams, all the games and it is a very positive
thing. So I think the time was right with the advent of
satellite television. The league plays exciting football
and it has attracted a good mix of foreign players—
top, top players. All those factors coming together in
a growing industry has meant it has become attractive.
Q168 Ms Bagshawe: Mr Coates, you took a club
back out of foreign ownership. What do you think
made something like Stoke so attractive in the first
place to foreign investors?
Peter Coates: What?
Ms Bagshawe: You took a club out of foreign
ownership by buying it back.
Peter Coates: They wanted to go because they had
lost their money and that happens a lot in football.
Ms Bagshawe: Whether they decided to sell it or they
didn’t, but what do you think they—
Peter Coates: They were desperate to go.
Ms Bagshawe: What do you think attracted them to
it in the first place?
Peter Coates: They thought they could make it work.
They thought they could take Stoke into the Premier
League. That was their objective. They thought they
had a manager, an Icelandic manager, who could do
it. They were confident. Iceland, if you remember, was
doing rather well and growing and taking over the
world and one of the first things they took over was
Stoke City. They found it was much more difficult
than they thought. Foreign owners come in and it is
immensely difficult. It is the best league in the world
and it is the most international league and that is why
it attracts foreign owners, because of its international
dimension. It attracted even small Iceland, which is a
population less than Stoke. They thought they could
make it work and do well. I remember it very well.
They had a bit of money to spend; they thought they
would have a bit of fun, enjoy it and make some
money, because they thought they were going to get
into the Premier League. Of course, they discovered
how difficult it was. It is an immensely difficult
industry to work in. You have immense pressure from
the media, immense pressure from your supporters
and it is a tough business.
Q169 Ms Bagshawe: Mr Quinn, what do you think?
Niall Quinn: I suppose the example of Sunderland
would be, again, one where the owner has bought into
the potential. One of the first things I asked him to do
was understand the emotion of our football club, and
I think that is the area where foreign owners, through
the lack of PR or whatever, sometimes have an issue
where people do not understand where they sit in
terms of their love and affection for the club. I would
say one of the issues—it is not my issue but
Manchester United’s—is the people do not really
know how the Glazers feel deep down in their hearts
about when a referee makes a bad decision. Do they
go home really fed up after a game like we all do or
are they taking the call from the golf course
wondering how the team got on today? I think that is
the thing that is out there.
I know that is not true, of course, and in our case it is
especially not true. One of the great things about our
owner, which is appreciated by our fans, is he has
more than bought into the emotion of it. He has
bought into it financially, but also in terms of his week
being a bad week, no matter what he is doing, if the
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Culture, Media and Sport Committee: Evidence Ev 47
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
club has not done well. I think that is a measure of
his involvement at the club.
The other good thing is he lets football people run the
football side of it. There is trust in the air, and it is to
get the fans in Sunderland to believe that, which
makes our team—which is fans, work force, players,
and of course our owner, and our board—know that
we are all pulling in one way. That is a tough ask
and nobody is more aware than me of how foreign
ownership is mistrusted. In our case it is not; it is
welcomed with open arms. In selling the club to Mr
Short and selling the idea of the club, for somebody
in that bracket as he was at the time it seemed a great
story, a great adventure to go on. These people are
winners. They like to see can they improve it. If I can
marry that in with the fans’ approval, then we have a
good formula.
David Gill: I can assure this Committee that our
owners have had a very bad week.
Q170 Ms Bagshawe: In terms of restoring some of
that trust with the public and foreign ownership and
in terms of governance, do you as a panel think that
the Premier League is making sufficient inquiries of
foreign investors before they purchase a club? Do you
think there is enough due diligence going on? Mr
Quinn, we will start with you on that one.
Niall Quinn: It is interesting. I can think of one or
two cases in the past where there was a media outcry
on people who were involved with clubs. It involved
fit and proper persons, as they were called, and the
issues came into the public forum. Basically what I
can say is that in the period over the last few years—
post Portsmouth’s demise, post other things that have
happened—that has really tightened up now. I think
we are confident and we know that the Premier
League have tightened that up and shifted that to a
point. Without going too deeply into it, there is now
an international company that covertly will find out
everything they need to know about somebody
coming into the game.
Ms Bagshawe: Associates, is it?
Niall Quinn: We can’t tell anybody who it is. That
needs to be understood on the basis that if we were to
turn around and stop somebody who can invest in
other business in the country from investing in our
business, could they sue us?
Tony Scholes: One of the things that is worth saying,
I think, is that in football most things get into the
media immediately. There is very little we do that
does not get reported on the following day. This is an
area that doesn’t. There have been a number of people
who have wanted to take over football clubs but have
been prevented from doing so because of the Premier
League’s rules that never get into public exposure.
Q171 Ms Bagshawe: Are you prepared to name one
of them?
Tony Scholes: To be honest with you, I don’t know
them either. That is the Premier League’s job. We are
aware that there are a number but that is their job to
do that; to have a look at them and to vet people who
want to take over clubs.
Q172 Mr Watson: Were the Glazers vetted?
David Gill: Were they vetted? They went through the
process. Not to the extent that both Niall and Tony
have said. I think there are two things here: one is that
the Premier League has learnt from certain situations.
We learnt from the Portsmouth situation and we, as a
group of clubs, all supported wholeheartedly the
recommendations from the Executive to improve the
rules in terms of financial information and so on going
forward. As Niall and Tony have said, in terms of the
vetting of owners, that has been improved. I think it
is important for industry and for sport to learn from
past issues and to look them.
I do not think that, regarding the attractiveness of
English football versus other football and English
business perhaps versus British business and other
business, passport is an issue. You can have very bad
British owners or very bad English owners. It is the
ability of the people coming in, their aspirations for
the club and the objectives of the club that matter. So
I think we should shy away from saying it is a
passport issue and saying that you can only be English
in order to be a proper owner of a football club,
because I don’t think that is true. It is much more
about the right owners than about their passport.
Q173 Mr Watson: Am I right in saying that
Manchester United, the actual company that is
Manchester United, is now resident in Delaware in the
United States?
David Gill: That is one for the owners. Manchester
United Limited, is clearly a UK company. The
football club is a UK subsidiary of that. As to the
ultimate owners, that might be the case. Where is the
ultimate owner of Chelsea Football Club or—
Mr Watson: I don’t know, where are they?
David Gill: It doesn’t matter, because my job as the
Chief Executive of Manchester United is to run the
club according to our own financial structures, to
ensure we continue to compete at the highest level of
the game. The ultimate ownership up there is
something for the owners. But what I would say is
they have confirmed—and the Premier League checks
this—the ultimate owners of Manchester United,
100%, are the Glazer family.
Q174 Mr Watson: My point is, though, that don’t
you think there should be some national
embarrassment that a great English club like
Manchester United is owned in Delaware?
David Gill: Not at all. Manchester United Limited
publishes its accounts every quarter of every year. I
am not quite sure why they would be an
embarrassment as long as the company is operating
properly within a great competition. I think
Manchester United should be a source of pride for
England, in terms of what it does and has done within
the Premier League, and in terms of its performance
and importance to the economy. We understand
football is very important to the economy of the
United Kingdom, and to the social fabric, and we act
responsibly within that. So I don’t think it is an
embarrassment in any way, shape or form.
Q175 Mr Watson: I am sorry to make this about
Manchester United, but just on the point about the due
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Ev 48 Culture, Media and Sport Committee: Evidence
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
diligence, the secret organisation that vets potential
buyers—
Niall Quinn: It is a law firm.
Mr Watson: Yes, law firm. Can I just ask, would you
be confident that the Glazers would pass that new test
today were they buying the club?
David Gill: Without a doubt.
Mr Watson: Without a doubt. Okay, thank you.
Q176 Jim Sheridan: Just on this point, do you think
it is fair to your supporters that there is some sort of
secret organisation that vets—
Niall Quinn: It’s not a secret organisation. It is a law
firm; sorry, I beg your pardon.
Jim Sheridan: We are getting closer; it is now a law
firm.
Peter Coates: I think it is a specialist in that sector. It
is something I wanted them to do because I felt if we
were to improve the fit and proper person test, you
want to make sure it is properly vetted and I thought
a specialist company would be the best way to do it.
Q177 Jim Sheridan: Did you not think it would be
helpful to share that experience, that information, with
your supporters?
Niall Quinn: Just on that point again—
Jim Sheridan: Aren’t they entitled to know what kind
of person is owning the club?
Niall Quinn: Yes. Where there are certain people that
this firm did not want involved, we couldn’t make that
public, because those people could maybe have come
along and tried to sue us.
Q178 Jim Sheridan: Are you aware of any other
industry discipline that behaves like this?
Niall Quinn: In terms of trying to get to the best
possible result for the fans?
Jim Sheridan: People don’t know what kind of
person owns the business.
Niall Quinn: I think they do. We obviously pass.
David Gill: The point here is that ultimately it
becomes clear what this process is. There might be
five people bidding for a club, and I think what the
Premier League has done is institute quite proper
procedures to look at various things regarding the
appropriateness of that takeover, whether it relates to
the actual person in terms of his past business dealings
or past issues, or to their business plans, which will
involve asking whether they have the finances and
objectives to take the club forward. That will mean
looking prospectively from a financial perspective. So
out of that five—they vet five—three might pass the
test, and for them it then becomes a bidding situation
in terms of who gets the club. The other two might be
failed and we as clubs and supporters don’t need to
know who the Premier League has turned down. I
think it is more appropriate for the organisation
controlling the league to do that.
Tony Scholes: It is a very positive thing because the
league in football has been criticised in the past for
allowing people to take ownership of clubs which are
very important institutions, allowing the wrong people
to do so. So they have implemented what started as
the fit and proper persons test and it has been
strengthened as a result of learning from some
incidents that happened in the past. They have got an
independent firm in. Recognising they didn’t
necessarily have skills to do that themselves, they got
an independent firm in to vet those people. So the
people who end up owning clubs are those people who
have passed. The Premier League and everyone in
football knows that they will be appropriate stewards
and good custodians of the football club; so it is a
very positive thing. I would not see it as a bad thing
at all.
Q179 Jim Sheridan: The point I am trying to make,
perhaps rather badly, is that if you do not have that
open transparency in sharing that information, you are
then left with the conspiracy theories—the speculation
about whether people owning clubs have an interest
in laundering money, for example. That is the kind of
speculation and conspiracy that opens up when you
seem to be hiding or not sharing information that
should be there.
Niall Quinn: I don’t think there is any hiding there. I
think what we are saying to you is as a group this
Premier League—
Jim Sheridan: But you won’t even tell us who this
organisation is, this law firm.
Niall Quinn: That could change. Maybe I sounded a
bit too covert there. It is a law firm, a specialist law
firm. It is up to the Premier League in a meeting to
agree whether to make that public. I can’t make that
public on their behalf. What I would say to you is the
issue that you want is the issue we want, and we want
to make sure that fans have a say about that. Do they
need to be told about somebody who probably
chanced their arm and came along and we saw coming
early? I think it only creates a little bit of instability
where people think that we even would speak to those
kind of people. We have to do the thing right, Jim, to
get the right kind of owner.
Q180 Jim Sheridan: It just doesn’t sit well with me.
Niall Quinn: I am happy to bring that back to the
Premier League and say, “Should we make it clear
because people have a doubt about this?”
Jim Sheridan: In terms of the fans, it is a need-toknow basis.
Niall Quinn: I am here to take that on board and I will
bring it back and we will look at that on your behalf.
Peter Coates: But the UK does have open borders
with business, and football is partially a business as
well as a sport, and we have lots of foreign ownership
of many of our companies around the UK. It is a fairly
normal thing in that regard. They do not necessarily
tell you who the people are who might have wanted
to buy a company and who did not buy it for whatever
reason. They only focus on the people who have
taken it.
Q181 Chair: It has been suggested in the past that,
given some of the people who have ended up owning
football clubs, it is difficult to see what you have to
do to fail the test. Are you saying to us there are
people who have been told they are inappropriate to
own a football club?
Niall Quinn: Yes.
Chair: Do we have any idea of how many?
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Culture, Media and Sport Committee: Evidence Ev 49
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
Peter Coates: We don’t know the numbers but we do
understand that there are people who wanted to buy
and failed to buy because they did not pass the test.
That is our information from the executive of the
Premier League, but we have no numbers for you.
Chair: We will pursue it with the Premier League.
Q182 Mr Sanders: What role, if any, should
supporters’ trusts play in the governance of your
clubs?
Niall Quinn: When it comes to fans and their love for
the club, I could just tell you about Sunderland and
what we do with groups of supporters. We have a
meeting every four weeks with our supporters’ liaison
group. We have a meeting every six weeks with the
branches. We have senior management attend those
meetings. We take into account their fears and
requests, and their desire for the club to do better—
their side of the story. We bring it in and that reaches
board level and we look at ways of comforting them
that their club is being run properly. I think that is
probably the issue. Just last night, for instance, I had
a forum of 400 fans; I have another one tonight with
500 fans. Every so often we do this; we go out and
we give them a state of union address. We hear their
fears from the floor and not through the media, which
is a much better way of getting to the problem. Look,
there are problems out there. The Premier League is
the most incredible thing. The world loves us, but in
our own back garden everything isn’t so perfect and
we are not here today saying it is. But what we have
to be able to do is to listen to people and hear what
they have to say, and feel that we can behave
appropriately and give them the comfort that we run
the clubs properly. In terms of fan representations and
stuff like that, I am the fan. I am their person in there.
Q183 Mr Sanders: I think there is a certain
difference in north-east football being just that much
more passionate and maybe even that much more
local compared to Manchester United, whose fan base
is perhaps not just located in the Manchester area.
How does Manchester United communicate with its
fans, given that its manager will not even
communicate with the world at the moment?
David Gill: We communicate with our fans on an
extensive basis. We have invested in our fan relations
team heavily over the last few years to improve that
area. As I said earlier, we had 36,000 phone calls last
month. We have thousands of letters and e-mails,
which we respond to appropriately. In terms of formal
processes, we have a fans’ forum that I sit on with
four other senior executives where we meet a
representative group of fans to discuss issues.
Q184 Mr Sanders: How often does that happen?
David Gill: We meet a minimum of three times a year,
sometimes four. We have an extensive branch
network, both in this country and overseas, and again
there is regular dialogue between the branches and
the team responsible for managing those relationships
throughout. Then I went to a meeting just before our
City game and answered questions in an open forum
with other members of the team. So we communicate
all the time. We understand it, but as Niall says, on
our board we have Bobby Charlton. He is a big fan.
We are all fans on the board. We understand it and
we work with them, but I think we do communicate
appropriately and sensibly with our fan groups.
Q185 Mr Sanders: But somewhere communication
must have broken down for something like FC United
to have been created. Have you tried to improve your
communication with fans since the creation of FC
United?
David Gill: There are two groups: FC United and
MUST. As I said earlier, MUST’s objective is to
change the ownership. So I think it would be rather
strange, unless they change their objective, to open a
dialogue with those fans. But there is nothing to stop
a member of MUST or a member of IMUSA or a
member of FC United sitting in the Fans’ Forum if
they choose to apply. There are elections every year—
half changes one year, half the next—to our fans
forum. They can apply if they are a season ticket
holder or a junior member and so on. They can apply
to go on and appear through that. We are happy for
them to be on those forums. Clearly, at the same time,
we are not going to engage in structured dialogue with
organisations like that. I do not think it is appropriate
or sensible.
Q186 Mr Sanders: I am just bemused because Niall
Quinn has perhaps given a model on how you would
communicate with supporters—individual meetings
involving lots of people on a regular basis. No
disrespect to Sunderland but they have not won the
league or the cup or been European champions, and
here you are, a premier Premier League team, and yet
you have all these supporters’ groups you will not
even talk to because they are at war with you. What
is going on?
David Gill: They are at war with us? They are at war
with the owners. There is a group there, we
understand that. But I am not going to sit here and say
that we are going to suddenly open the dialogue. We
understand the importance, like any business and any
sport, of the fans and we do have those regular
dialogues with them. We have many, many
communications, as I have outlined. We take those on
board when we are making decisions, whether on
ticket pricing, concourse catering or the shape of the
programme. Digital media is a great feature that we’re
using, the internet. Particularly we have a number of
sponsors overseas and we are developing products for
them; for example, in Saudi Arabia for our fans there
through Manchester United content. So we understand
the importance of communication and we don’t take
it lightly. We discuss at our management meetings, at
board level, what we are doing with that. If we are
going to be castigated for not speaking with one or
two groups who have particular very clear agendas
then so be it, we will take the castigation. We are very
comfortable with our method of communication and
we would be naive and stupid if we did not understand
what the fans think and what they want, and reflect
that in our business policies. We are comfortable that
we do that.
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Ev 50 Culture, Media and Sport Committee: Evidence
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
Q187 Mr Sanders: But don’t you see a pattern here
that when you disagree with somebody you stop
talking to them?
David Gill: No. Okay, I will ask you a question. Their
intention is to change the owners. Do you think it is
sensible to sit down and change the owners? This
body came out of Shareholders United Against
Murdoch, which was formed in 1998 when Sky tried
to take us over. They have evolved since that. They
want to have a situation where they have other
owners, or they can own the club or whatever. So
unless they change their situation I do not see a reason
to sit down and talk to them.
Q188 Ms Bagshawe: Let us just go back for one
second to the last question on the issue of foreign
ownership. Fully half the clubs in the Premier League
are now foreign-owned and there is quite a lot of
concern out there that that was going to affect the
decision-making capabilities of the Premier League,
particularly in ways that relate to support for the
national team and for training young players up to be
England players in the national team. Do you have
any concerns at all that vast swathes of the Premier
League being under foreign ownership may have a
knock-on effect on our national team and our
national game?
Peter Coates: I think that improvements have been
made on that. There has been an argument, and it may
be a good argument, that perhaps the balance had gone
too far; there were perhaps too many foreign players.
But the introduction of the new 25-man squad has
changed things. Every club does want to produce
indigenous players, obviously. There is nothing like
your own players. We would love to have at Stoke—
and I am sure Sunderland and Manchester are the
same—boys who come up through the system and are
local to the area. That is a very important thing. We
pour millions of pounds into development. One of the
arguments against the Premier League is that they
perhaps don’t get enough opportunity, but with the
difference in squad size, I think that is a positive thing
and has improved the opportunity for young players
to come through.
Q189 Ms Bagshawe: Of course you are a British
owner that took the club back out of foreign
ownership, and I suppose the concern that fans have
is that foreign owners are looking at the club as a
successful investment, something where they want to
make a bit of money. They have no skin in the game
whatsoever if the England team does well or does
poorly, and that is a concern for some fans. Mr Gill,
how do you address that?
David Gill: No, I disagree with that. As I said earlier,
the whole strength of football works in a pyramid
system and I think if the national team does well there
is certainly a knock-on impact to the Premier League,
and to the attractiveness of it. We have seen what is
happening in Spain at the moment with their team
doing very, very well and I think that trickles down.
So I don’t agree with that. As Peter said, we are very
interested in developing our own talent. We put
millions in and there is a big review going on now in
terms of youth development, which is a tripartite
process, involving the FA, the Premier League and
the Football League to see what has happened. The
academies have been in existence now for 13 or 14
years. We are now looking to see what changes and
improvements need to be made. We are putting a lot
of money in and perhaps the players are not coming
out, so how do we improve that? Around the Premier
League table, there is great support for the national
team in making sure England does well. There are
issues to be worked on, for example the match
calendar, but it has never entered any discussion I
have either had with the owners or around the Premier
League table that there is lack of support for the
English team, because I personally think it does
benefit the game.
Q190 Ms Bagshawe: What about you, Mr Quinn?
Niall Quinn: I suppose one of the proudest moments
we had both as Sunderland fans, as the owner, as
myself and the board and our manager, was when
Jordan Henderson, who was at our academy since he
was eight years of age, made his England international
debut this year. I think to us that justified everything
we have tried to do in the last few years about
bringing our home players through. It is funny how
things go. When I came back to the club five years
ago even local kids in Sunderland didn’t want to come
to Sunderland. We were losing them to Middlesbrough
and Newcastle because our academy was not working.
With the owner’s help we have been able to put more
funds into that academy and, as I say, Jordan is the
picture postcard this year. But the great thing is that
on Saturday we were at the Emirates in a game that
went all around the world—a fantastic game against
Arsenal—and four of the players stripped out of our
players and subs had come through our academy. We
think that should augur well for English football in
the future.
Q191 Dr Coffey: Debt has come up several times in
this conversation and although my colleague Mr
Collins is coming on the aspect of financial fair play—
and it is interesting to hear your comments, Mr
Coates—I wanted to ask Mr Gill, in terms of the
financing choice for Manchester United, how much
was driven by tax aspects, such as interest relief offset
against tax and similar? How is it used potentially as
a loss making vehicle to offset other tax? Is that the
main driver for the reason why you financed that way?
David Gill: That is an owner issue really. It is true to
say that interest expense for any UK corporate is a tax
deductible item and they have used that. But I think
if you step forward, we still pay significant amounts
of tax. Our tax payments to the Exchequer last year
totalled about £75 million; over the last five years it
has been £370 million.
Q192 Dr Coffey: Is that corporation tax?
David Gill: No, it is various elements. There is VAT;
PAYE is a big one, clearly; national insurance and
corporation tax. So, yes, our corporation tax charge
has clearly gone down as a result of that interest
expense, but as to whether it makes sense to use that
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Culture, Media and Sport Committee: Evidence Ev 51
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
in terms of the overall planning of their finances, it is
for them to answer.
Q193 Dr Coffey: I recognise that, but if you go
across the other side of Manchester, Sheikh Mansour
came in and made an equity investment. Do you think
we should be changing the financing laws to
encourage that rather than allow debt finance to
leverage?
David Gill: I think if you are going to change it—and
it goes back to Peter’s point, sport is a business but it
is also a sport—you are going to have to change it for
all UK corporates. I think companies should operate
within UK corporate law, company tax and so on. If
the Government do not want to operate that way, fine;
but I do not think it will change for football’s
purposes.
Q194 Dr Coffey: I do not want to steal Mr Collins’
question so I will try not to, but with the forthcoming
regulation is there not a case for you already making
changes to how you operate financially in order to
cope with what is coming?
David Gill: No, we are very comfortable with
financial fair play, if you are talking about that, and
how it operates and we understand the impact. Our
interest expense is an operational cost to the business
and it will be, quite rightly, included under financial
fair play. It should not be excluded. We are very
comfortable with that and we will operate within it.
Peter Coates: I think there is nothing wrong with debt
so long as it is sustainable debt and affordable debt.
I think that that is the critical matter. Quite clearly,
Manchester United can afford their debt. Debt is
wrong when you cannot afford it and you are
irresponsible. As for the tax aspect, there is an
argument which I know is doing the rounds, and it is
for UK legislators to decide whether interest should
be allowed or not. But that is a matter for
parliamentarians, not for football clubs.
Q195 Dr Coffey: Could you clarify, Mr Quinn: are
you debt financed or are you equity owned?
Niall Quinn: Five years ago when we took over the
club we inherited a quite sizeable debt. A group of
Irish investors came in and invested themselves in the
club, maintaining the level of debt. Ellis Short then
came in and took all the shareholding and we have
worked consistently over the last three or four years,
since Ellis has come in, on the club’s progress. While
we have made progress, we have also reduced that
debt by about 25% and other money that he has put
into the club he has capitalised. So he has been a
model owner.
Q196 Damian Collins: Following on the questions
about financial fair play, do you have any concerns
about the structure of the UEFA fair play rules? Mr
Gill, does that pose any problems for Manchester
United? For the representatives of the other clubs,
could you live within those rules if you qualified for
European competition next year?
David Gill: We were involved through the European
Club Association, as were other clubs, such as
Chelsea, for example, who were on the working group
to develop those proposals with UEFA and make sure
that what was being put in place was workable, made
sense and was for the benefit of football; whether it
be the benefit in terms of making sure, on Peter’s
point, that clubs could operate within their own
resources, in terms of ensuring, potentially, a limiting
effect on player cost, or in terms of transfers and
wages, so there are benefits coming out of it. We are
comfortable with it. The critical issue will be around
implementation and the sanctions around that, and
making sure that it is appropriately applied. But I do
not think anyone can criticise the objective of
ensuring that clubs operate within their own
resources, personally.
Peter Coates: I think it would be a good thing for
football. My only concern will be its implementation
and I want it to apply to Italy and Spain just as
rigorously. We will play by the rules, as we should
and as we would want to, and we have to be confident
that UEFA will see that other clubs in other countries
do the same. Even in the Bundesleague, it is not quite
clear where everybody fits. They have lots of
problems, lots of debts, and they have the kind of
issues that we have been discussing today.
Niall Quinn: I suppose, from our point of view, at the
very start when this first came into being a couple of
years ago, when it was first heard of, we wondered
was it an attempt to bring the Premier League back to
the other leagues. I think there was a little bit of that
at the very start, but we have worked our way through
it now. It has been quite extensive in terms of the
research and where we are all trying to get. A lot of
people have put a lot of effort into this and I would
back up exactly what everybody is saying. We are
very comfortable. We think it will be very good for
the game. I think the important thing is that fans feel
like that and they feel that it is a good thing coming
in, too. But can I also point out that I put petrol in my
car yesterday and a fan told me to get my bloody
chequebook out and sign Danny Welbeck from
Manchester United? So while we talk this game we
are under severe pressure to keep doing what the fans
want. Hopefully, if they learn that FIFA fair play is a
good thing too, then we can all make progress.
Q197 Damian Collins: I suppose Welbeck might
have cost about the same as the cost to fill up your
car as well?
Niall Quinn: A little bit more.
Tony Scholes: Spiralling wage costs at one club affect
the rest of us, so financial fair play is an important
thing to bring in. In its first guise, though, it would
have been damaging to us. A club like Stoke City
would have fallen foul of financial fair play because
there was no latitude at all. But with the latitude that
has now been negotiated into it, which does allow a
limited amount of losses each year or a limited
amount of owner investment, then I think we as a club
are happy with it and as a league we are happy with
it. Peter’s point is the crucial one. This country, our
Premier League, our FA, will apply it rigorously. Our
concern and our request is that every other country
throughout Europe does the same.
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Ev 52 Culture, Media and Sport Committee: Evidence
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
Q198 Damian Collins: Given the positive response
to it from you all, why shouldn’t we ask the Premier
League to adopt this as a form of standard practice so
that any club competing in the Premier League would
be eligible to compete in European competition if
they qualified?
Niall Quinn: That is a journey we hope to go on and
we would welcome being brought into that if
everybody else was. I think some people would turn
around and say, “But, Niall, you have had a couple of
years of investment and you have had a leg up to get
to a point now where you want to narrow the rules”,
and I have to accept that. But again, for the general
good and the greater good of the game, I think it
would be a better idea if all of us came under that.
Yes, I would agree with that.
Tony Scholes: Many clubs in the Premier League at
the moment adopt the UEFA licensing process. We do
as a club. We have done since we have gone into the
Premier League. You could argue quite reasonably
that our chances of qualifying for Europe in the first
couple of years were very slim, but as a club we
thought it was the right thing to do. We are in the
company of the vast majority of clubs in the League
to do that.
David Gill: I think, if you look at it over time, as we
understand how it operates, I think you can see that
happening. We referred to an earlier example. The
Premier League voluntarily agreed last year to
introduce squad sizes, put the 25 in with the homegrown limit within it. As Tony said, a lot of clubs
who apply for licences—they are operating anyway—
would operate, if they got into Europe, within that. I
think you move over time and I can see that
happening.
Q199 Damian Collins: You could see that?
David Gill: Yes, over time I think that would be the
case; as people understand it, how they operate. As
Niall said, people get into shape for it and prepare for
it. I think you will see that happening.
Damian Collins: Mr Chairman, I want to move on to
my next question on the football creditor rule, but I
think Mr Farrelly is going to come in.
Q200 Paul Farrelly: Clearly, I think that experience
across sport shows something about the issue of salary
caps: they only work when you have a community
of interest—for instance, as in rugby—and there is
arguably not a community of interest between the
Manchester Uniteds and the Chelseas and the Arsenals
and everybody else who just wants to stay up in the
league. I am sure, David, that many clubs operate an
individual cap, even if it is not formalised, because
everybody will want something else, if somebody gets
another 10 grand a week, and then there will be no
doubt in the interests of running a club an overall
wage bill. But then you come along and you pay an
outrageous amount to Wayne Rooney and you must
have them all tearing their hair out, and any parent or
teacher because you are also rewarding bad behaviour.
How can you justify that if you have any feeling for
your wider responsibilities to the game?
David Gill: We do have feelings for the wider
responsibilities of the game. You said it is outrageous;
that is your view. I do not think it is particularly
outrageous and we have acted very sensibly in
Manchester United. I agree with you 100% that a
wage cap will not work. You use an example; yes, that
is English Premier rugby but a lot of the players go to
France where there is not a cap. These sort of things
happen. Personally, I think a salary cap will not work
but I think financial fair play will help within that. In
Manchester United we have our own self-imposed
cap. Ever since I have been there, we have imposed a
cap whereby 50% of our turnover can be used on total
salaries. A lot of that is players, clearly, and staff, but
we have done that.
Within that, we believe that we can both retain the
best players and attract the top players, and compete
against other teams both domestically and Europeanwide, but at the same time retain money to invest back
into the club, whether it be the training ground I
mentioned earlier or revamping our boxes and so on.
So we think that is the best way to do it and we are
very comfortable with that. I think we look at it in the
round. We are very careful in terms of what we pay
our players; we make sure we do it and understand it.
As I said in response to the first question, the business
policy and business objectives of Manchester United
depend on what happens on the pitch. We have to be
out there playing attractive football, competing and
making sure that we can do that, and we will do that
by paying players appropriately.
Q201 Paul Farrelly: Just a brief supplementary,
Chairman. Tony from Stoke commented on the knockon effects of rising settlements. With Wayne Rooney,
one could take the view that from a business
perspective you have simply protected the value of an
asset in what you have done; so fair play to you. But
at the same time you have given a message, haven’t
you, that bad behaviour pays off? Players making
statements against the club will have agents
encouraging them to carry on, because they will just
say, “Look what we did in the Wayne Rooney case.”
David Gill: Wayne Rooney is a great player both for
this country and for Manchester United. They are role
models, players, and there are examples of behaviour
that is inappropriate; I would not disagree with that.
But at the same time he is there, we want to keep him
and I think it has not had a knock-on effect. We have
done certain deals with other players, which we have
announced recently, and the impact of what we paid
Wayne—not that they know that—never came up. It
was about what they believed they should be getting
for playing for the club and we have acted
accordingly. I do not think we should hone in on
Wayne Rooney in this particular situation. He is a
great player for the club and country and will continue
to be so.
Q202 Damian Collins: There has been some
discussion in our previous hearings about the football
creditor rule, and I think concern has been expressed
in the written evidence we have received as a
Committee that this is an outdated practice and that it
is unfair for football clubs to give each other
preferential treatment while other creditors, be they
the taxpayer, the taxman or even St. John Ambulance,
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Culture, Media and Sport Committee: Evidence Ev 53
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
potentially lose out. I would just like to ask your
comments as people running clubs as to whether you
think it would be good for football if we moved on
from the football creditor rule. Mr Gill first, please.
David Gill: I can understand why it was in there in
the first place. We have not formally adopted a board
policy on it, but I think the general view of
Manchester United is that it is a rule that has had its
time. I think we have had to address it in certain
instances in the Premier League whereby we now put
in quarterly reporting—I believe the Football League
does as well—to certificate that we are not in arrears
in respect of HMRC debts in any way, shape or form,
which I think is a positive thing.
But I agree with you: I think the whole issue of
fairness in administration or liquidation or whatever
is that everyone should be treated the same. One
argument for it has been that it ensures that a club that
has overtraded does not then get back into the League,
albeit with a points deduction, or perhaps into a lower
league, having gambled without its having come off,
to the detriment of another club in that league. I can
understand that argument. The positive benefit would
be that clubs would not get into that situation. Their
due diligence in terms of their dealings with another
club, whether it be on transfers or whatever, would be
perhaps more rigorous and, therefore, they should not
find themselves in that situation. If it does occur, it is
rare. On balance, we would favour its being
withdrawn.
Q203 Damian Collins: When you talk about the
dealings between clubs being more rigorous, are you
saying that if a club was selling a player to another
club they would be much more cautious about
reaching that agreement until they were convinced the
club had the money to pay them?
David Gill: I think so. I think you have seen in the
last few years that there has been a trend for transfer
fees to be paid over a long period. Previously, the rule
was you had to pay within the year, which again I
think is a better discipline. I think it could lead to that
rule being scrapped, personally.
Q204 Damian Collins: Just to pick up on one thing;
in terms of the transfer payments, are you saying that
you think because transfer payments are spread in
instalments that has an inflationary pressure on
transfers and encourages clubs to make commitments
they may never have to fulfil?
David Gill: Well, I am not sure they will never have
to fulfil because I do not think anyone would enter a
legal agreement knowing they do not have to fulfil it.
But there may be an opportunity to use other clubs as
a funding mechanism as opposed to if you have to go
to a bank or a third party institution to make that
purchase; then perhaps they would look at it from a
different perspective. That is what I am saying. I do
not know; it could do, it may not do. But I think that
is—
Peter Coates: I am ambivalent about it. I am not sure
which way I want to go on this. I understand fully
David’s arguments. We have improved and tightened
the rules, both for the Premier League and the
Football League, whereby clubs have to report if they
have not paid the Inland Revenue. So we have made
an improvement there. I am very surprised the Inland
Revenue allow it to happen. That has always surprised
me. It is a difficult argument. It may help clubs lower
down the leagues maintaining it and retaining it, so
there is an argument both ways.
Q205 Damian Collins: But as Chairman of Stoke
City—heaven forbid that Stoke should ever be in a
situation like this—how would you justify it to the
community that you might have to pay a football debt
to a club, say like Ipswich, before paying a local
supplier in Stoke?
Peter Coates: I would find it very difficult but I have
been in business all my life; I have never not paid
Inland Revenue. You pay your bills, it is normal. I just
do not do things like that and never have. I would not
dream of not paying bills that I know are due and
have to be paid. It is not in my mindset to do it. I
would not store up debt in that way, it is wrong. The
clubs should not do it and businesses should not do it.
Tony Scholes: I think that the main issue with the
football creditor rule has been with HMRC over the
last few years. The Premier League has taken action
in that regard, as David and Peter have already said,
in making sure that clubs cannot get into arrears with
HMRC. I think it is also fair to say that we have
debated this around the table many times and I do
not think anyone feels comfortable with the fact that
another football club may get paid but a small local
supplier in that community does not get paid. No one
feels comfortable with that.
There is another side that needs to be weighed in when
considering the football creditor rule and that is that
it does help to maintain sporting integrity. When a
team is playing another team, team A may have sold
a player to team B and not been paid for that player
and as a result of that may have been unable to go
and strengthen their own team. If they then play in a
game there is an imbalance in the sporting
competition. The source of the football creditor rule
is to do with sporting integrity, but I think it is fair to
say that where we are now there is probably an
appetite for having a fresh look at it.
Q206 Damian Collins: I just have a question on that.
I am not sure where the integrity is there, because if
a club is competing at a level beyond that which it
can reasonably financially sustain simply because
other clubs are prepared to sell players to them
knowing that their risk is protected, how is that good
for the integrity of the game?
Tony Scholes: It is the club who have sold the player
and not been paid and would reasonably have
assumed they would have got the money to go out and
strengthen their team as well as a result of paying that
player. This is the original argument for the football
creditor rule. If they cannot rely on those payments
coming to them, then that club has been weakened as
a result of it.
Q207 Damian Collins: But wouldn’t it be better to
have a system where the transfer was not made in
the first place if it was clear the club couldn’t make
the payment?
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8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
Tony Scholes: That is David’s point. If the football
creditor rule was changed it would put the onus on
clubs to do more due diligence over the
creditworthiness of the clubs buying players.
Niall Quinn: Yes, and I suppose there are 17 other
chairmen around the country who I am conscious will
want to have a view on this before we put this rule in
the dustbin. From our point of view, the fan in the
street meets the guy who printed the programmes who
did not get paid and he sees the player driving out in
the big car who was paid. I think that is damaging and
we have to look at stuff like that and say, “Yes, tidy
this up and give that guy who printed the programmes
as much skin in the game as the big players.”
Q208 Damian Collins: Can I ask just one final
question, Mr Chairman? You heard what David Gill
said about transfer payments. Sunderland and Stoke,
would you concur that there should be tighter
guidelines on the period of time over which transfer
payments can be made?
Niall Quinn: Not all payments are Premiership club
to Premiership club; so there is an outside force there
when you are buying foreign players and that becomes
a minefield, too. But certainly with club to club in the
Premiership I think we are all of the opinion that there
is enough money in the Premiership kitty to hold back
to protect anybody and then punish somebody who
did it the wrong way. I think we could handle that inhouse ourselves.
Q209 Jim Sheridan: Could I perhaps ask about the
role of players’ agents in the game today? The
evidence that we have taken so far seems to suggest
that there is a general consensus that players’ agents
are a necessary evil, that there is no alternative. Is that
an accurate assessment?
Niall Quinn: I would think from our experience, yes.
It sounds about right. I never had an agent. I came
back into the game and I had this great idea that at
Sunderland we would not allow agents at the training
ground, we would never engage with them, and then
all of a sudden you realise to make progress these
guys were getting their players to go somewhere else
and were laughing at us because they had power. The
big power came with the Bosman ruling and the way
European law supports them; then you throw in the
transfer system that allows a window of time. It was
manna from heaven for the agents who squeezed us
and who continued to squeeze us in all those periods.
The game is heavily stacked in their favour. One of
the big problems that that causes is that while, okay,
they are getting too much money because they are
squeezing us all and we all want to stay in this
brilliant league, the man in the street, the football fan,
feels ever more distanced from it when you talk about
the wages.
Let me say what I would like if there was anything
that could be changed in our set-up. We have our
media, we have the Premier League, we have our
football club, we have our fans here and we have our
players here. If there is anything I could change it
would be that any improvement we could make would
go directly here and satisfy that and repair the gap. I
think we should all look for something that says,
“How can we help this group of people out to still
stay in love with the game?” If we send the matches
abroad with empty stadiums, it is over; the Premier
League is over and these are the lifeblood of the game.
So how do we protect these? Every revenue that
comes in, the agents have the upper hand to squeeze
it out of us. That is the case; I think you would agree
with that. How can we stop that? How can we find a
better way of these people to love the game?
Now, these are the same people who tell us, “Get your
chequebook out, I want us to be top six.” They are
also saying now, “You are paying too much money;
this is wrong”, and at the same time saying, “Can we
go to the matches a bit cheaper?” The big thing we
are getting from the forums is about ticket prices; for
the guy who wants to go and bring his two or three
children, it is impossible. In the old days it was
possible; it is not possible now. Obviously, incomes
have changed and the economic situation is as it is.
But what I would love from any group, whether it is
this group or any group of significance that really
cares about the game, is consideration of how we can
bring them into the stadium cheaper without the
agents cranking it all up again and causing a big
problem for the club.
I think we would all agree here; if we stayed with the
same net amount of money each year on the basis that
we were giving them a discount on tickets and we did
not lose it somewhere else, we would all go for that,
welcome it with open arms and fill the stadium out. I
think we can talk about a lot of the fan issues, and the
federations and the sports trusts will bring up
hundreds of things, but the big thing is they want to
come into the grounds cheaper and I think we should
look at ways of accommodating that. The players are
big winners here in this; the players and the agents
are big winners. Inland Revenue is a big winner in
this. The Inland Revenue takes a big take of all this,
too. Is there some way that we can get those two—
and I am not saying they are together in this; I think
that that is coming—not to all go in their way as it
does now? Could we give something back here
without affecting our business going forward? It
would be suicidal for us to let them in half price now.
The agents will still press the crank on, the Revenue
still take their take, but could there be a way, if we
tilted it back this way, that would benefit them? I think
that is something we should all aim for.
Peter Coates: I think agents are a fact of life and I
think I should be free to do what I want in terms of
what I pay them. It is up to us to negotiate sensible
business with them. One of the things you could do
that might improve it is transparency; in other words
we have to say what we have done in terms of agents.
You can’t divulge a player’s contract—obviously that
would be completely wrong—but you could have
transparency in agents’ payments. We all want to
drive agents’ payments down. On the other hand, it is
a marketplace and we should be free to deal in that
market. It is up to us to be smart enough to make sure
we do not pay too much, and that when we pay a
higher fee, we are seeing whether there is possibly
some reason for it.
Tony Scholes: It is fair to say, though, that some
agents perform a very valuable role. They are part of
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Culture, Media and Sport Committee: Evidence Ev 55
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
the industry now and they do perform a valuable role.
But agents are paid a disproportionately high amount
of money for any deal that they are involved in. That
is a fact and I think we would all accept that.
Q210 Jim Sheridan: They can also be used as
scapegoats as well. When a club wants to transfer
someone they can then blame the agent. But putting
that aside, everyone we have spoken to in football
during this inquiry, when we talk about agents, more
or less says the same thing as yourselves, which
suggests to me that there could be a role for FIFA if
they act collectively. It seems to me that FIFA have
abdicated any responsibility whatsoever to try and
regulate this part of the game. At the end of the day,
whether it be in England or anywhere else in Europe
or the world, agents take money out of the game. It is
not going back in again; it has gone out of the game
and it is never seen again. Why is FIFA or UEFA not
taking a firmer role?
David Gill: It is interesting to talk about taking it out
of the game. I am always interested by that statement
because accountants take money out of the game, and
it does not go back in. Lawyers take money out of the
game, and it does not go back in.
Q211 Jim Sheridan: They are a necessary evil.
David Gill: But agents are. I think agents do have a
specific role. It is like any walk of life; the actual
term “agent” has a bad connotation, but there are good
agents and bad agents. But the players do need them
for services and I think we should understand that.
When we look at what we are going to pay a player,
whether it be renewal of a contract or a player transfer,
we look at the overall investment. Like any sensible
business, we look at the player wages, the agent’s fee,
and we determine whether that is appropriate for our
business, and we do that on the transfer fee. I am not
saying there is no issue, but I agree with you in terms
of FIFA. FIFA have been looking at the matter. I think
that there are a number of cases with respect to agents
in which they are looking to see whether the term
should be changed to intermediaries. That certainly
has many more syllables, but we will still call them
agents, and they will still be there. They are looking
to do something whereby they put the onus on the
clubs and the players to have responsibility.
I think Peter makes a very good point in terms of
transparency and understanding. As long as in any
particular transaction if a player is aware what his
agent has received from the club or from himself and
everyone is aware of it, I do not see a particular issue
in it. It is another way of using the club’s resources
and making sure we are responsible for how we
discharge those club resources. I think it is a very
interesting issue; it has been there for many years, and
we cannot change it domestically. The Premier
League tried a few years ago to make the players
responsible for paying their agents. It failed miserably.
We had to change the rules back again.
Q212 Jim Sheridan: That was my last question.
How did that fail, though? Effectively the fans are
paying twice now, are they not? They are paying their
player and they are also paying the agent.
David Gill: I do not think you can separate them out.
I do not think the agents’ fees are necessarily
incremental. It is part of the overall investment. So I
do not think it is true to say, “That is it, you can just
pay the player X and forget about the agent.”. One of
the reasons it failed was the tax implications. Under
UK tax rules, if the payment that the club paid on
behalf of a player was not a tax-deductible expense,
he had to gross it up. That was a key point, and we
became uncompetitive versus what was happening in
Spain, in Italy and in Germany. Again, we operate in
a worldwide market for talent. As part of this earlier
discussion, it is not just about players developed in
England; it is a worldwide market. So we have to
operate against that if we want to attract those players
in with what the regime is in other countries. Your
point is exactly right; FIFA has to take the lead as a
world governing body to make sure it is managed and
appropriately controlled.
Q213 Jim Sheridan: Just finally—still with you,
Niall—do you think it makes you a better player if
you are paid £1 million or £10 million?
Niall Quinn: No, I do not. I can’t stand here and
defend where wages have gone. It is the greatest show
on earth, the Premier League, and we want it so badly
and the agents have manoeuvred themselves to
manipulate that whole situation brilliantly. To be a
little bit fair to them and to ourselves as to why we
tolerate it at times, we would at times as a football
club be carrying wages on a player who is of no use
to us; he is sitting on a long contract, it is really tough
and we get a phone call from an agent who says, “I
can get him to wherever”, some part of the world. For
us the big thing is that, “Okay, we might be exposed
to £1.5 million wages for the next year, what do we
do? We can get him out there. The agent wants
£250,000 for one day’s work, you know something,
we are £1.5 million better off, let us do it”. That is the
pressure we are under sometimes as football clubs and
they manipulate it and market themselves brilliantly.
It is a necessary evil, going back to the very start.
Q214 Paul Farrelly: I wanted to come on to the
Football Association, but first can I just ask a couple
of questions about your own house, the Premier
League? Is there merit in the Premier League shaking
up its structure and having more independent
directors? Is the board too small? Should the Premier
League’s governance structure be more representative
of the different shades of opinion and the different
ambitions of different segments of the league?
Peter Coates: I suppose you have to say, and it is
only our third year, the Premier League is very well
managed. It has, I think, probably a quite outstanding
Chief Executive who has done a great job for the
Premier League. As a model it has worked very well
and it has been a big, big success. You do have
shareholders; you have 20 shareholders all with a vote
who you meet four times a year and, therefore, you
are able to have your input. I can understand you
thinking it is perhaps Richard Scudamore and Dave
Richards, but it does not quite work like that because
all the shareholders have a vote, you meet four times a
year and you are able to have your views represented.
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Ev 56 Culture, Media and Sport Committee: Evidence
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
David Gill: I agree. I think if you look at it, the actual
Premier League is a success story without any
question. You are just adding people because of a need
to add them. I think the remit of the Premier League
is relatively narrow. It runs the actual game, the
competition. It is responsible, quite rightly, for the
selling of the television rights and other commercial
aspects of it, whether it be the ball sponsorship, the
title sponsorship and so on. I think it is well run and
I think the way that it works, the voting structure with
14 votes required to pass a resolution, means the
objective and discussions and debates and issues are
taking place in the forum of the shareholder meeting.
In adding an independent or another non-executive
person, I think you are just doing it just to say you
have ticked the governance box as opposed to adding
value to what is a very well-run league, very well
respected around the world.
Niall Quinn: Yes, I feel the same. This is our fourth
year. What I found interesting was that every Saturday
you have 20 clubs who want to beat each other up and
then we go to a room to find ways of making it all as
one. It was unusual and I sat back and I watched and
listened for quite a long time before I got involved
and felt that the good work it is doing is not publicised
as well as it might be. It is an extraordinary success
story, the Premier League, in theory. I am not saying
it is perfect in our back garden, but we do have the
forum there to alter things as they occur.
Q215 Paul Farrelly: Can I move on to the FA? We
had a very strong picture of the FA painted to us by
Lords Triesman and Burns in the opening session. I
am sure you have read the reports. The FA is pictured
as operating with the chairman and the chief
executive; with representatives of the professional
game meeting the day before, agreeing, in good old
Marxist/Leninist/Trotskyist fashion, the line. When
they say no they mean no. The representatives of the
amateur game do not always agree with them but they
never vote against them and if the chairman and chief
executive have some interesting ideas, they are left up
a creek without a paddle if the professional game
simply says no. We have seen the Triesman report,
which was going to be a submission to questions by a
former Secretary of State as why the FA did not put
their own submission in. Was that position adopted by
the FA and the professional league and the premier
representative reflective of all shades of opinion
across different clubs in the Premier League or are
there clubs in the Premier League that would be more
progressive in accepting reform?
Peter Coates: I think that it has a recent very bad
record, the FA, with lots of own goals and lots of
things that have gone wrong, which were frankly very
bad and reflect very bad on the game, and I think it
does need reforming. The Burns Report is not a bad
marker for that. I am strongly in favour of two nonexecutive directors. I think we have made an
appointment of a good chairman. Like any good
organisation, I think you need a good chairman and
a good chief executive, and he will get the people
around him.
But he does have to be able to do his job and you
referred to some of the more dysfunctional problems
that he faces. I think two non-executive directors—
and he should have some influence as to who they are,
they should not be foisted on him—would be very
good for the governance of the game. I think along
with that you would need to reduce the size of the
board. It would become too big. I think the chairman
needs help and I think two non-executive directors of
the right calibre would be an enormous benefit to him;
so that is something I would like to see. We have not
had support for that in the FA. I am hoping perhaps
that is going to change and there will be a move in
the direction of that and some of the other things that
I have just referred to.
Q216 Paul Farrelly: Niall, was the “just say no”
brigade reflective of the position and opinion of
Sunderland?
Niall Quinn: I do not think so. First and foremost, we
are in a tough place in Sunderland and it is a hard
job. Concentrating on your own world 16 hours a day
sometimes does not give you the space in your mind
to map out a perfect road plan for your thoughts on
the FA and where it goes. What you try and do is to
see the big picture and hope that you can contribute
and that we would not block things; just blocking for
the sake of blocking something. David sits on the
board. I think David would be in a better position to
speak clearly on this, but we would take the view,
each of our shareholders of the club, we take the
Premier League’s view on everything that comes up
about the FA. I thought it was really good in my time
that the FA had representation at our meetings, that
there seemed to be something happening between it.
Now, obviously that came to a shuddering halt and it
needs to get going again. Instead of looking back, I
would be all for finding a way that is transparent, that
we all feel we are doing our best for the game,
because without the kids playing football in their
respective amateur clubs, without this great love for
the game, the Premier League will be at a loss, too.
There has to be a collective buy-in there.
David Gill: As Niall says, I am on the board. In terms
of where it is going I would support it wholeheartedly
and I want to reiterate what Peter said because I think
he articulated why independent executive directors
would be helpful. That needs to be done in
conjunction with trimming the board. I think that the
FA has a very broad remit from grass roots through to
coaching, through to the England team, through to the
FA Cup through to the professional game and so on,
and then goes on to discipline. Another area I would
look at seriously, which Burns sort of advocated, was
separating out the disciplinary side and making that
semi-autonomous under the rules and regulations
stipulated by the FA, but then with the actual body
dispensing that discipline being separate. I think that
would assist the FA because a lot of bad press comes
out through the FA not acting on a particular issue
because of this, that and the other. I think that would
help.
Before I went on the board I thought on the national
game and the professional game we would be at
loggerheads. I do not see that. I think the debate and
discussions at the board have basically been about
moving in the same direction for football. If it is
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Culture, Media and Sport Committee: Evidence Ev 57
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
particularly just a national game issue, then we would
support what they are recommending; they are experts
in that area. That also works the other way around. It
makes eminent sense to me. Without doubt the FA is
not completely broken, but there are issues and the
turnover of staff at the top, whether it be at the
chairman, chief executive or general secretary level,
cannot help. It cannot help any organisation for that
to happen, and I think we have to bed it down, have
some stability. In order to do that we also need to give
the new chairman some support and some assistance
at that level, and that makes eminent sense to me.
Q217 Paul Farrelly: Which representatives, which
sectional interests, should be trimmed or cut back?
David Gill: At the moment that would take it up to
14—five national game, five professional game, the
general secretary, chairman and two non-execs—so I
think you can do it pro rata. I do not think anyone is
that desperate necessarily to be on it. I think what we
want to do is have a proper body there because that
will determine the strategy of the organisation,
monitor the implementation of that strategy, the dayto-day running of the FA, so whatever is best for the
FA. I do not think people should just hang on because
they have been there for ever. It is what is best for
the organisation.
Q218 Paul Farrelly: The German FA has adopted a
different approach. It has what you might call
sectional interests on the board, which has evolved. It
has representatives of women’s football, which is very
big here as well as in Germany, and the director of
football for the national team, because they feel the
national side should have an input. Is that a route that
we should be considering as well?
Tony Scholes: I think you probably need to be a bit
careful. David is talking about reducing the size of the
FA board, and if they are going to be effective they
need to be small enough to be able to make good
and clear decisions. If you start adding on sectional
interests it makes it more difficult. But there is a
structure below the board, of course, where such
interests could and should be represented.
Peter Coates: We have two boards below the board;
we have a national game board and a professional
game board. There is no reason why the structure
cannot accommodate the right balance and I think it
is very important that the chairman and the chief
executive are allowed to get on and run the business
and are not stopped by the board from carrying out
their role. Going back to earlier, I think two non-execs
would be a very big improvement.
Q219 Paul Farrelly: You have been quite outspoken
in our local press and for anyone who wants to listen,
really, about the failings of the FA on a much broader
front, from the turnover of chief executives, which has
been mentioned, the way Wembley was handled and,
indeed, the World Cup bid. What do you think the
FA needs to do to improve its international standing
overseas and its reputation here? Are there any
organisational weaknesses that contributed to our
dismal failure to get more than two votes in the World
Cup bid?
Peter Coates: Well, it was pretty shocking, really,
wasn’t it, whichever way you look at it? Now, who is
responsible for that? Well, I am surprised that we did
not know more. We have guys out there, we have a
representative on FIFA and we had no idea all we
were going to get was one vote. There is something
wrong if we cannot do better than that. We should
have known, for example, and maybe this is a
criticism of FIFA and the chairman—if he has an
agenda that he wants to spread football around the
world that is a perfectly reasonable agenda in my
view. If he wants to go to Russia, there is nothing
wrong with going to Russia if he wants to spread the
gospel, or the Middle East for that matter so long as
we can play it in the summer. But things like that
ought to be known and we say, “We are out of it, we
have no chance”. It surprises me that we are not smart
enough to get a feel and get a flavour for what is going
on and end up with egg on our face with one vote.
So, yes, I was very upset about it. I wanted the World
Cup in England obviously and I thought we had a
chance from all that people were saying, but we
seemed to have no chance.
Q220 Paul Farrelly: Niall, you have seen a few
ructions in your time between the blazers and the
players in Ireland. What is your perspective?
Niall Quinn: Well, I was heavily involved and I led
the campaign in Sunderland. We got a great
camaraderie going not just in Sunderland but the
region. We called it a regional bid. We were thrilled
to be called out first as the first city that was going to
be hosting a game if it did come our way. We got very
excited. But looking back now that it is all done and
dusted and where it went, what I would say is if we
were back again there was a lot of good stuff, but a
lot of that good stuff got drowned in arrogance. I
really believe that. We did not hear anything from
Russia in those 18 months. People heard from us all
the time. I am not saying that that would have
annoyed or upset the people, but it did really take
away from a lot of the real gilt-edged stuff that we
had done. The next person who would dare venture to
take on something like this in the future, I would plead
with them to keep your good stories and keep your
successes wrapped up and roll them all out in the last
couple of days.
Q221 Paul Farrelly: David, in Germany we heard
from a very senior, respected and reliable source that
Sir Bobby Charlton was told a year prior to the failure
that England had no chance because the numbers,
were not there. Are you aware of that? Has that passed
through? Does the game share this conviction?
David Gill: I am not aware of that situation.
Q222 Mr Watson: My interest in the governance of
football is about how you protect players. As
chairman, can you tell me if you know of any current
or past players who may have had their privacy
invaded through phone hacking?
David Gill: I am not aware of anyone at Manchester
United, no.
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Ev 58 Culture, Media and Sport Committee: Evidence
8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn
Q223 Mr Watson: Niall, you played against Sol
Campbell a few times. Were you aware when you
played against him that his phone was being hacked?
Niall Quinn: No, I did not. Thankfully, nobody has
any suspicions around the club. We do not feel
threatened at all.
Q224 Mr Watson: You do not know whether Alex
Ferguson’s phone was hacked?
David Gill: He has not mentioned to me, no.
Chair: Right, I think that is it. Can I thank the four
of you very much?
Examination of Witnesses
Witnesses: Lord Mawhinney, Former Chairman of the Football League, and Henry McLeish, author of recent
review of Scottish Football, gave evidence.
Q225 Chair: First of all, I thank Lord Mawhinney
and Henry McLeish for having sat patiently through
the first part of this morning’s proceedings. I welcome
Lord Mawhinney, a former Chairman of the Football
League, and Henry McLeish, obviously a former First
Minister but also the author of a recent review of
Scottish Football. Could I start by asking Lord
Mawhinney whether he thinks the introduction of the
Premier League weakened or strengthened what is
known as the football pyramid?
Lord Mawhinney: It strengthened it, but I will come
on to the present in a moment. It is a phenomenal
success. I have sat in Beijing and watched Premier
League games. I have sat in Boston and watched
Premier League games. The future income of the
Premier League is more and more shifting towards
overseas media rights and whenever they launch their
own television channel that will have another
additional effect. It is a great success.
I think the difficulty is that it has created a problem
about the handling and distribution of money. It has
generated so much money that it has skewed, or is in
danger of skewing, the system. The Premier League
is one of the country’s great advocates for a free
market and I pay tribute to it. The problem is that the
Premier League is not a free market; it operates in a
closed market. What happens at the Premier League
affects the finances of not just other Premier League
clubs but clubs right down through the Football
League, and what happens in the Football League
affects what happens in the Conference.
Going back to the earlier questioning, every time Mr
Rooney or Mr Torres gets a salary settlement, that
cranks up the whole system. Agents note it and they
add a little bit to the value of their player. Other clubs
note it. Whether that is good for the medium-term
football pyramid I think is very debatable.
Q226 David Cairns: Henry McLeish, you have
written this football review. It is a big review; it has
89 pages and makes lots of recommendations. Can
you just encapsulate what you think are the key one
or two recommendations that you would really like to
see implemented from this review?
Henry McLeish: The position in Scotland is in some
respects very, very different, especially in terms of
scale and the financing of the Premier League in
Scotland, and in terms the fact that we have 5 million
people rather than 60 million. In that sense, I would,
first of all, say that the context is very different. That
said, as someone who has a passion for the game and
who has played the game, I found that the football
authorities in Scotland were really not fit for
purpose—and I will be as sweeping as that at the
start—because in a sense in both England and
Scotland we are looking at two of the oldest
associations. We are talking about history and about
legacy, about a preciousness and exceptionalism that
I think you only find in football, and about an
insularity that is safeguarded in some respects from
the outside world. In that sense, they were not fit for
purpose—this is the SFA.
Then you take the Scottish Premier League and the
Scottish Football League, as the two other institutions.
I could find no good reason, for example, why they
had been separated, because our SPL operates at a
very modest level compared with England. That said,
we had a fragmented game, there was lack of trust;
there was a whole series of problems that had clearly
accumulated over decades without anyone from the
outside suggesting that things should be changed and
without any momentum from the inside suggesting
things should be changed.
After the review, and after speaking to an enormous
number of people, the first thing I wanted to do was
to improve significantly the governance of the game
as exhibited by the Scottish Football Association. This
involved a major overhaul of its committee structure,
which was fine for the start of the last century, but not
fine for the start of this century. They had too many
people on the boards and a whole breakdown and
fragmentation of their approach. Of course, there was
also a severe lack of confidence in their ability to
oversee the game and regulate the game. I suspect
that, in terms of the FA in England, part of this is
going on.
What I recommended was, first, sweeping changes to
the structure, composition and modus operandi of the
Scottish Football Association; secondly, the
reintegration of the Scottish Premier League and the
Scottish Football League, in no way stepping on the
toes of either but bringing them together to
collectively take the game forward; and then, thirdly,
an acknowledgement—I think this is one of the issues
that I think is interesting in England—that the game
is bigger than the Premier League. Now, we can say
that in Scotland because I think it is a more modest
Premier League. That said, it was to talk about the
fact that, in terms of the gap between national
aspiration and national achievement, the gap was
enormous. We were asked: should we reduce our
national aspiration? Now, in Scotland that would have
been heresy because we are a passionate country,
although not always successful. We wanted to keep
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Culture, Media and Sport Committee: Evidence Ev 59
8 March 2011 Lord Mawhinney and Henry McLeish
the aspiration alive, so what we had to do was to raise
the expectation.
What I think has now come forward is a growing
embrace of change and a growing of confidence that
the game needs to move forward together, which
means that football as a sport has to be resurrected as
a game. Therefore, the whole emphasis should not be
on the Premier League in Scotland and what it wishes
to do. That can be accommodated and, of course,
within our Premier League structure we have two
clubs—maybe they do not need to be mentioned
today—which are certainly the subject of much debate
in Scotland in terms of dominating the Premier
League. All in all, there was a recognition that the
game is enormous and that the SPL has a part to play.
As in England, however, you may have the best
Premier League in the world, as we have heard this
morning, but your national side does not reflect that
in any particular way. Our effort in Scotland was to
look at this in a more integrated way from the very
grassroots talent elite development right through to
make sure that we have the best Premier League that
we can muster at the present time.
Q227 David Cairns: Talking of Celtic and Rangers,
then, isn’t the problem that we are trying to organise
a league in Scotland that has two great behemoths,
two massive world cups, a few teams in the middle
that are perfectly respectable, well-run clubs that have
intermittently done quite well in Europe, and then this
very long tail of amateur clubs or part-time clubs that
we do not see in England, but we are still trying to
keep the whole panoply of a structure as though we
were in the same scale as England? This is not one of
your recommendations, but wouldn’t it just be better
for everyone—and it is not going to happen—if the
Old Firm were playing in the English Premier
League? You would have a much more rational
structure than Scotland and the Old Firm wouldn’t be
as constrained as they feel they are by the pitiful
amounts of TV revenue that they are getting compared
to what is happening in England.
Henry McLeish: I suppose the simple answer is no,
and that is why it was not a recommendation. The
realities are that Rangers and Celtic will continue to
play in the Scottish Premier League. I think you are
right to suggest that we have great difficulty now
supporting the four divisions involving 42 clubs. That
said, part of the recommendation was to acknowledge
that, in terms of the community interest and
community development, some of our clubs would be
looking more at that than they would be in terms of a
normal business model for development.
Secondly, within the structure of the SPL with the 12
clubs, which may go to 10, Rangers and Celtic are
accommodated, although they are huge. 65% of all the
attendances over the last 10 years in Scotland have
come from Rangers and Celtic. We are aware of that,
but on the other hand, even if you wanted to think that
Rangers and Celtic could be involved down south, I
think you are up against UEFA rules because it would
allow you, for example, as a separate association to
have the people from the German Bundesleague or
others seeking to join your Premier League as well.
I think it is impractical. The politics and the
possibilities are certainly to see Rangers and Celtic as
a major asset in Scottish football but to ensure that
some of the excesses we have seen recently are
curbed. But that said, we have a very particular set of
problems that in some respects, Chairman, do not
really reflect what is happening down south.
Q228 David Cairns: Your key recommendation,
then, is to merge the SPL and the Scottish Football
League and to tackle the labyrinthine committee
structure of the SFA and the blazer brigade there. How
have these recommendations been received and how
confident are you that they will be taken forward?
Henry McLeish: They are being taken forward and
the board of the SFA has accepted most of the
recommendations and, in fact, they have been
approved by the board. One of the problems is trying
to make sure that change does take place in other areas
of the game. For example, we are keen to make sure
that we work with other sports; with a bit of modesty
acknowledge that while it may be the top game in
Scotland we have a lot to learn from others. I was
interested by the submission the FA made to you that
because of their uniqueness it was very difficult for
them to learn from others. That is flatly not the
position because one of the problems your FA has
compared with the Scottish FA is that you have very,
very similar problems, which are a product of legacy,
a product of history and a product of being inward
looking.
Change and specific recommendations, I think, are
going forward. But what we are up against in Scotland
is a huge financial problem; not some of the issues
that were raised earlier in the evidence session, but in
terms of broadcasting, fan base and sponsorship.
These are the three key issues in which we are trying
to keep involved to generate more cash.
Q229 Dr Coffey: Just to each of you, how important
are the solidarity payments coming from the top
division down to the lower divisions, Premier League
to Football League in a particular case, and, in
particular in England, how important are the parachute
payments and do they end up distorting competition
in the Championship?
Lord Mawhinney: The help that the Premier League
gives in a variety of ways to the Football League is
significant and, up until recently at least, has been
much appreciated. The parachute payments were
instigated because the salary levels in Premier League
clubs were so much greater than in Championship
clubs that, without some transitional funding, Premier
League clubs that got relegated would simply just
head straight into administration or just tumble down
the Football League and that did not seem to be fair.
There was an agreement, which we supported, that a
certain amount of money should be made available by
the Premier League to Premier League clubs that were
going to be relegated.
Chairman, can I just, if you will forgive me, make it
clear that Mr Clarke and Mr Williamson spoke on
behalf of the Football League? I am expressing my
own view, albeit as Honorary President of the league.
In my view, the present level of parachute payments
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Ev 60 Culture, Media and Sport Committee: Evidence
8 March 2011 Lord Mawhinney and Henry McLeish
are going to undermine the integrity of competition in
the Football League. They are going to do that
because the amount of money—£16 million, £16
million, £8 million and £8 million over four years—
bears very little relationship to the salary issue that
was the original case. I tried to persuade the Premier
League at one point to link the parachute payments to
the specific salaries of players that came down and as
that player got sold or moved on, so that bit of the
money could drop out. That seemed to me to be
coherent with the original philosophy. That was totally
rejected. We now have a set of circumstances where
the Premier League will tell you that they are being
very generous to the Football League and at one level
they are being very generous, but the strings attached
and the effect on the integrity of competition are both
issues that cause me concern.
Q230 Dr Coffey: Roughly how much does the
Football League now get from the Premier League?
Lord Mawhinney: Well, that is really quite a
complicated question, if you do not mind me saying
so.
Q231 Dr Coffey: Ballpark figure, is it £50 million?
Lord Mawhinney: We get solidarity payments. If the
Premier League were here they would include all of
the parachute payments that go to their clubs—
Dr Coffey: Just the solidarity—
Lord Mawhinney: No, I am trying to be helpful. The
figures here are very easily misunderstood because the
Premier League, up until the time I left, were saying
they gave about £120 million a year to the Football
League; but two thirds of that were parachute
payments to their own clubs, they were not to us.
About £25 million is what is sort of estimated comes
to the Football League through the involvement of
Premier League clubs in the Carling Cup, for which
we are enormously grateful. There is some generation
of money to Football League clubs from Premier
League clubs in the context of transfers, though that
has dropped off as the Premier League has shifted its
gaze more toward Europe and the rest of the world
than to the league below it. It is really quite hard to
answer that question and I do not want to mislead you.
You might want to ask each of the two leagues, add it
together and work out an average.
Q232 Dr Coffey: The only reason I ask is that surely
the Football League had come to its own arrangement
by not including the parachute clubs in certain other
redistribution of income within the League. I
understand Middlesbrough is about to restructure
because it has come to the end of its parachute, but is
there an ongoing implication for viability of clubs
leaving the Football League?
Lord Mawhinney: Dr Coffey, that is exactly the point
that I was making about integrity of competition. If,
in the Championship, you have two clubs each season
going in with £16 million extra against the amount of
money that goes partly from solidarity payments from
the Premier League of about £2 million and the
Football League allocation to a Championship club,
which is about £2 million, you have two clubs with
£16 million and the rest with £4 million. Next season
there will be four with £16 million and 20 with £2
million and, if you believe what you have been
hearing, money is what makes a football club
successful. Personally, I think fans want sustainability
as well as success but there is no doubt that the
football industry mentality links money with success
and that raises questions about integrity of
competition.
Q233 Ms Bagshawe: This is a question that applies
both to England and Scotland respectively. On the
distribution among the individual Premier League
clubs, and down to clubs below them, do you think
that the situation is fair and equitable in terms of
transfer payments and youth development payments?
Do you think those individual payments have been
handled properly, respectively?
Henry McLeish: On the last question, there are
problems with parachute payments, as they are not
sufficient. There is a different scale of costs, a
different series of financial problems, so in Scotland
the current reconstruction proposals are about creating
an SPL2 or a kind of Championship type of league.
That is going to involve more money coming from the
SPL into that. Also they are seriously looking at a
significant increase in parachute payments.
Overall, because of the lack of broadcasting income
and the difficulties of sponsorship, we are dealing with
more meagre budgets. So in that sense there isn’t
really a dispute between the Scottish Football League
and the Scottish Premier League about distributional
aspects. It is more a joint league or a joint effort to
try and get more money coming into the game overall.
But what we have done in my recent report is make
some suggestions about the elite talent/youth
development side, because in many senses we do not
have the young players coming through. It is quite
clear that within the SPL and within the SFL, the SPL
in particular, the investment of young people is not
bearing fruit to the extent it should. What we are
looking at then is a wider pooling of both
responsibility and resource across all the authorities,
including the SFA, to try and tackle that particular
problem. In that area, we are also seeking further
investment from the Government as one of the
leverage points, the very few leverage points they
have, to do something for elite, talented young people,
which would be in the national interests as a
justification for involvement as well as to the benefit
of the clubs.
Lord Mawhinney: As far as England is concerned,
frankly you pay your money and you take your
choice. The Premier League have a ladder system but
their clubs voted for it. So I guess those who are
toward the bottom end of the league don’t feel that
the differential is so big as to create a problem. In the
Football League there is equality of distribution within
the division. Within the Premier League the effect of
money generated through playing in the Champions
League has a significantly more distorting effect in the
context of your question than the ladder arrangement.
Q234 Mr Sanders: On these parachute payments,
given the sort of scale that you have set out, the
number of clubs that would be in the Championship
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Culture, Media and Sport Committee: Evidence Ev 61
8 March 2011 Lord Mawhinney and Henry McLeish
with that financial backing, it occurs to me that if you
are a League 1 club and you get promoted you are
automatically at a disadvantage within that new league
that you have entered and that there is then an
incentive to overreach yourself if you are in the
Championship, having come up rather than having
come down. I am wondering if there isn’t a direct link
between those parachute payments and the situation
of Plymouth Argyle, at the moment in administration,
who possibly overreached themselves, having gone up
into the Championship and unable to compete with
clubs that have those parachute payments.
Lord Mawhinney: You will forgive me if I don’t
comment about a specific club. There are probably
management and governance issues and all sorts of
other things, so forgive me if I don’t do that. But as
to the core question that you raise, it is a good one
but, Mr Sanders, it is not just when a League 1 club
goes up to the Championship. As part of the latest
what is called solidarity package, I told you about the
parachute payments and the just over £2 million a year
to the Championship clubs, the other part of that
package is that the League 1 clubs get £300,000 and
the League 2 clubs get £200,000, give or take a few
bob.
The very solidarity packet enhances the differential
even before you get into the position of what happens
to the promoted clubs. It is a real problem. If I had to
identify one thing that I learned about football, I
would talk about two things: I learned it was
sometimes quite tricky to get all 72 chairmen pointing
in the same direction at the same time, but the main
lesson I learned was that if the Football League
doesn’t defend the integrity of competition, absolutely
nobody else will. The integrity of competition is, for
me, easily the most important issue. It relates to
sustainable debt; it relates to the behaviour of agents;
it refers to transfer windows. There is a whole range
of things that fall under the broad heading of
“integrity of competition” and I very much hope,
Chairman, that this is an issue that will commend
itself to the Committee in fairly robust terms when
you produce your report.
Henry McLeish: Can I just add a postscript? I think
Lord Mawhinney is right in describing it as a closed
market. You can take the clubs that occupy the
Premier League in Scotland and say they are
businesses, they are in a marketplace, but the
operation of the League is not in a marketplace. I
think that whether you call it solidarity or
protectionism then you do find that there is a lot of
problems peculiar to football that have developed over
decades into the situation we have got. I don’t think,
certainly in Scotland, they are anti-competitive in that
regard. On the other hand, the precarious nature of
relegation and promotion is such that there is no great
outcry in Scotland about some of the excesses or
perceived excesses of that process. As I said, more of
a concern that if we can generate more cash from a
better product on the pitch that would be the biggest
objective to be pursued.
Q235 Mr Sanders: Can I ask you for a quick answer
to this? You mentioned Celtic and Rangers, and that
one of the reasons for not coming into the Premiership
was the impact on the Scottish international position.
But how does that work when you have Welsh teams
playing in English leagues—possibly one of them
going into the Premiership this year—and yet there is
still a Welsh professional, semi-professional league,
and a Welsh national team?
Henry McLeish: We have Berwick Rangers playing
in the Scottish leagues as well, so we are quite
friendly with our English colleagues on that. I raised
it in reply to David Cairns’ point merely by saying
that if two clubs of sufficient stature were to seek to
move between international associations then I think
it might ruffle a few feathers and, quite frankly you
don’t have to do a great deal to ruffle the feathers of
either UEFA and, in this case, it would be FIFA. I
think there is a more serious point, which is that while
David Cairns has quite rightly outlined the issue for
Rangers and Celtic in a small league where
attendances are not good, their competition is not
sharpened every week. This is just the historical
reality we find ourselves in. In terms of not agonising
in a report or in discussions and dialogue about where
Rangers and Celtic are going, they are part of Scottish
football and I think that is how we want to deal with
the problem.
Q236 Mr Sanders: Lord Mawhinney, can I ask about
the Football League and whether it ought to be doing
more to support and reward youth development
programmes run by Conference clubs?
Lord Mawhinney: I have to be honest and say I don’t
understand what the basis of the question would be.
Most of the clubs that I had the privilege to represent
think that they have a major task getting their own
youth development programmes up and effective and
defending, as is now commonly and widely reported
in the media, the increasingly good youth
development programme in the Football League
against the sort of comments that you heard from the
representatives of the Premier League who gave
evidence earlier. On the whole, I think it would be
reasonable to say that most of the Football League
chairmen think that those two things constitute enough
of a challenge on youth development without taking
on the job of trying to handle youth development for
the Conference.
Q237 Mr Sanders: So you think it ought to just be
something for the league clubs to do? I mean league
clubs have, as you hint, a difficult enough job
maintaining a youth development programme. It is the
first thing they tend to cut back when they are in
money trouble. But shouldn’t it be something that
League ought to look at right throughout the pyramid,
that every club that is professional or semiprofessional ought to be encouraged to have some
form of youth development?
Lord Mawhinney: The answer to that question is
undoubtedly yes. Thirteen of the England team who
played recently against Denmark received most of
their youth training in the Football League. We have,
as Mr Clark and Mr Williamson, particularly, told you,
a good and burgeoning system in the Football League
for youth development. It is now under challenge by
the Premier League—that will be a matter for the two
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Ev 62 Culture, Media and Sport Committee: Evidence
8 March 2011 Lord Mawhinney and Henry McLeish
leagues to sort out among themselves—but I am proud
of the strides that have been made over the last seven
years as far as youth development is concerned and
that is not a bad English statistic.
Q238 Paul Farrelly: I want to just come on briefly
to finances, but just on that strand on youth
development. One of the things that has struck when
I went to Germany was not so much the 50 plus one
rule, because that can obviously be negotiated around,
but it was a sense that they had an ethos in Germany
that seems to be missing here, particularly vis-à-vis,
the Premier League and the FA and the Football
League. They said that when they lost very badly in
Euro 2000 they decided collectively to do something
about it and, in particular, youth development was
strong. They put a strong emphasis on youth
development. You have seen the results now with the
young German team and their performance in the
World Cup. Is there any sense that we can learn from
Germany in youth development and developing that
ethos, sharing some money in the game but making it
in the national interest as well as the game’s interest
and home-grown players? Is this a fruitful line of
inquiry for us?
Lord Mawhinney: Yes, I think it probably is; perhaps
in the context of whatever you may choose to say
about the future of the FA. It is a matter of record that
Trevor Brooking and I didn’t see eye to eye over
youth development for years and we didn’t see eye to
eye because our clubs were putting £40 million into
youth development, the FA was putting in a minimal
amount and they simply wanted us to hand over our
£40 million and our young players and they would
decide what to do with them. That never struck me as
an attractive option but, in an attempt to be helpful, a
few years ago I had Sir Trevor here for lunch and I
invited him to take a clean piece of paper and write
down what he would like from the Football League
and I would do my very best to persuade the Board to
deliver. I am guessing that was three years ago, maybe
four years ago, and I was promised a reply within a
week and it still hasn’t come.
Paul Farrelly: Maybe we can follow that up.
Henry McLeish: Can I just make a postscript, because
I think this is one of the most important issues facing
certainly Scotland and I have no reason to doubt that
within the FA structures it is the same problem in
England. We had listened to the SPL talking about
youth development. We were clearly talking a good
game but the delivery element was missing. What I
think we had to rationalise there was that if we’re
looking for young Scots to be nurtured, the talent they
have, so they can appear with the clubs or
internationally or with the Scottish team, we virtually
had to remodel what we were doing. One of the things
that we tried to do in this report was ask, if you look
at everyone concerned in the game, what is the
purpose of football in 2011? What is the national
mission? Why should a Committee of the House of
Commons want to be involved?
I think that the Chairman said when he launched this
inquiry that he wanted some strategic involvement and
to strengthen self-regulation, and essentially I thought
that he was talking about the FA. If there is one broad
area where there should be a growing consensus it is
that we are not doing enough. If you look at some of
the figures on coaching, and qualifications for
coaching in either country, and then look at Portugal
or Spain, you can see why at international level we
are not doing well. At least you guys qualify; we
rarely qualify these days. But, on the other hand, as
to youth development, Germany is the classic
example; they took it upon themselves to say this
mustn’t happen again. So, therefore, in terms of
procedures, finance, co-ordination and an integrated
approach to youth and talent development, that is
where we are now heading in Scotland, and it seems
to me that that argument might be applicable here.
Lord Mawhinney: Our young people should go into
proper training at a far younger age and the FA should
shift away from making them play on full-size pitches
and make them play on much smaller pitches, so that
they can develop their skill base.
Q239 Jim Sheridan: Can I just ask a supplementary
about youth development, particularly in Scotland?
You did say earlier that the youth development
programme has more or less failed. We are no longer
producing the Billy Bremners of this world. There
may be a simple or significant reason for that, I don’t
know. One of the issues I have picked up, which is
probably applicable to England as well, is that when
youth clubs play the Old Firm in Scotland and a young
boy shines, the Old Firm then take them away. While
such a boy might shine in a moderate club, in among
the Old Firm—with “superstars” as we call them—he
might not shine, so he loses the game, the game loses
him, and he just fades away. I wonder if there is
anything that can be done to stop big clubs in England
and, indeed, Scotland, from poaching these young
players away.
Henry McLeish: I am sure the simple answer to Jim
Sheridan’s comment would be no. On the other hand,
however, what we have looked at again in Scotland
under the duty of care issue is that—again looking to
strengthen the capacity of the FA down here—we
want to strengthen the capacity of the Scottish FA to
have a duty of care. Therefore, we understand the
competitive nature and if the youngster is excited by
the prospect of going to Rangers or Celtic or Man
United, parents often get involved and it is difficult to
stop the process. On the other hand, the great wastage
rate is approximately 95% of young people at the age
that Jim Sheridan is talking about will go to a club
and will never make it.
The tragedy about that is you could argue that people
are not picking talent properly but a lot of these young
people, children, youths, are lost to the game. Also, if
they had been dealt with differently and more
effectively at the local levels they may have sustained,
developed later and still had a good career in football.
We, again, as a part of the package of the
recommendations on the duty of care issues, want the
SPL, the SFL, the SFA to get together with also the
wider youth development to make sure that
opportunities are still available for children and
families but—“constrained” is not the right word—
they are conditioned by a better framework, which
means there is more success and less wastage.
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Culture, Media and Sport Committee: Evidence Ev 63
8 March 2011 Lord Mawhinney and Henry McLeish
Lord Mawhinney: As far as England is concerned,
the danger is if it is going in the opposite direction. If
the new youth development proposals are enacted
there will be four categories. The biggest clubs in the
Premier League will be in the top category and they
will be allowed to set up training arrangements in
towns and cities all around the country, sometimes in
competition with Premier League or, more likely,
Football League clubs in the same town. So the
direction of travel is being promoted as a new elite
structure for developing kids but the danger is that it
is going to go in exactly the opposite direction, Mr
Sheridan, to what you have suggested.
Q240 Paul Farrelly: Let me just cover finance
briefly. The figures are stark. In the last 18 years over
half of Football League clubs have been subject to
some form of insolvency and, Lord Mawhinney, under
your tutelage, division 2 introduced some restrictions
on wages. Do you think those have been successful
and, if so, is there any prospect with such differing
agendas that these or similar forms of financial control
can be implemented up the pyramid in English
football?
Lord Mawhinney: The problem with football is not
lack of money. It is lack of cost control. You heard
the Premier League chairmen talking about agents in
the Football League a few years ago initiated the
publishing of how much money each of our clubs
gives every six months to agents. That has had an
effect. We did the first ever deal, the only deal so far,
with HMRC to ensure that we could work with
HMRC and insist that our clubs pay their National
Insurance and PAYE on time each month and stop
using the Treasury as an unofficial bank. You were
given some evidence earlier that I suspect is not
totally right. It was right inasmuch as I think it was Mr
Scholes who said the Premier League have a similar
arrangement. They don’t. The clubs have to tell the
Premier League but my understanding is the Premier
League have not followed our lead in terms of coming
to an arrangement with HMRC itself.
That was hugely important but there are other cost
control issues. One of them, I guess, would be football
creditors. I hate to say, Chairman, that I inherited a
football league policy very supportive of the football
creditor rule and when I left the football league policy
was still very strongly in favour of the football
creditors rule. We did debate it a number of times and
I got outvoted every time in the Board, but my
personal view is that it is not defensible. Mr Collins
pursued my successor on this issue. If you will forgive
me, I think you are absolutely right. I do not know
how you defend the local community where local
businesses that you are supposed to be the football
club of don’t get paid for services rendered while a
football club hundreds of miles away gets protected.
There is no doubt that the football creditor rule cranks
up expenditure and you are right again to say that it
would make far better due diligence if it didn’t exist
and you persuaded my successor, while defending the
football creditor rule, to say that he could see no moral
basis for it. I share that view. I don’t think there is any
moral basis for it. It may be of interest, Chairman,
for the Committee to know that just before I left the
chairmanship of the Football League made a charity
donation to St John Ambulance of more than £40,000,
purely as a charity donation, which covered all of the
administration losses that the St John Ambulance had
on its books that were outstanding as a result of clubs
going into administration.
Henry McLeish: In Scotland the creditor rule applies,
but it is not a major issue because there have been no
particular problems with it at this stage.
Q241 David Cairns: Just on this issue in relation to
Scotland you have a situation where one of the Old
Firm clubs is essentially now controlled by the bank,
not owned by the bank, and found itself in a situation
where, in the transfer window, they had to sell their
best player—possibly scuppering their chances of
winning the league; of course, let’s hope they’re still
in it—essentially because the bank told them to. If this
isn’t a sign that there is a fundamental problem in how
we are structuring the game then it’s hard to think of
a bigger sign where the oldest, biggest, most
successful club in Scotland is having to sell its best
players because the bank is telling them to do so. If
this isn’t making a case for fundamental change,
what is?
Jim Sheridan: How bad is the indebtedness in
Scotland?
Henry McLeish: The problem of indebtedness is
significant, but let me put into context both points.
The creditor rule is separate, in a way, because it’s an
issue that is more closely linked between HMRC and
the Scottish Premier League, in particular, and to how
we deal with things. There has been a much closer
coming together in dealing with financial issues and
SPL itself under its new chairman has been very
active in trying to make much more sense of the
finance. But I have made no effort to try and disguise
the fact today that the financial condition of Scottish
football is not a good thing. In that sense, there are
many, many examples that I could put forward. But
what I think I would draw the Committee’s attention
to
as
a
piece
of
evidence
is
the
PricewaterhouseCoopers’ annual report of financing
of the Scottish Premier League, which is published
every year, and 2010 was particularly interesting
because I think it celebrated the 21st anniversary of
that publication. So there is a lot of data going back
over the period and reinforcing some of the concerns
that have been expressed on both sides of the
Committee room this morning.
Q242 Damien Collins: Lord Mawhinney, you have
anticipated the question I was going to ask about the
football creditor rule, so I won’t go to that ground;
your answer to the Committee is very clear. I just
wanted to pick up on what you said earlier about the
integrity of competition with regard to the financial
standing of the clubs. Do you think the Football
League requires greater scrutiny of its member clubs,
their financial performance, and maybe even moving
to a scheme similar to what you see in Germany where
clubs have to have their books effectively audited by
the League to make sure that they can meet their
obligations for the season ahead?
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Ev 64 Culture, Media and Sport Committee: Evidence
8 March 2011 Lord Mawhinney and Henry McLeish
Lord Mawhinney: Mr Collins, the first thing we did
was to recognise that when a club goes into
administration, which the law of the land permits, it
wipes out a whole bunch of debt and that gives it a
competitive advantage over the other clubs in the
division because, while they are having to use their
resources to pay interest, the club that has gone into
administration doesn’t. That is an integrity of
competition issue and we addressed that by
introducing the sporting sanctions and 10 point
penalty, which the Premier League subsequently
followed by nine points and the Conference followed
as well. There is always a debate as to whether 10
points is the right amount or whether it would be
better just to relegate a club; that is an ongoing debate,
but we took serious action.
We have also, over the years, strengthened the
financial reporting requirements of our clubs to the
centre, and that is of some significance; as long as you
bear in mind that the Football League, of which I can
speak with some authority, is a trade association. We
don’t run the clubs. It is the clubs that decide what
the regulations will be and they have so far responded
to providing more financial information, I guess.
There may be a point at which they baulk and say we
are going too far, but that hasn’t been reached yet.
Henry McLeish: I think reporting arrangements have
been hugely improved in Scotland over the last three
or four years. There was a period 2007/2008—and this
is in the PricewaterhouseCoopers report—where some
of the ratios, for example, of wages to turnover were
just simply remarkable. A lot of effort has gone into
trying to reign that back in. Reporting arrangements
are much, much better and both the Scottish Football
League and the Scottish Premier League have taken a
much more hands-on approach to the individual clubs,
especially if they are facing jeopardy or if there is a
suspicion that there are concerns. The other interesting
point in Scotland is that there is a better rapport
between HMRC and the clubs than there has ever
been. Slowly there is a realisation that a number of
the issues that have been raised by yourselves today
have been taken seriously because it is a protected
market; but, on the other hand, you still have to have
rules and regulations and parameters and all of the
clubs now have acknowledged that has to happen.
Q243 Damien Collins: Lord Mawhinney, we have
heard from other people, people in the Premier
League, who concur with your observation that the
problem with football is not lack of income but too
great a level of expenditure. Most of that clearly goes
on players’ salaries and transfer payments. Has the
Football League ever discussed internally the structure
of the competition and whether it would be better in
terms of the financial viability for smaller clubs to go
back to the old structure of a north and south bottom
two divisions?
Lord Mawhinney: Yes, from time to time; but I have
to say that there is no positive strength of feeling
within the Football League to go back to that. I think
partly because that would be perceived to be
diminishing the status of the clubs. That is how the
clubs would see it. So I don’t think that is going to
happen.
Q244 Damien Collins: I just wanted to ask a final
question relating to the structure of the FA and, within
that, I would like to touch on the youth development
questions that were raised earlier. Lord Mawhinney, I
would be interested in your views on the structural
reforms you think the FA should consider undertaking
to make it a more effective governing body. With
regard to youth development, there is the ongoing
debate about the role of youth development. But some
people would see that there was, I think, 2007 the
Lewis report on youth development, which produced
a lot of interest in it and it sort of went nowhere. Was
that a failure of the structure of the FA to take that
forward or was it the wrong report?
Lord Mawhinney: It was a failure of the structure of
the FA. On the broader question, I think I was the first
person in the management hierarchy of football in this
country to say on the public record that I thought the
FA was dysfunctional and that remains my view;
though I want to put a caveat in by saying that I
welcome the appointment of David Bernstein. I think
he has the potential to initiate change across a wider
front and I have made it clear to him that, although I
am not actively involved anymore, if I can help him
in any way I would be happy to do so.
But for the last few years the record of the FA is pretty
terrible, to be honest. I know that the new chairman—
there was an element of common ground in the earlier
testimony, although there was a good deal of hedging
going on—would like to have two non-executive
directors appointed to the Board and I would support
that if it was to happen. If Lord Burns had taken the
advice of some of us before he produced his report
we wouldn’t be here today, we would be having a
different conversation; but he didn’t and he has now
told you that he regrets he didn’t. I regret he didn’t,
but he didn’t.
The big problem is that people should not assume that
appointing two non-executive directors to the FA
Board is going to solve the problems of the FA. The
FA’s problems are much, much deeper and more
radical than that. Lord Triesman was right; there is a
poor relationship—and I use my diplomatic language
because I am testifying before Parliament—between
the FA and the Premier League. The council is among
the more conservative bodies with which it has been
my privilege to work in the last 30 years. There needs
to be change in both of those areas and the FA needs
to reassert its authority as FIFA’s representative in this
country. It hasn’t for years, and I hope it will, but none
of those three issues are going to be resolved by
adding a couple of non-executive directors and
making the board 14 instead of 12.
Henry McLeish: Just on the structure, some of the
points I made earlier. Again I concur with Lord
Mawhinney about the structural change but I think
what we also do—and this was the Chairman’s initial
context about improving self-regulation—you have to
give the confidence and the capacity to the FA to do
that. They have to win it back, in my regard. It is a
similar problem in Scotland because the real question
within the SFA was, “Well, what is our role?” A
Premier League that is kind of there and doing a
reasonably good job; an SFL, all the youth. I think
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Culture, Media and Sport Committee: Evidence Ev 65
8 March 2011 Lord Mawhinney and Henry McLeish
they have grown in capacity, grown in confidence,
they want to move forward.
The other issue is that it is from top to bottom. In
Scotland what we have suggested, and hopefully you
will read the report in detail, is to take things from the
very council, on which I agree with the comments
made, right through the Board structure, and we are
talking about 12 to seven; we are talking about nine
committees to two. In a sense, that is the structural
issue; that is the armaments that they can use to
deploy what they want to do. But the other thing is
just changing the ethos and to me the confidence issue
is absolutely sound because in Scotland now it is club,
it is community and country. For far too long it seems
to be the emphasis has been club, understandably.
That is where the big players are, this is where the
issues are. But in Scotland I think we are trying to
say, “Okay, but there is a country issue,” which is the
thing we have talked about in terms of youth, and also
to acknowledge that there is a community issue about
getting some of our clubs on to different business
models and different ideas of where we can go. Again,
as Brian Mawhinney says, in relation to geography,
they still want to be part of the heart of football.
Therefore any suggestion of becoming a community
club diminishes that; it is something they frown upon.
You have got be careful in that.
Q245 Jim Sheridan: A major part of this inquiry is
about the relationship between the support roles, the
authorities, clubs, and so on, and you would have
heard the Premier League’s response to the question
about club ownership and should the fans know or not
know who owns a club. I’d ask if you concur with
that. Secondly, still on the question of supporters, if I
can ask Henry, in particular, I know that the
footballing authorities in Scotland are doing their best
to try and improve the game, improve the product.
But the popular press obviously the move to attain a
team in a league is not very popular, so I wonder how
the authorities in Scotland will square that circle if
they are to genuinely listen to the fans?
Henry McLeish: On the latter point, there is this
ongoing battle between what would be the best league
structure financially. I mean in the report that I
prepared I said that 10 made sense if you looked at
the financial context, because what that means is 12
goes to 10, 10 take on board what 12 were getting and
it is all about the broadcasting; it is all about the fans
tripping down the league.
On the other hand the fans instinctively want bigger
leagues because they are sick and tired of other clubs
playing each other too many times. I am not sure how
it is going to work out in Scotland because the SPL
are still debating that particular issue, but I suspect
they will probably end up with the 10. It still begs the
question of what is the best model for Scottish
football. Clearly, in the financial context, I think that
may be the right one but it certainly doesn’t solve the
fans’ problem.
Can I just say before Lord Mawhinney comes in, on
the wider issue of fan base, I think things have
improved in Scotland but for a lot of clubs the fans
are welcome because they come through the turnstiles
and they pay and they watch, and that is the fan base.
But there has been a bit of a reluctance to involve the
fans in a much more dramatic way. There are
problems with that, especially if it is about fan
takeover in terms of ownership of the Board. What I
see in Scotland is that the Scottish Football League
clubs, the 30 of them, will move to different models,
as some of them are doing with community interest
companies and so on. So there will be a bigger
involvement of the fan base. They will be part and
parcel of developing the club and, if they have access
to resources, that might help that out. On the other
hand, the clubs are desperate for resources anyway.
So I see there are prospects there, but currently not a
lot of progress has been made.
Lord Mawhinney: Football, in one respect, is quite
bizarre. It is very difficult to keep a secret. I have had
business appear on the media while the board meeting
at which it was being discussed is still going.
Jim Sheridan: You’ve not a PLP as well?
Lord Mawhinney: Listen, tell me about it. Some of
the most skilled exponents of that in the media are
taking an interest in these proceedings. At one level it
is very hard to keep a secret and yet there is, running
through football, a huge secrecy non-transparent core.
I remember, Mr Sheridan, when I went to see Geoff
Thompson, then chairman of the FA, to tell him that
the Football League was going to introduce a fit and
proper person test, he told me I couldn’t do it because
a fit and proper person was the remit of the FA and it
wasn’t a league issue, and so I couldn’t do it. We had,
what I guess is known even in here, a full and frank
exchange of views and we did it. Then the Premier
League followed us and then the FA did something.
But the instinct is not to be open. For Members of
Parliament that is harder to grasp but it is a reality.
You weren’t given the name, it is a law firm I believe.
The Football League doesn’t use it because it can’t
afford to, it doesn’t have the money. I was surprised
that you weren’t simply told, “We are not going to
publicise it because if we do we would have to
publicise the rejections and that would open
everybody to legal challenge and law suits and all the
rest of it”. That is a serious issue in the world of
football. But we have been moving to transparency;
publishing agents’ fees as I mentioned earlier was an
example of transparency. My guess is that more will
come over the years. I think this is unstoppable, but
football is a very, very conservative—small “c”—
industry and it moves slower than the average.
Q246 Dr Coffey: Building on what Mr Sheridan
said, Lord Mawhinney and Mr McLeish, it is about
the supporter and community ownership of football
clubs. There haven’t been that many examples of
where it has led to great success in terms of moving
up the divisions. Do you think that the sentence that
went in the coalition agreement was just, “Why is it
there?” It is an interesting one and we are trying to
offer something for the Government to respond to, but
did we all just jump on a bandwagon last March,
Labour party included, when they said they were
going to arrange for everybody to be able to buy a
stake in their club?
Lord Mawhinney: I can’t tell you why it is in the
coalition agreement. I have no idea why they put it
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Ev 66 Culture, Media and Sport Committee: Evidence
8 March 2011 Lord Mawhinney and Henry McLeish
there and they certainly didn’t consult at least some
of us who might have had a constructive thought. Just
as, if you will forgive me saying so, I don’t think your
manifesto probably was the result of deep consultation
with the members of your party who might have been
able to make a contribution. I don’t know why it is
there.
York City was extremely important because the
supporters trust in York City deserve an enormous
amount of credit for saving that club from going out
of business. I think that created an emotional
environment and I think I am the first senior
administrator in football who went and spoke at the
supporters annual conference. But, given the present
business model where so many clubs depend on the
benevolence of rich people, supporters clubs are
probably not the answer. But if and when football gets
itself on a more sustainable basis without having to
depend enormously on the beneficence of rich people
or rich companies, then the supporters trust might
become a more effective model—except that as Mr
Williamson pointed out to you—and it has been our
experience—supporters trusts pick a director, put him
on the Board and then expect him to tell them or her
to tell them what is going on at the club and, of
course, fiduciary responsibilities stops that happening
and it all ends in tears.
Henry McLeish: From my point of view, I think I
agree with the latter point about the degree of
tokenism that goes on in a very secretive football
arena. That said, if you take Scotland, it seems to me
that big progress will be made with the Scottish
Football League clubs. There are 30 of them and there
is a lot of enterprise, a lot of initiative. There is
actually quite a lot of investment by the chairman in
some clubs. But the main thing is they are trying to
take the clubs forward in the sporting context.
I went to see the Sporting Club Lisbon just as a visit
and what we are trying to get football to do, especially
in those leagues, is to make sure they are interfacing
with other sports as a community focus, as a
community hub, as a sporting hub; again watching
that they don’t feel they are being squeezed out of
football, but at the end of the day, the different
business model—and as I said, one of the business
models is this Community Interest Company, the CIC,
which allows, because of the structure and status of
the organisation, for them to obtain finance and
possibly obtain some grant funding that they wouldn’t
have been able to get in their old classification as a
public liability company. There is a lot on the move,
but I think it needs encouragement. It is happening
but it is going to happen very slowly.
Chair: The Rt Hon Lord Mawhinney, the Rt Hon
Henry McLeish, thank you very much indeed for
your evidence.
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Culture, Media and Sport Committee: Evidence Ev 67
Tuesday 15 March 2011
Members present:
Mr John Whittingdale (Chair)
Damian Collins
Paul Farrelly
Mr Adrian Sanders
Mr Tom Watson
________________
Examination of Witnesses
Witnesses: Shaun Harvey, Chief Executive, Leeds United Football Club, John Bowler, Chairman, Crewe
Alexandra Football Club, Barry Kilby, Chairman, Burnley Football Club, Julian Tagg, Vice Chairman and
Sporting Director, Exeter City Football Club, gave evidence.
Q247 Chair: Good morning, everybody. This is a
meeting of the Culture, Media and Sport Select
Committee as part of our inquiry into football
governance and I would like first of all to again thank
Burnley Football Club for hosting us this morning and
looking after us yesterday evening.
I should also say that I have received apologies from
the Chairman of Leeds, Ken Bates, who is unable to
be with us since he is suffering from bronchitis, but I
am grateful to Shaun Harvey, the Chief Executive of
Leeds who has agreed to take his place on our panel,
and I would also like to welcome on the panel Julian
Tagg, the Vice Chairman of Exeter, Barry Kilby, the
Chairman of Burnley, and John Bowler the Chairman
of Crewe Alexandra, and I am going to invite Damian
Collins to start.
Q248 Damian Collins: Thank you. The first question
to Barry Kilby; could you tell us why you got
involved with Burnley Football Club and what is your
motivation for being Chairman?
Barry Kilby: It’s where I come from, it’s our club. My
dad brought me here as a lifelong supporter I suppose
is the correct answer, and also in a town like Burnley
I think the football club really is one of the central
pillars of the culture that I come from, so when I got
the chance to take over and strengthen that and move
it on that’s what I chose to do. It’s as a super supporter
that I took over as Chairman.
Q249 Damian Collins: Mr Harvey how did you
become involved with Leeds United?
Shaun Harvey: Leeds United is my third job in
football, having previously worked at my profession
at Scarborough and Bradford City, so every failed
footballer’s dream. I was an amateur player at school,
always loved football, so what better way of earning
a living than actually being involved in the
professional game.
Q250 Damian Collins: How long have you been
with Leeds United?
Shaun Harvey: This is my seventh season.
Q251 Damian Collins: Mr Bowler, how about you?
John Bowler: I moved to Crewe from London on
business, had a young family; what to do at
weekends? So we thought we’d go and support the
local football club. I probably then made the mistake
of suggesting how they could run it a bit better and
was invited to join the board and ultimately asked to
take over as Chairman, so it started as a supporter and
went on from there.
Q252 Damian Collins: Mr Tagg?
Julian Tagg: My involvement started as a coach in
youth football at Exeter. I started off the Centre of
Excellence from nothing and built that up. When the
club got into trouble, as a born and bred Exeter
person—and I’d seen the trust beginning to evolve
into something that was credible—I saw the football
club getting into such a terrible situation and
condition, owing so much money. I’m not sure I knew
the full details when I got involved, but the football
club was very pressured. But it’s more important; it’s
not just about football, it’s about providing something
for the city, and that was probably my main
motivation—whether that might have been the rugby
club or the football club—providing something for the
city alongside those people. I thought the trust were
beginning to become organised and looking like
something that could help us; that’s the primary
reason I got involved.
Q253 Damian Collins: Barry Kilby, you are the
Chairman of Burnley Football Club. Could you tell us
something about the ownership structure of the club?
Barry Kilby: Yes, essentially there are four
directors—five directors—on the club. Between us,
we have about 85% of the share capital. I’m the
largest shareholder with about 35% of the company,
but we have over 200 shareholders, many holding one
or two shares. Some have been held since 1936 and
held in families, so we have a wide shareholder base
and essentially the directors of the club control the
company with the majority of shares.
Q254 Damian Collins: The other directors, are they
people like yourself, so local businessmen?
Barry Kilby: Yes, certainly four were born here. Two
have businesses down in London, but they still
remember their Burnley roots and want to support it.
Two others live up here, but all of us have been
Burnley supporters since we were boys. Our fifth
director came up here in the 80s and he has been a
director for 25 years as well, so essentially we are
local people who support the club.
Q255 Damian Collins: Mr Harvey, could you tell us
something about the ownership structure of Leeds
United?
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Ev 68 Culture, Media and Sport Committee: Evidence
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
Shaun Harvey: Leeds United Football Club is owned
via a holding company. The majority shareholder is a
company called FSF Limited who are based in Nevis
and own 73% of the issue share capital.
Q256 Damian Collins: Could you tell us something
about the majority shareholding?
Shaun Harvey: FSF Limited is owned by three
discretionary trusts that are all managed by trustees
out of Switzerland. There are two management shares
issued that are held and it’s those people who are
responsible for Leeds United Football Club.
Q257 Damian Collins: Who are the individuals who
are the major investors in those trusts?
Shaun Harvey: The question is the discretionary
trusts. The trustees have appointed two members to
run the trust’s interest in Leeds United Football Club;
Mr Patrick Murrin and Mr Peter Boatman, who asks
Mr Ken Bates to chair the board and look after their
interests in Leeds United Football Club.
Q258 Damian Collins: So is Ken Bates answerable
to those two trustees?
Shaun Harvey: That’s correct.
Q259 Damian Collins: So they would have the
power to remove him as Chairman or put a new
Chairman in?
Shaun Harvey: They must have by definition.
Q260 Damian Collins: Do you know that?
Shaun Harvey: Well they must do. They are the
shareholder or the trustees to the shareholder, so that
must be a power that they have.
Q261 Damian Collins: You know who the trustees
are, but do not know who the shareholders are.
Shaun Harvey: Correct. They are discretionary trusts.
Q262 Damian Collins: So you cannot point to a
named person and say those people are the owners of
Leeds United?
Shaun Harvey: No, and that’s why the ownership
statements that have been made are made in the way
that they are because they are a true and accurate
reflection of the ownership structure behind Leeds
United Football Club.
Q263 Damian Collins: Do you know personally who
they are?
Shaun Harvey: Do I know personally who the
trustees are?
Q264 Damian Collins: No, do you know who the
trustees act on behalf of? Do you know the people
who are the owners?
Shaun Harvey: No, I don’t.
Q265 Damian Collins: You do not. As Chief
Executive, you do not know who the major investors
in that trust are.
Shaun Harvey: I don’t know who the beneficiaries of
the discretionary trust are, no.
Damian Collins: Okay.
Q266 Damian Collins: You have worked at other
football clubs, so do you not find that slightly strange?
Shaun Harvey: Not particularly. If I was the Chief
Executive of a football club that was quoted on the
stock market I wouldn’t expect to know every single
shareholder.
Q267 Damian Collins: Does Ken Bates know?
Shaun Harvey: Not to my knowledge.
Q268 Damian Collins: Right, well he obviously has
not told you. Do you have any relationship with the
trust other than through the trustees?
Shaun Harvey: No, my responsibility is to deal with
the trustees who represent the trusts.
Q269 Damian Collins: But is that something people
in Leeds are concerned about?
Shaun Harvey: It depends on your definition of
“concerned about”. At the moment, we’re fifth in the
Championship, everybody seems to be relatively
comfortable with how the club’s proceeding. We’ve
gone from a very low point and are ascending the
ladder of success. That’s not to be translated as we’ve
achieved anything yet, because there’s still nine games
to go this season, but the reality is, it’s the Board of
Directors that are responsible for running the football
club, not the shareholders.
Q270 Damian Collins: But so long as the team are
doing well the fans don’t care.
Shaun Harvey: I wouldn’t be quite as bold as to make
that statement, but if things are going well and there
are positive results, then that’s what a Board of
Directors are there to try and ensure, within its
powers.
Q271 Damian Collins: But is there any sense of
commitment for the trust for their investment in Leeds
United? Could they withdraw it at any time? Are they
committed for a number of years?
Shaun Harvey: The football club has got no debt, so
they hold the shares and, yes, they are committed.
There’s no indication that they have any desire to
move away from their investment.
Q272 Damian Collins: Given the financial problems
Leeds United have had, do you think there is a
legitimate concern about the transparency of the
financial organisation of the club and its ownership?
Shaun Harvey: It depends how far you want to go
back in time. If we go back to the year 2000–01 when
the club was owned by a plc and competing in the
Champions League European semi-finals, then there
was a vast array of owners of the club run by its
directors. Yes, the club got into trouble under the plc
board first and foremost, and sold through a group of
local businessmen, which is the model that you’ve
heard Barry Kilby explain to a certain extent as to
how Burnley’s arranged. Without speaking for John
Bowler I think, Crewe was the same basically, but
he’s capable of confirming that himself.
That got into trouble very quickly. They bought it
from the administrator of a plc, so it was in trouble
very, very quickly, because they didn’t have sufficient
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Culture, Media and Sport Committee: Evidence Ev 69
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
funds to run the business. So, yes, there has been a
potted history and a concern, but I’m convinced now
that the light of the Elland Road tunnel is in fact the
way out, rather than a train coming in the other
direction.
Q273 Damian Collins: Yes, I understand that, I think
there will be a concern with the nature of the football
club. In the case of Burnley, it is very simple to
understand where the money comes from, who the
investors and directors are, and with a club like Leeds
United the majority shareholding is owned by a sort
of mysterious trust and we don’t know who the
investors are, and I think that’s a legitimate concern
for a football club.
Shaun Harvey: You’re entitled to draw that
conclusion.
Q274 Paul Farrelly: Just one question, because we
are looking at the application of fit and proper rules
and I don’t want this to be dominated by the
controversy of the Leeds mysterious shareholders, but
does the Football League know who the beneficiaries
are?
Shaun Harvey: The Football League have exactly the
same information that has been made public, and the
statement that has been made complies with every
single part of the Football League’s regulations, as
indeed every single football league club has to do.
Q275 Paul Farrelly: Just one follow-up. If you are
fortunate enough to get promoted to the Premier
League, do you expect the Premier League to ask you
the same question about the beneficiaries?
Shaun Harvey: We expect to be able to comply with
the terms of the Premier League’s rules at the time
and the statement that we’d be making is no different
from the statements made public now, because it is a
true and accurate record of the ownership structure of
Leeds United.
Q276 Chair: True, accurate and also rather
uninformative.
Shaun Harvey: Well, you can’t answer a question
that’s not got a direct answer; there is no individual.
That’s the nature of discretionary trusts, which are a
perfectly legal and a much used ownership structure
in many different industries, not just football.
Q277 Mr Watson: I’ll allow Mr Harvey time to take
breath. If I could go on to John and Julian; how far
up the English football pyramid do you think your
clubs can realistically go?
John Bowler: We would hope to certainly play
regularly in League One, and we would hope to be
able to challenge to get a place in the Championship.
To stay there is difficult because of the financial
pressures that come along with running a
Championship club.
Julian Tagg: Our journey started in the Conference,
and we got ourselves to League One, which was our
target, in five years. In ten years, our target now is to
establish ourselves in that league, which in our second
year seems exactly what we’ve done—we avoided
relegation on the last game last season. This season,
we’ve probably already established that, so we’ve
made that progress. Our target will be to get in the
Championship and do the same. I think that’s the
compelling thing about football; it’s always possible
with the right kind of management, with the right kind
of—I mean Crewe particularly and ourselves—with
the right kind of youth policies behind us, it is
possible, I believe it is. If I didn’t think it was
possible, I don’t think I’d be sat here, unless there’s
some purpose. If we got to the point where anybody
in our club said that, you know, we’re happy where we
are, that’s the time I think my involvement would—I
would always support the youth side—but I would
probably stop unless there’s some target. That target
is the Championship, the next stage then will be, as
everybody here knows—pardon the vernacular—it’s
bums on seats that count.
If our ground gets to the point where that stops us
going any further, say in five or ten years’ time, that
is where we look again for the next step. I believe our
city is big enough to take a club that will go even
higher. Blackpool have done it, and as I say, football
is compelling in that sense. So, yes, I think it’s
possible. It may take a little bit longer to get there and
I would be looking once we did to take the next steps.
Q278 Mr Watson: Okay, Barry and Shaun could I
ask you, is the measure of success for Burnley and
Leeds a Premiership place? Staying in the
Premiership?
Barry Kilby: Yes, we’ve tasted it once. I think we
want to go back there again, to be in the top tier of
English football. So I think our supporters’ aspirations
are that we should see Blackburn, Bolton as clubs
we’re on a par with. So I think it is realistic for us, if
we could just set ourselves right, to think we could
compete in the Premier League. How far we could
climb up that ladder is open to question, but certainly
I think it’s realistic that we could on that level perform
in the Premier League, and that’s our aim.
Shaun Harvey: Yes, Leeds United’s objective on the
field is relatively simple—it is to get promoted as
quickly as is practically possible.
Q279 Mr Watson: Shaun, I don’t want to revisit the
mysterious trust question, but your Chairman is quite
a remarkable character in the sense that he took
Chelsea from the Third Division to second in the
Premiership on a sustainable budget and appears to be
doing that with Leeds, whatever the financial
arrangements. Do you know what the secret of that is?
Shaun Harvey: Hard work, dedication and
experience, I suspect. There’s no magic formula. If
there’s a magic formula of how to make a football
club successful, there’d be a lot less clubs who have
suffered financial problems and there’d be a lot more
success around. It’s about maximising every possible
element of income and hopefully surrounding yourself
with a manager and coaching staff who have got the
ability to maximise a return from players.
Q280 Mr Watson: You said earlier that you are a
sort of professional Chief Executive in football.
Would you like to outline what the difference is
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Ev 70 Culture, Media and Sport Committee: Evidence
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
between working for the Chairman of Bradford and
the current Chairman of Leeds?
Shaun Harvey: I actually said it was my profession.
Others are probably better placed to judge whether it’s
professional or not. The answer is the Chairman of
Bradford City and the Chairman of Leeds had some
similar traits. They had very small boards with the
ability to make answers quickly. The one thing for
certain is the quicker you’re able to make decisions—
and effective decisions—in the knowledge of the full
circumstances that surround the issues you’re dealing
with the easier it is to be effective.
Q281 Mr Watson: So would you say a strong agile
board structure is vital to the success of a club?
Shaun Harvey: I would say so, yes.
Mr Watson: That’s interesting.
Q282 Mr Sanders: Why have so many football
league clubs gone into administration in recent years?
Who would like to have a stab at that?
Julian Tagg: I can only talk from personal
experience—and I would imagine it’s the same
elsewhere—it’s all anecdotal across the board,
because every situation is so different. I believe our
club was in quite considerable difficulty and the
people in control at that point then wanted anybody
to take it from them, and they passed it to some people
who put it into a ridiculous state of problems and debt,
and that’s part of the danger. When a football club
does get into trouble the people who are responsible
at that time are very keen to, as you can imagine,
offload that responsibility to anybody.
The fit and proper person is very, very sensible from
personal experience. Hopefully that’s beginning to
solve that problem to a degree. It’s usually, in terms
of Shaun’s point about managers, about wages in the
end. Getting the success with a wage bill that you
can’t maintain means you go down a league, get lower
numbers, and so the whole thing escalates. Usually
underpinning it is a wage problem.
Certainly in our situation, we were paying wages in
the Conference because of the football creditors rule
that you wouldn’t even considered having to pay—it
was probably commensurate with two leagues
above—and I think there are a number of clubs that
are in a similar position. They suddenly drop out from
the Championship for instance into League One and
that is a big gap. Same all the way down. If you’re
paying players from the division above or perhaps
even the top wages for players who could play in the
division above that and then suddenly you find
yourself two leagues down but with a contract in place
you’re pinned to that. There’s probably more
experience at the other end of the table, but that’s what
we are so very, very careful of avoiding; that’s where
we think the major pitfall is.
Barry Kilby: I think they are different, but there are
the more spectacular ones. Last season, Portsmouth, a
Premier League team with their revenues coming in
well over £50 million, still went into administration.
The reason to me was that it was saddled with debt,
but it was irresponsible debt—the debt on the club. I
think there is a danger sometimes with the foreign
owner who can walk away if it doesn’t work out.
Really, it didn’t cost them that much—it was the club
that suffered and there was no responsibility.
There are other examples, and I believe that when
Leeds went to administration that all stemmed back to
an extremely ambitious set up that was all geared
towards being in the Champions League and at the
top of the Premier League. When that kicked in, there
were problems there. So really it is clubs getting into
trouble and being saddled with debt that they can’t get
out of.
Shaun Harvey: There is a combination of two things.
There are two common denominators—relegation or
failure to reach the levels at which you’re budgeting;
and players’ wages. If the incomes you’re expecting
from your success on the field aren’t realised, the
players’ wages have to be reduced accordingly,
otherwise those are the factors that get football clubs
into trouble.
Julian Tagg: There’s one other factor which is
probably in capital investment. Often, people will
stretch to build a stand. The capital aspect is
sometimes something that stretches people too far, and
when you’re trying to do both things, you’re trying to
maintain the pitch or gain success on the pitch and
you’re trying to reinvest capital, then certainly from
experience I believe that was another indicator of why
they got into trouble.
Q283 Mr Sanders: So what lessons have you learned
from the Exeter experience?
Julian Tagg: Don’t build another stand for the
moment. That’s what we’re trying to work out; the
way forward without taking those risks. Everybody
has a different background in terms of their
ownership, and our model and how we raise the
capital that goes with it is the one that’s taxing us at
the moment. But at the same time, it’s about having a
manager who understands the nature and ethos of the
club, which he does very well, and has good control
of what is actually happening, not necessarily just on
a one-year basis but perhaps on a two or three-year
basis. You need a budget if this happens and a budget
if it goes in the other direction, and that’s how we
tend to plan. We try and plan in the middle by being
pro-active rather than retro-active and it’s when you
get into that retro-active situation it sometimes
becomes a spiral that you can’t get out of, so as Shaun
was saying, it’s about planning and hard work.
Q284 Mr Sanders: Have you passed any of this
advice down the A38 to Plymouth?
Julian Tagg: We have an excellent relationship with
Plymouth. We’re always there. We will specifically be
helping them to try and raise money, so even though
they’re our major rival we’ll help them. I personally
haven’t been asked but certainly members of our trust
have been down there to help their trust to try and
form something. So yes, we have helped wherever we
can and we’ll continue to do so even though they are
a bitter rival.
Q285 Mr Sanders: What’s been learned from the
administration that Leeds went into in 2007?
Shaun Harvey: The 2007 administration fortunately
is traced back, as I spoke about earlier, to the time of
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15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
the plc board, who raised circa £60 million by the
securitisation of ticket seats. The 2007 administration
was the final action of a board trying to resolve the
financial issues with which it was left, but the source
goes back to those days. The answer is we always
stated from the start that we believe Leeds United
could trade profitably if it wasn’t saddled with the
financial burdens of the past and the trading since
2007 is proof of that.
John Bowler: The other issue is that—and this has
been referred to—we have to recognise that running a
football club as a business is not a difficult task in
comparison with other businesses. One of the big
issues I think that a lot of football clubs face is this
demand for success, and the demand for going
forward and getting results. We live in a very resultsoriented environment today. It’s not a long time ago
when a manager of a Premier League club said to me,
“John, you do realise that coming third in the Premier
League is failure”, and it’s this balance between
running a tight ship and yet trying to satisfy the
demands and the wishes of the supporters to take the
club forward, be ambitious, try to get up to that next
rung up the ladder. The problem is if you do outstretch
yourself then it’s very difficult and you’ve got a rough
period if you come back down again.
Q286 Mr Sanders: Is financial prudence rewarded in
the football league? Should it be rewarded in the
football league? Is the emphasis too much on places
or positions in tables and trophies in cabinets? Should
there not be some reward for being a well-run club?
John Bowler: I don’t think that that really is the issue.
I think the football league is working hard, as all
football league clubs are working hard. They
recognise that with the various salary capping
mechanisms, the reporting that we do is encouraging
that well-run football club, and I think that is the way
to approach it. That won’t in any way offset what I’m
talking about and that is the demands and the
encouragement that supporters give to their football
club to go on and to be even more ambitious and that’s
when the trouble starts.
Q287 Mr Watson: Just a supplementary; sorry to
come back to you, Shaun, but you talked about the
plc days. When Mr Ridsdale was living the dream at
the turn of the century is it your contention that the
club failed because of the plc structure itself, or
because of poor financial management, or both?
Shaun Harvey: I think it was poor financial
management. The gamble was too big in essence and
it’s that that saddled the club ever since, until the
administration in 2007.
Q288 Mr Watson: So you wouldn’t actually argue
against a plc structure per se.
Shaun Harvey: Not at all, it’s the management inside
it that’s actually the key issue.
Mr Watson: Okay, thank you.
Q289 Chair: Can I just ask Barry; you’ve tasted
Premier League success, but you’ve also kept your
feet firmly on the ground and you didn’t go out and
spend huge amounts of money on players. You said to
me that you did invest in a pitch, but did you come in
for criticism for not doing so? Did your fans suggest
to you that actually if you’d gone out and bought a
couple of really star players you might stop in the
Premier League?
Barry Kilby: Yes, that’s always there. The word
“ambition” always crops up—lack of ambition is one
of the usual ones you get in the phone-in programmes.
You’ve just got to be careful you don’t bet the ranch
on this and I think it is easier in the Premier League. It
was easier if somebody came up with a Championship
team, so you could improve the wages, and it was still
very manageable. If you get to a second year that’s
when you start swimming in the waters of established
players in that league, and the costs do tend to start to
rise. Fans want you to win matches. We all should
have prizes for good government—we don’t, and
that’s what sets the theme and the pressure is
enormous.
When we got up, it was a bit easier at first. We were
new, we hadn’t been in the Premier League for 30odd years, so perhaps it was easier to keep the fans’
expectations; we are being sensible, we’re clearing
our debts, if we do go back down we’ll be able to
handle it. I think they did understand, but I’ve a
feeling if we had been in another year or so the
pressures would have built to spend more. We’ve just
lost five-nil to Liverpool at home, Match of the Day
says you’re a load of clowns and jokers, and that’s the
sort of pressures you come under. The big problem is
that players’ contracts don’t just last the season you
buy them. You have a three-year commitment, and
there’s a big difference between the two divisions. So
we did opt for prudence and I think the fans more or
less did realise that, being our first season in there,
but I know the pressures would have built up as time
went by.
Q290 Chair: You are a very successful businessman
with a good business brain, and ultimately you have
the final say. Other clubs would have been less
prudent. Essentially would you say that their problems
stem from poor management?
Barry Kilby: Yes, poor management or a reluctance to
look ahead; maybe not face facts and thinking it’ll be
all right on the night. I think that subtle bit is pushed
into the future—“We’ll deal with that when it comes
round”. Unfortunately it does sometimes come around
and you’ve got to keep a weather eye. Essentially it’s
your players’ wage bill, it’s 80% of your costs or
whatever you want to make it, but it can get as high
as that and you’re committed to that. It’s just knowing
to keep a weather eye on where we might be in two
years’ time.
Q291 Damian Collins: Just a follow on from that
question; if you wanted to keep a club like Burnley in
the Premier League, become a kind of Wigan or Stoke
or a club like that that’s broken through and stayed
there, how much money on top of what you get from
gate receipts, prize money, TV money, do you think
the directors would have to put in every year to a club
like this so you could compete?
Barry Kilby: In the Premier League you’re now
starting to get into really big money, £40 to £50
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Ev 72 Culture, Media and Sport Committee: Evidence
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
million on top, and even that doesn’t make a big
impact. So I think with a Championship Club it is
directors’ loans and so on. Once you get into the
Premier League it is getting exceptionally rich people
who can put their own personal money in so you try
and work it within the revenues that are there
normally and commercially.
Q292 Damian Collins: So for a club of Burnley’s
sort of size, and there are other clubs that are similar,
unless you’ve got benefactors putting tens of millions
of pounds every year on top of the income the club
can earn, you can’t sustain being in the Premier
League.
Barry Kilby: Certainly most clubs do have quite big
debts. Clubs of our size in the league now have
benefactors who are owed quite a lot of money. I think
you can keep within that. It’s more the problem if you
come down. You can afford a wage bill of £45 million
to £50 million, the way the Premier League is set up
with the TV money and the normal trading of the club.
The big problem is if you come back down—how to
deal with it; that’s the real thing. It is difficult, because
essentially in the Premier League you’re competing
sometimes against people who don’t care. They don’t
even care about the economics of the thing. If I’m
Joe’s Corner Shop, and Marks & Spencer’s is next
door to me, at least we both have to make do and
make sure our income’s in front of our expenditure.
In the Premier League, you come up against people
who don’t care, so that’s really difficult to rationalise
in a way, and how do you compete with that.
Q293 Damian Collins: In one of our previous
evidence sessions, the Chairman of the Football
League said that he could find no moral argument in
favour of sustaining the football creditors rule. Do you
think he’s right?
Barry Kilby: It does seem unfair on the face of it that
some people are protected within the industry and
some people aren’t, but it is a difficult one. It is almost
like the rules of a private members club, and certainly
I know if there had been no protection—the football
creditors rule—clubs would have disappeared because
they could only survive with the league members. I
think it’s quite fair to say, “Look, if you want to play
in our league you’ve got to pay your dues”. So
nobody’s comfortable with some people being
protected and others not, but there’s a proper reason
for it in the football family. You know players need
to be paid, transfers paid. If that went, I think the
competition would be in great jeopardy and everybody
would shrink into their shell and it wouldn’t happen.
Q294 Damian Collins: Heaven forbid that Burnley
would be in this position, but what would you say to
your local suppliers—you know, the caterers, printers
and their staff; local businesses that would not be
covered by the football creditors rule—if the club
went into administration, and you are paying the
football debt say to Charlton Athletic. However, a firm
in Burnley won’t get paid or will only get pennies in
the pound. What would you say to a local business
like that?
Barry Kilby: I don’t think you’d be comfortable, but
for creditors to get anything we need to remember that
that club would be worth nothing if it couldn’t play in
the leagues. It needs to have credibility and to be able
to play, for anybody else to come across and have a
CVA. Maybe they might get some more money down
the line if it’s worked properly. I think if you’ve got
to pay everybody, then it would just disappear.
Julian Tagg: Damian, can I make one comment?
There are lots of those and we’ve had that situation
where a lot of people weren’t paid—a lot of those
people are within our business now and major parts
of that business. They realise what it brings to the city
and they would rather have 10p in the pound, and
have the money that’s come over the last 10 years and
the trade that they’re able to do because the football
club is still there. So there is that side to it. The second
side is that if it weren’t there probably some clubs
wouldn’t exist in the end.
I can’t justify it. You’re quite right, I’m not going to
sit and justify it; I’m just going to say that there are
reasons. The point is that lots of those companies that
you’re talking about are major sponsors of ours and
are still involved as suppliers, whereas if that club
weren’t there they wouldn’t be supplying. So nobody
can sit and say that that’s right; not paying anybody
is wrong. I think the rules as they’ve tightened are
closing in on that, but those companies that have been
stung, for want of a better word, or have not been
paid, are still integrated in the football club. We’ve
gone a long way to make sure that they were looked
after at that point for those very reasons.
Q295 Damian Collins: But in that case football clubs
are effectively using local businesses like a bank and
using that money to artificially sustain their level
within the league to the detriment of the clubs they
play against.
Julian Tagg: Bad ones are; you’re correct—I’m not
arguing against that.
Q296 Damian Collins: Mr Harvey, if you would like
to comment on that I would be grateful for your
views. I just want to ask, as you’ve been at Leeds for
a number of years, Brian Mawhinney told us that he
tried on a number of occasions to accept or ask for
league clubs to end the football creditors rule and
continually failed. I would be grateful for any insight
you can give on that.
Shaun Harvey: Just to deal with the issue of football
creditors to start with. Football creditors exist in
football and don’t just crystallize in the period of
insolvency. The football creditors principle runs
through every club throughout its membership. So if,
for example—and using people round the table—
Leeds United owed Crewe some money on a transfer
fee and didn’t pay it, then Crewe have the right to
collect that money from money that would otherwise
be sent essentially to Leeds United Football Club. I
understand the rationale for why to focus on the end—
i.e. the insolvency situation and why it appears that
one set of creditors are being treated preferentially—
but the football creditors principle is of football clubs
that are working day in, day out, allowing each other
to sell tickets, which is massively important. If Leeds
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Culture, Media and Sport Committee: Evidence Ev 73
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
defaulted in this example on a payment to Crewe,
which meant Crewe had to sell their players to keep
in business, that cannot be a fair and rational position
for Crewe to be put into, particularly when it’s a
closed industry. The only people we can trade with on
a football level are a professional football club.
Nobody else can buy or sell a registration of a player.
Normal businesses if they get into trouble would sell
an asset. The only people a football club can sell their
asset to is another football club, so that’s why I think
the principle of the football creditors is massively
important.
I will come back to the comments and the report
you’ve made reference to from the former Chairman.
I think coming from an area from outside football,
looking in, I can say that the Crown lost its
preferential status with the advent of the 2002
Enterprise Act. There was preference as well as
football creditors, so it’s only recently with the change
in law that this has become an issue, and the law says
that businesses do go insolvent and the Enterprise Act
is there to bring them back. Why do I think he would
have been unsuccessful in bringing the matters
forward? Because the integrity of the competition and
not gaining an unfair advantage over the clubs that
you are competing with on the field on a Saturday
afternoon was of paramount importance to all those
clubs.
Q297 Damian Collins: But do you not think the rule
does help artificially to sustain competition for clubs,
because they can be involved in transactions with
other football clubs and those clubs have got the
security of knowledge that they will get paid even if
other people won’t?
Shaun Harvey: Well, they’ll get paid in an insolvency
provision when the club re-enters the football league,
which is usually via a new company. So it means that
they can’t gain an advantage over the other clubs, and
the justification is difficult. St. John Ambulance are
often quoted as the party that has been affected, and
that case is usually cited because, whilst it’s still very
significant, the amount is usually small in comparison
to the overall debt. When Leeds went into
administration, 49% of the debt at the time was to
the investors.
Q298 Damian Collins: When the Premier League
Chairman and Chief Executive gave evidence to us
last week, their view was that without the football
creditors rule, clubs would be more responsible about
buying and selling players to each other; they would
take a greater interest in the balance sheet of other
football clubs because they’ve got more commercial
risk, and in terms of business practice that sounds like
a sensible thing.
Shaun Harvey: Yes, and I think that’s borne out of a
position of looking down on everybody else from a
lofty height. The ability to say that also comes from
the fact that the majority of the transactions are for
player transfers; it’s not just player transfers, there is
day to day trading between football clubs as well
which often gets glossed over—a lot of that’s going
overseas. If you sell a player to an overseas club, you
take your life in your hands sometimes in relation to
getting paid and certainly getting paid on time.
John Bowler: Yes, I was just going to say the other
important issue is that transfer fees very often are a
means of, if you like, trickling funds down to smaller
clubs. To use Shaun’s example, we sell a player to
Leeds, but if we’ve bought that player from another
club there is often a sell-on clause for the other club,
and so the transfer fee mechanism does in actual fact
feed other clubs rightly with money and with funds
available to them. My belief is that if that creditors
rule was not allowed, then there could be a number of
occasions where a football club might go into
bankruptcy, but it would also take probably two or
three other clubs with them because of the fact that
the transfer money that ought to have come down to
those other clubs hasn’t come.
Q299 Damian Collins: We are going over the same
ground, but in a world without it, clubs might be more
cautious about entering agreements where they’re
taking payments from another football club if they’re
not certain whether that football club can afford to
honour them or not and that might help spread best
practice.
John Bowler: I accept that point, but on the other
hand, I think that the information available to a club
when it’s selling a player to another club makes it
difficult to decide whether in fact the club that you’re
selling to is as financially sound as it might be.
Q300 Damian Collins: Perhaps getting rid of the rule
would create an incentive for clubs to be much more
up front about their money, and where it comes from.
John Bowler: I don’t think it would. I think in actual
fact the information there is often not available for
you to assess just how financially sound the club is
that the player is being bought from. Don’t forget
some of this trickling down of funds could go on for
a number of years. Players move on from one club to
another. All I’m saying is don’t underestimate the
value that the creditor rule does provide as a means
of feeding funds down through the football pyramid.
Julian Tagg: Really the rules that the Football League
are putting in place—they have done it with League
Two and are attempting to do with League One—are
about that due diligence that you talk about. The
Football League are trying to do it on our behalf to
strengthen those clubs up for that reason, which, if
you were expecting clubs to do that every time you
did business you’d spend a lot of time doing that due
diligence. It seems to me that that’s what the football
league clubs themselves are signing up to. Certainly
League Two have done it and I think League One has
an appetite to do the same.
Q301 Paul Farrelly: Not to get hung up on this, but
surely the football creditors rule rewards poor
financial management. If you are not a member of
the club, it discriminates against Nantwich Town or
Stafford Rangers does it not?
John Bowler: Why?
Q302 Paul Farrelly: Because they find it far harder
to get into the club.
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Ev 74 Culture, Media and Sport Committee: Evidence
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
John Bowler: I wouldn’t have thought so. I think the
other thing that the football creditors rule does in
terms of the fact that those football debts have got to
be paid off is that the people probably coming in to
take over a club that’s gone into administration do
their due diligence, and in fact recognise the rightful
debts that they’ve got to face before they come in,
rather than taking it out on the cheap.
Julian Tagg: I think one of the things—and it’s a very
difficult one—is the risk of what you might lose. As
we said, a company might lose the opportunity to
trade, whether or not they are one of the ones that
have been defaulted against. You also leave a large
hole in the community, and I think that’s huge. What
football clubs do across the country for that
community; that’s the risk of what you may lose. If
that club does disappear for that reason because
they’re no longer allowed in the family, as Shaun has
explained, that is the risk. I see those two things
certainly from a personal point of view and from
personal practice as hugely, massively important. I
would be worried about supporting what you’re
suggesting because of the risk, whether it be my club
or whether it be Leeds or anywhere else. Knowing as
I do what happens, what those clubs mean to and do
for the community, it would be a big risk to start to
lose some of those.
Q303 Damian Collins: I hear what you say. On that
basis, any kind of rule, any kind of practice that all
clubs employ which people might question can be
justified on the basis that while the club might go into
administration the community might lose their club.
Therefore let us do almost anything we can to avoid
that no matter how “morally dubious”—to use the
Chairman of the Football League’s words—that
might be.
Julian Tagg: But certainly from a personal situation,
it is the people who came in from outside who were
wilful in what they did and how they did it, and that
was nothing to do with any supporter, nothing to do
with anybody in that city, and it’s perfectly feasible
that it could happen again. So a couple of individuals
could do something to a football club, rip it out of the
middle of that community and the rule would no
longer be there to protect that community. So I
absolutely take your point and I don’t feel good about
it at all, but in terms of the balance between the two
that would be something I would hate to see
somebody else lose, knowing how important it is.
Barry Kilby: If a club went out of existence there is
no football creditors rule—we all lose the club; if it
disappeared, that’s it. It’s surely right for us to say to
the new club coming back in, which wants to get back
into the league and play alongside us again, “Listen,
you’ve got to make sure that you honour those
contracts if you want to come back and play in our
league”. That’s the real reason there. I mean certainly
if it disappears, if Burnley Football Club is owed a
million quid if that club goes, that’s it, full stop. It’s
only when the new club that’s coming back in its place
wants to take its place in the league that we can say,
“Well if you want to come back into the league it’s
only right that you make sure your players were paid
and you were dealing with your debts before we allow
you to come back in”.
Q304 Damian Collins: I think we’d all agreed with
that, it’s just a question of whether it should be at the
expense of other creditors.
Shaun Harvey: Chair, I sense you’re keen to move
on and I think one or two over here are happy for you
to move on as well, but I think the biggest element
of football creditors that is carried forward to a new
company is actually the players’ wages. It’s the
players’ contractual obligations. They’re employees.
Employees are preferential creditors certainly for
arrears, usually to, I think, about an £800 limit. But
that’s the biggest liability that is taken on by a new
company. If players don’t have that level of security
of contract, then I suggest the asset value of their
registration and the arrangements that are in place
with the PFA could well be put into question. It’s a
bigger question for you to take up with others but it’s
just worthy of leaving you with.
Chair: Right, thank you. Paul.
Q305 Paul Farrelly: John, a question for you. Crewe
are legendary. I think Dario Gradi took over from the
late and great Tony Waddington as the longest serving
manager in football history and he’s renowned for
spotting players and youth development. Do you think
there’s a lesson that we can learn in football
development from the likes of Crewe that the
Germans have learned and the French have learned
that might involve the bigger clubs sharing a bit more
money out for what might be at the end of the day in
the national interest?
John Bowler: Yes, but I think every football club has
got to decide how it’s going to run its business. When
I first got involved with Crewe 30-odd years ago, we
had a record that we’d applied for re-election more
than any other football club in this country and
therefore we were still in existence but only just, and
we took a long hard look at, as a business, what the
future held for us. We don’t have a large catchment
area. We have a lot of very well known clubs around
us that attract traditional family support outside of
Crewe and therefore despite whatever we could think
of, one thing became apparent and that was we
couldn’t generate the commercial revenue and the
support that would sustain us going forward anywhere
other than in the bottom league.
You’re quite right, Dario joined us at that time and
his passion was youth development, and therefore our
business strategy was simple. It was, look, the only
way we’re going to kick on here, the only new
revenue that we can find is to concentrate on youth
development and developing young players; firstly to
populate our own team and secondly for those who
were going to play at a much higher level than we
could play at, then hopefully that would generate
commercial income. Through his success we’ve been
successful there. Over those 30 years that he’s been
with us, he’s been responsible for generating transfer
income that redeveloped our stadium. That built our
academy and has got Crewe to where it is today. There
was always going to be some calculated risk, but we
were prepared to support a budget loss situation on
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Culture, Media and Sport Committee: Evidence Ev 75
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
the basis that we would have sales coming through to
offset that and that’s how we balanced the books.
We have been grateful for the support that we have
received from money handed down to us from the
Football League, the FA and so forth. It is a struggle
today and I think that if we want to have the kind of
community clubs Exeter is talking about, and if we
want to sustain community clubs and smaller clubs,
then there is no doubt that against the competition that
we have, yes, we would welcome more central
funding being provided to us and through whatever
mechanism there is. It doesn’t tend to feed its way
down as efficiently today as it used to do.
Q306 Paul Farrelly: Is there anything we can learn
from other countries—perhaps the legalities of being
able to contract young people, which would mean that
smaller clubs got a fairer crack of the whip or is that
too esoteric a question?
Julian Tagg: I think the system actually as it stands at
the moment, like anything, can do with improvement.
Everything can be improved, everything can be
bettered, but I think the system is there and across the
board, pretty much every club is involved in it and
what I see from first hand is a lot of people striving
constantly to improve and to do that, and I think the
system is very much in place. I think the focus at a
national level often is the England team and why isn’t
the England team winning everything. I think if you
look at the under-17s, under-19s, under-21s, you’ll see
that a lot of the boys who have been developed, not
only in the League but also in the Conference, and
that’s where players have come from. There’s a lot
of very, very good work going on, which again I do
understand can be improved, but the systems that are
there I believe are working quite well. They can be
improved upon, but I don’t think there’s a massive
amount that needs to be fixed. Perhaps the coaching
and the levels and ability of those coaches can be
worked on, and certainly the focus that there has been
recently on the number of hours and so on, without
going the whole way of what is being suggested, I
think there’s mileage in that too.
Q307 Paul Farrelly: How does it look from
Yorkshire?
Shaun Harvey: Youth development policies are
different at every single club, and again there’s no one
magical formula that says do this, this and this and
you generate a professional footballer at the end of it.
For me, the system only breaks down when clubs lose
the opportunity to develop the players in their
academy to the full potential, and that means where
another club’s come and taken them out of your
academy at a young age to place them in their own.
If that happens, by definition what you’re actually
losing are the best players, because a Premier League
club would not come and scout a player from another
club’s academy or centre of excellence unless they
believed they are going to better the players that
they’ve already got in their systems, who are supposed
to be the best anyway.
So I think the biggest challenge that we all face is
ensuring that there’s an adequate compensation
system in place that actually protects the interests of
the clubs that are developing players from the
youngest age. Statistics prove that each club can bring
through one player per season who becomes a regular
first team player—and this is defined as being 25 first
team appearances by the age of 21—but because
there’s no magic measure, if new systems are put in
place for compensation that doesn’t accurately reward
the investment that’s made in the whole system by
that club, many clubs will stop their youth
development policy because it is no longer
economically viable for them to have one. John
described the model at Crewe, and a lot of clubs have
lived on running the senior team by the proceeds of
income generated from the sale of younger players,
and there is absolutely nothing wrong with that.
There are two measures; getting players to play in
your first team and producing players to sell to move
on for a transfer fee. Both are equally valid arguments,
and if we aren’t careful and that particular mechanism
is affected negatively, what we will see is a lot of
clubs stopping youth development, running
community-based schemes and then picking up
players who have been cast aside by bigger clubs and
Premier League clubs at the end. The sort of social
effect that has on the players that are released is
anybody’s guess, so we are playing with dynamite at
this moment in time.
Julian Tagg: There is a deeper effect as well when
you develop your players and you have three or four
in your team, you know by definition as they’ve come
through, their wages are lower. That’s been the focus
a lot of the time about the wages, so if you have
developed two, three or four players that have come
through, if you were a club that wasn’t developing
and you’re bringing in players from outside they
would cost you probably three or four times as much.
When you have one that’s a significant saving but if
you get two or three into your first team, never mind
whether they’re sold or not, which of course hopefully
they are, that’s a significant saving which would make
life much more difficult for the lower end clubs.
Q308 Paul Farrelly: Barry, maybe you can help me
on this, without being naïve and taking everything that
we’re told at face value, we did get a sense in
Germany that there was more of a collective ethos
about their game that’s perhaps not evident here, in
that there was a very strong statement from lots of
people we talked to that the German performance in
Euro 2000 was absolutely rubbish and was a national
disgrace and they needed to do something about it,
and they did it with youth development. We’ve seen
that with the young German team that ran England
ragged but got caught out with the maestros from
Spain, but still they are where they are. Bayern in
particular said, “Okay, we can’t just not pinch players
because otherwise Arsenal will come calling and nick
all the best talent”, but there’s a gentleman’s
agreement to not be aggressive about it. Where are we
failing in our game?
Barry Kilby: What we’re talking about is the success
of the national team, and I think on the whole the
Football League does very well in nurturing its talent
and coming through. One of the problems for the
England team as opposed to Germany is that the
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Ev 76 Culture, Media and Sport Committee: Evidence
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
Premier League hoovers up the very best talent. The
big problem the Premier League has is that once they
get to 19, 20, those real vital years of football
development, there are so many foreign players in
here—and it’s even imported foreign young players—
that players are not getting that chance to develop as
they would do in Germany, where they would have a
much easier chance. Those are really vital years where
you get match intelligence and a strong mentality. I
don’t think it matters that much if we spend even more
hours on trying to trap a ball or whatever—it’s those
vital years that are being missed in the national team.
I don’t think you can go back and say the youth
system’s failing. I think the players are there, it’s that
vital competition that they’re missing now. The
famous Manchester United—Beckham, Giggs, the
Nevilles; the famous one when Alex Ferguson in the
early 90s put those lads in and they came through to
be top players for twenty years—wouldn’t happen
now. It’s so foreign dominated. We can’t say we might
have one season where we will finish tenth and then
we’ll pick up again; success has to be there and the
best way is to import ready-made talent. I think that’s
more on the national team than what you start doing
by messing around with what the clubs are doing in
the football league, which I think is an excellent job.
Julian Tagg: I think I mentioned before, you’re doing
exceptionally well at under-17, under-19 and under21 from a European perspective, so something’s not
going terribly awry. I’m worrying whether some of
what’s suggested is going to exacerbate what Barry
just describes; players getting to the top end and
getting frustrated with no situation or no opportunity
to play in real football. It would seem that the clubs
at the very top are actually bringing them back down
into our divisions—the Championship and One and
Two—to, whether you call it blood them or educate
them. They’re going to take them away, yet they want
to bring them back, so unless there’s another
opportunity where they can get that kind of experience
I think what’s being suggested, that’s going to be its
flaw.
As I say, you get the 17s, 19s and 21s. The other
comment you made about was that there seems more
unity, and of course even with the process that’s going
on here—and I’ve been part of the Youth Working
Party—the Premier League are driving it quite rightly,
because they’re trying to improve and I applaud that,
but that’s not been done with the FA and the Football
League and the Premier League all sat around the
table. All those people have interest and so it
becomes—you’re quite right, Paul—disparate rather
than a unified group of people trying to achieve
something. It may have been a faster process and a
more effective one were that not the case.
John Bowler: I think my own personal perspective
too is that, yes, we are concerned about the growth of
foreign ownership in the Premier League, and will that
foreign ownership have as much interest in the future
of the national game and all that goes into this
wonderful sport that we’ve got, which is our national
game, and the wellbeing and development of it. I think
we’re in a changed process, with new ownership and
foreign ownership coming in to the Premier League.
The Premier League have been very supportive of us
so far but I think a number of us have got concerns
about how will this relationship nurture itself and
develop in the future, so I think the concern that you
raise is a fair concern.
We’ve got to be sure that we want the finest Premier
League in the world. We want to be sure we’ve got a
very strong and successful national game, but we have
to try to ensure that we don’t lose the family of
football, because the family of football really does
depend on making sure that the grass roots are taken
care of, so we must make sure that as many of the
local communities nationally spread throughout this
country have their own football team and hopefully
their own league football team. That’s what we need
to ensure.
Julian Tagg: Many of those England footballers are
coming from Conference Two, One, all the way up. I
can’t quote them specifically but that broad base,
which is what’s happening in the footballing
communities, is hundreds and hundreds of children
starting off. They go into development centres,
advanced development centres, into the centres of
excellence. There’s a massive amount of work that
goes on before these children get to 12 years old, and
the depth and breadth of that is hugely important.
Some of the proposals might close that off and the
pyramid at the bottom wouldn’t be so stable, and, if
that wasn’t there and those children weren’t doing
that, they would be doing something else. Hopefully
they’d become a great rugby player or a swimmer or
something else, but if we’re concerned about football,
it is that base—and keeping that base strong—of
football in the community that raises all the way
through with the football clubs’ involvement, and will
ultimately be the strength of the England team end,
because that, if you pardon the pun, is the grass roots.
That’s where they’re coming from.
John Bowler: And to support what Barry was saying,
in our experience of developing young players, the
most successful players or the players who have had
the most success that we’ve developed have actually
left us during their first two years as professionals
after playing in our first team, rather than those who
have left us during their academy years. That is an
important issue that we mustn’t lose sight of.
Q309 Chair: We need to move on because we are
lagging behind. Can I ask you a quick question? It
appears likely that the sale of exclusive broadcasting
rights on a territorial basis within the EU may be
declared illegal. That’s obviously going to have a huge
impact on the money coming into the game but it also
may mean that the existing three o’clock blackout can
no longer be maintained. How serious would it be for
your clubs if that blackout at three o’clock no longer
applied?
Julian Tagg: Just from seeing what happens on a
Tuesday night when Manchester United or Arsenal are
playing, we feel that direct effect on our gates. Every
time we lose a Saturday game and it comes back as a
Tuesday one, we know that’s quite a considerable
drop in income, because nine times out of ten there’s
a football match on the TV that people would want to
watch, and I don’t blame them in a way. If that were
to happen on Saturdays it would have serious
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Culture, Media and Sport Committee: Evidence Ev 77
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
ramifications from a financial point of view to every
football club.
Shaun Harvey: It’s the floating fans. A Crewe fan
will always be a Crewe fan, a Leeds fan will always
be a Leeds fan and they are going to hopefully go and
be able to turn up and watch their team play live at
the stadium of choice. The floating fans are the
problem, those who want to go and watch football and
pick and choose a game. Why pay to go and watch a
game through any stadium turnstiles if you can watch
arguably a higher profile, greater quality, higher
division game on TV? So I think three o’clock on a
Saturday afternoon has to be tried to be kept
sacrosanct for the purpose of getting people through
the turnstiles at their local clubs.
From a financial point of view and the value of the
loss of exclusivity to the TV companies, whether we
like it or not, Sky effectively acts as paymaster general
to the world of football as it stands. The TV rights are
where income is mainly generated and anything that
fundamentally affects that will have a bearing on
every single club. As I said earlier, what causes clubs
financial problems is loss of income, usually created
by relegation in the examples that we’re talking about,
but with a significant loss of centrally distributed
income without sufficient time to adjust, we will see
problems. ITV Digital proved that when it went bust,
at football clubs. With a loss of income that clubs had
been told realistically they could expect and plan for,
you saw a spate of administrations. It was also an
excuse in some circumstances but it is a real fear that
fundamentally it could affect the very fabric of
football.
John Bowler: And don’t forget that really the drive
that a lot of clubs are making now, particularly smaller
clubs, is to encourage the new supporters, encourage
families. As Shaun is saying, for the die-hard Crewe
fan, he’ll come and it doesn’t matter what’s on
television, but we’re really interested in encouraging
schoolchildren to be coming, families to be coming,
and to have that competition when we’re playing
could not only have a serious impact today but it can
have a serious impact for the future.
Q310 Mr Sanders: You’re familiar with the idea of
limiting clubs’ spending on player wages to 60% of
turnover, which is now the practice in League Two.
Do you think a similar rule should be brought in to
other divisions?
Julian Tagg: I’ll give you a quick answer; yes. We
experienced it in the Conference, experienced it in
League Two and not in League One, but, yes, I would
invite it and there’s already a lot of discussion, a lot
of work and analysis that’s going on with financial
committees within the football league to achieve that
and I hope they do and will be voting for it.
Q311 Mr Sanders: The quick answer was yes.
Shaun Harvey: I’ll give you as quick an answer as I
can but with an example; 60% of our turnover would
mean we could spend approximately £16 million a
year on wages. We spend nothing like that.
John Bowler: I was originally against it, because I
felt that football clubs have really got to take
responsibility for running their own businesses and
running them prudently and profitably. I’ve changed
my position on it because I think it’s just part of a
package of things that the football league is looking
at to try to ensure that we do have good financial
governance and to encourage best practice, and
therefore I accept that that is one of a number of
measures with which the football league is putting its
house in order to ensure the wellbeing of the sport
overall.
Barry Kilby: I’m slightly wary of it somehow—just
that little bit of straightjacket coming from above that
you must do this and do that. The season we went up,
when we were getting close, we increased our
spending a bit and that was directors’ loans. We knew
what we were doing and how we’d cover if it didn’t
come off, so there’s a little bit of flexibility there. It
just seems very rigid to me for somebody to say,
“Whatever your circumstances you cannot do X”. I’m
a little bit worried by that. It’s very sensible, 60%, I
think it’s a decent percentage of your wage bill that
the club can handle, but everything by diktat, I’m just
a bit uneasy with.
Q312 Mr Sanders: Do you think it’s more
complicated between Championship and Premiership
than perhaps between Leagues One and Two?
Barry Kilby: There has always been that thing where
some benefactor might come in and give a club a
boost. It’s a bit rigid. Leeds—that’s £13 million, but
for us it would be a lot less, and that would be forever.
Whereas sometimes you might get a son of the city or
the place who decides to give money, and that’s gone
on in football since time began, with somebody
funding the new centre forward and so on. I’m just a
bit wary of it being in all circumstances a
straightjacket and it’s imposed from above. It would
tend to reinforce the status quo.
Q313 Mr Sanders: It’s interesting that two members
of the panel who have experienced this are in favour
of it but the two who have not fear it, and of the two
who’ve experienced it one of them said he feared it
before it came in.
Shaun Harvey: Yes, I think just to support what Barry
is saying, it’s not how much you’re paying that’s the
issue, it’s your ability to meet that debt, and as long
as you’ve got the ability to do it and the football club
isn’t in a worse position as a result of it, then that
should be the measure. That is more along the lines,
shall we say, of a financial fair play model that UEFA
have got than a fixed salary cap. If you can fund it, if
you can manage it, if you’re prepared to spend it then
you should be allowed to do so as long as the patient
at the end of the day is not the football club.
Q314 Mr Sanders: It’s been suggested to us in this
inquiry that the Premier League’s parachute payments
for relegated clubs distort competition in the
Championship. Do you think parachute payments
should be reduced or even abolished? They are at the
end of the day a reward for failure.
Shaun Harvey: You can either view them as a reward
for failure or a mechanism to try and self-adjust you
back into normal life. We talked earlier about the
players’ wages, which I think we’ve all identified are
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Ev 78 Culture, Media and Sport Committee: Evidence
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
probably the single biggest issue that you have to
manage, and coming down from the Premier League
it takes time to adjust with those players.
Q315 Mr Sanders: Well, why don’t you have
contracts that say, “In the event of us being relegated
I’m afraid you’re going be paid less”?
Shaun Harvey: In principle, there’s nothing wrong
with that statement, but I’d challenge anybody to sit
in front of an agent and a player and say to them,
“We want to sign you for three years. We’re a Premier
League club. We’re going all out to stay at this
division. However, if we fail we want to reduce your
wages by half”. To which the player and his agent say,
“Well you’re not really that confident that you’re
going to stay in the Premier League then are you?”
“Well, yes, we’re going to give it every go.” “But
that’s contradictory to what you’re asking my client
to sign up to, and Club B down the road will do this,
this and this”, because it’s a competitive market. Now
the model is fine. I understand it and it’s something
we all try to do. In practice, it isn’t as simple as that
and those players do get injured periodically.
Barry Kilby: I think it does distort the market, but the
answer is that the gap is massive, and as I said before
average teams now in the Premier League have a
wage bill of £50 million. How do they handle that
when you come down? I’ll back up what Shaun says
there; it’s competition, isn’t it? They say, “Well, we
want you to halve your wage if we come down”. If
somebody else is in the market for a player, they
might drop that, and they don’t operate that clause.
It’s terribly, terribly difficult in the market place to
force that through.
Q316 Mr Sanders: But isn’t this actually all linked
back to this creditors rule that the reason they do this
is because they’re on a no-lose situation?
Barry Kilby: Again, I just come back to the Premier
League, and sometimes you’re competing against
people who don’t care. They’ve got billionaires who
are prepared to lose £600 million about that. You’re
competing in those circumstances. They won’t care
about the relegation clause—it’s very difficult. Last
season, we came up from the Championship and the
players got an increase. It’s easy to say, “Well, if we
go back down it comes back down.” That follows a
logic that is easy to enforce. If you’re trying to get an
established Premiership player, it’s very difficult to
say, “You do know if we go down we halve your
wages”. That’s not an easy one to pull off. But I agree,
I think it does distort the competition somewhat, but
I would say it’s not always guaranteed that the ones
that come down with the parachute payments with that
advantage are able to go back because invariably
they’re shedding players, still with the parachute
payment, and they’ve got to try and get their house in
order and get back on an even keel.
Shaun Harvey: If you get relegated from the Premier
League or any league, the only players other clubs
want to take off your hands or your books are those
they believe represent better value for them. By
definition, you end up with the players in your squad
that nobody else wants to take off your hands and
they’re not arguably the ones who are best equipped
to get you back out of the division that you’re in.
Q317 Mr Sanders: So it didn’t pay offering them
contract in the first place did it?
Shaun Harvey: It didn’t, and if we all had hindsight
we would be a lot better off.
Q318 Mr Watson: Just to wrap up—and I will take
you last on this, Julian—I will get to fan involvement.
Could you tell me what role if any should supporters’
trusts play in the governance of their clubs?
Shaun Harvey: You heard me say earlier that I think
the best model is a small dynamic board that’s able to
make decisions quickly and on that basis, that’s the
view that I would support. Consultation’s fine but
when it comes to the decision-making process, for me
it needs to be left in the structure that I described
earlier.
Q319 Mr Watson: So no fan on a small agile board.
Shaun Harvey: Not for me, no.
Q320 Mr Watson: Okay, John?
John Bowler: I take a different view, but that
probably relates to the difference in size of clubs. I
think that smaller clubs like ourselves that are
hopefully making a major contribution to the local
community and have a big community involvement
would like to see a Supporters Trust with about 25%
of the shares with a seat on the board. I have to say,
because it’s me who’s been leading it rather than the
supporters, it’s not been easy to put into place. We
have regular meetings with our Supporters
Association and we have good relationships with
them, so I started with them, but we couldn’t find a
group of people who wanted to take it forward,
because it’s no mean task setting up an efficient
Supporters Trust and there are a lot of bodies in the
cemetery already where it hasn’t worked.
So my recent approach has been to try to get a group
of local business people and the local professional
people to work with supporters to see if that’s a way
of putting it together, on the basis that we think it will
have a good chance of success and getting established.
So the answer is yes for us, but we’ve got to be sure
that we do set it up properly and it runs properly rather
than paying lip service to it.
Barry Kilby: We have fans on the board—that’s our
directors with their own money, quite a lot of it—and
we have the Clarets Trust. If you buy enough shares
in the club you can have a seat on there. I do agree
with Shaun, but I must come back when you say, “a
fan on the board”. There are some tough decisions to
be made that most fans wouldn’t like, so where do we
stand on that one? If we do any guarantees for a
financial deal, is the fan going to put his house on the
line and say, “Yes I’ll join in that one”. I think there’s
nothing better than people having a big financial stake
in it. We do have the Clarets Trust, we have meetings
with them, quite often very interesting and they make
good points, but also we must remember the wide
shareholders thing—we’ve got over 200 shareholders.
We are responsible to them and they do criticise, but
we are talking about an actual somebody imposed on
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Culture, Media and Sport Committee: Evidence Ev 79
15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg
the board who’s not there on the same footing, which
is essentially the shareholding in the club, and him
putting his money in there. If he’s a representative of
the Trust, who is he and what’s he like and does he
want to tell everybody what the team is the next day,
do we sack the manager, do we all go back and have
a vote on that? There have to be quick decisions made,
and with the responsibility of money there’s nothing
better that makes that decision.
Q321 Mr Watson: Julian, Shaun takes a slightly
different view from you on this, I suspect. He’s happy
for the fans to be shareholders in a mystery trust
running out of Switzerland—I’m joking Shaun, I’m
joking—but you’ve got a slightly different model.
You’ve heard criticism from Shaun and Barry that
essentially if the wrong kind of fan ends up on a board
they can reduce the ambition of a club. Would you
share that view?
Julian Tagg: I submit that it’s very possible from
personal experience that the advantages and
disadvantages are at the other end of what Shaun’s
actually described. Of course the disadvantage is the
slow decision-making and taking everybody’s
opinion—with the bigger decisions, sometimes that
makes things very, very slow. You need to evolve as
a football club as you improve what you’re doing; you
evolve on the pitch all the time. The analogy is a good
one that is understood, and beginning to be understood
better by the fans, and it is that we need better
people—more experienced, with the right kind of
skills—as the football club progresses and the board
needs to evolve. Certainly the club board and the
board of trustees as we call them, which is where the
ownership of the club stands, are also important.
The other thing that becomes a disadvantage is the
constant need for information. If you give some
information then it means there’s another question for
some more information and so it goes on, so that’s
something that we do our best to handle. We have
financial groups that meet, we have trust groups that
meet, so those three things are the upside of it. It gives
us particularly long term security, and I think one of
the things that attracted me in the beginning was that
it’s not going to come along later on, something’s
going to go wrong and it’s going to fall into different
hands. All that work and effort of the community, with
lots of volunteers involved, gives us an ethos which
is a very useful one to have—a lot of people want to
be involved. I think there is a culture in football that
we talk about all the time; the fans want you to
improve, they want the best centre forward, but they
want the prices at the gate reduced, and it is about
trying to find the balance.
Our model in our club is changing the culture a little
bit in the sense, as the fans sing proudly “We own our
football club”, and there are fans who literally can
come off of the terraces and can go into that board.
Ultimately, if they’re the right ones, they can come on
to our board, and there are two of them. That’s the
way the flow goes, and the closer they get to the
responsibility of it going wrong, the more realism
there is. There’s still a long way to go; there are still
the fans’ forums saying “We want to do this
immediately”, and are vociferous about it, but the
majority and the wider change in the culture of what
we’re actually beginning to achieve, it would seem, is
that you can lose a game and it’s not the end of the
world and we don’t want to sack the manager, and that
we need to be prudent financially rather than gambling
money that we don’t have in the hope of moving up
the league. So there’s still the same thing that runs
underneath it but I believe the nature of the club is
beginning to change.
Q322 Mr Watson: So you’re describing a situation
where you have to explain your decisions more
thoroughly to fans but it doesn’t seem to me slowing
you up in making tough decisions when you need to.
Does that characterise your argument?
Julian Tagg: It has slowed us up and there are a
number of things that we’ve tried to change. It’s been
really difficult to make those changes—something that
becomes very obvious because you’re in a boardroom.
These things need to be changed and you have to go
back via the trust board—we’ve got a large board of
16—and convince them, so we’re far from perfect, I
think everybody realises that. There’s no blueprint for
this. We’ve made it work. Sometimes those two
boards come to a head and they clash. We have a
mechanism which we call the Joint Boards. We have
four from each side if you like—I never used to call
it sides but I do now—we have a group of four and
there are no minutes to that and we try and thrash out
what the club really requires. At that point, if you can
get some kind of agreement that we need to change a
certain aspect, whether it be the Chairmanship or
whether it be who sits on the boards or whether that
be the club board, then that’s where you really make
the real progress.
Then of course the rest cascades out in the normal
day-to-day business, but a lot of the time, I’m taking
a lot more care to make sure people know what’s
going on in advance, as opposed to the decisionmaking. They want to know that it’s happening before
it happens rather than necessarily, “Why didn’t I know
about that? Why don’t I know?” That’s probably the
most difficult thing because they’re keen fans and it’s
a good job that they do care that much about it.
Chair: I think that probably leads us neatly on to our
second question session, so can I thank the four of
you very much?
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Ev 80 Culture, Media and Sport Committee: Evidence
Examination of Witnesses
Witnesses: Dave Boyle, Chief Executive, Supporters Direct, Malcolm Clarke, Chair, Football Supporters
Federation and member of the FA Council, and Steven Powell, Director of Policy and Campaigns, Football
Supporters Federation, gave evidence.
Chair: Right, let’s continue. Can I welcome Dave
Boyle, the Chief Executive of Supporters Direct,
Malcolm Clarke, the Chair of Football Supporters
Federation, and Steven Powell, the Director of Policy
at the Football Supporters Federation? Tom Watson is
going to continue on his theme from the previous
session.
Q323 Mr Watson: Perhaps if I just open this up to
you, Malcolm, to start with, and then the other two
want, if they want to take it. Is it your view that
English clubs communicate enough with their fans?
Malcolm Clarke: Thank you very much, Chairman,
for the invitation first of all. Could I just explain at
the start that my colleague, Steven, has got a bit of a
hearing problem at the moment, so if I have to brief
him on a question that will explain that. I think the
answer to your question is a mixed one; some clubs
communicate better than others. I noticed that in the
Football Association evidence it says that the majority
of Premier League clubs and Football League clubs
are exemplary in the way that they communicate with
their fans. I’m afraid that I beg to differ with that as
a generalisation. It’s a relevant question, because
today we have published a league table of our
assessment of club charters, which all clubs signed up
to right back to the days of the Football Task Force
and we scored them on seven characteristics, and that
league table doesn’t really bear out the proposition
that they are exemplary. Only one Premier League
club scores more than 24 out of 35—we scored them
seven characteristics up to five. So I think it varies,
but of course the other issue is it’s not just a question
of communication. You can communicate to a
supporter very clearly that ticket prices are going up
way beyond the rate of inflation, that’s good
communication, but it doesn’t necessarily mean that
it’s good practice in terms of the way that they are
responding to their customers.
Q324 Mr Watson: Good, I’m glad you’ve published
that, I haven’t had time to read it yet. Can you tell me
which clubs are good and why and which clubs are
bad and why?
Malcolm Clarke: The club that comes top out of the
Premier League is Tottenham Hotspur, which is the
only one that gets what you call a really top score.
The club that comes bottom is Everton, who got a
score of nil because nobody could find their customer
charter. The club that comes second bottom is
Manchester United with a score of eight, and I thought
that was interesting after hearing your evidence
session with David Gill last week when he actually
said that there are certain groups of supporters who
they simply refused to speak to. When I attended the
Carling Cup Final last year and saw Wembley awash
with green and yellow as opposed to red and white, it
didn’t exactly come with the image of a club which is
communicating terribly well with its supporters. The
other thing to say of course is that that is scoring the
paper charters, and the next thing we’re going to do
is talk to their supporters and see what their
assessment of the communication or the customer
service is to see how it tallies with the charter, because
you can have it written very well on paper or on the
internet but the performance may not be as good.
Q325 Mr Watson: So will you have that evidence
by the time we finish our inquiry? Is that due soon?
Malcolm Clarke: I’m not sure what timescale you’re
working to. Whether we’ll have the supporter
response by then I’m not sure. The actual league table
is released today, so we can certainly let you have a
copy of it and submit it formally to the committee.
Q326 Mr Watson: One thing David Gill alluded to
in his evidence was that it was difficult—maybe I’m
being a little unfair to him—to characterise which
supporter groups were truly representative of the fans.
Is there a way that you can identify the kind of basis
of support that each of the groups carry? Do you help
interpret that to the clubs?
Malcolm Clarke: Supporters groups are democratic
organisations and obviously the greater success they
have in involving members the greater credibility they
have—certainly at Manchester United both the Trust
and other organisations have been very successful
with very large memberships. I think it’s a bit of an
excuse from Mr Gill, to be honest, to try and pretend
that some of those big groups are not representative
of very significant strands of opinion.
Q327 Mr Watson: If you could score supporters
groups in the way you score clubs, which would be
the good ones and which would be the bad ones?
Malcolm Clarke: I think any supporters group,
whether it’s a supporters club or the trust that Dave’s
organisation develops, if it succeeds in getting a
widespread involvement and if it operates in, which
they nearly all do, in a democratic way with its
processes, then that’s a good one. I wouldn’t like to
sit here and give my judgment now as to who’s top of
that league.
Q328 Mr Watson: Well don’t you think it would be
useful if you’re trying to build a better involvement
of supporters groups that you could actually vet these
groups on behalf of clubs so they can get a sort of a
health check from you guys rather than the clubs
having to do that in an arbitrary way?
Malcolm Clarke: For any supporters organisation to
be affiliated to the Football Supporters Federation they
have to meet certain standards; be a democratic
organisation, be committed to not supporting any kind
of violence, be committed to an anti-discrimination
policy, and similarly with trusts. Dave can speak with
more authority on this, but the whole approval process
of supporters trusts is quite rigorous in terms of the
standards that it expects in order to meet the test of
becoming a trust, and I’m sure Dave can elaborate
on that.
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Culture, Media and Sport Committee: Evidence Ev 81
15 March 2011 Dave Boyle, Malcolm Clarke and Steven Powell
Q329 Mr Watson: Okay, final question: when we
heard from the Chief Executive of Leeds earlier he
seemed to say the only real issue that matters for the
fans was winning games or at least if clubs are
winning games the other issues fell down the agenda.
Is that your view or what do you think is the issue of
fans today?
Malcolm Clarke: Obviously, all fans want their teams
to win every game, that’s just in the nature of it, but I
think it’s patronising and inaccurate to characterise
fans and supporters groups as only being concerned
about the winning of the next game and not about the
long-term sustainability of their clubs. If you look at
the evidence which has been submitted not only to
this inquiry but to the various other inquiries that have
been held by the All Party Football Group, by the
Task Force and so on, you will see that it is the
supporters groups that have been promoting
responsible good financial governance.
Obviously with any club there will always be fans
who are saying, “Get the chequebook out, Mr
Chairman” and so on, but there are tens of millions of
fans and they don’t all think exactly the same. I think
there’s a certain patronising caricature of fans, some
of which we heard in the previous session, “Oh they
might want to pick the team, they can’t be trusted to
keep confidential information, they don’t understand”,
and the evidence—and again Dave can speak with
great authority on this—is that the supporters trusts
that have taken a direct role in their clubs have shown
is that among the supporter base you get a huge range
of skills and experience, you get very senior people
with wide ranges of professional skills, in financial
managements and governance and so on. One of the
things that I’ve personally found annoying in football,
is the sort of caricature that says, “Well they’re just a
load of raggy-arsed fans”, pardon my language, “that
don’t really understand how things work”.
If you look at the football industry and you look at
the number of clubs that have been in insolvency
events in the recent years and you look at the amount
of money which is owed by the football industry to
the public purse, I don’t think the people who are
running the industry at the moment are in a terribly
strong position to say that supporters organisations
haven’t got the skills and experience to involve
themselves more fully in the running the of the
industry.
Q330 Chair: Mr Boyle, do you want to add to that?
Dave Boyle: Yes. I was just chatting with Malcolm
earlier. The relationship that a lot of clubs seem to
have with their fans to me is more redolent of perhaps
an Edwardian marriage where the wife would be
never told the salary of her husband because these
matters were not for her, and there is this idea that
fans don’t want to understand, nor could they
understand if this were ever shared, but as some of the
evidence you heard this morning said, fans do want to
know a lot of information, but that’s the nature of the
game. The reason why fans want to know is also the
reason why this club has been here since 1882 when
very few other businesses have survived that long.
The depth of loyalty which is the bedrock financially
of the game’s success has another side to the coin;
the relationship between the fan and the club is not
a consumptive one, it’s an emotional one, and that
emotional relationship compels a desire to know more
information about the club because it matters
passionately to them and to their family and to their
identity, and it seems to me the best way to deal with
this is not to ignore it or pretend it doesn’t exist or to
wish it away, but to manage it through dialogue.
Speaking to a lot of people in clubs you get a sense
that, a bit like when you speak to people who staff
helplines, they have a rather jaundiced view of human
nature because they see a greater proportion of people
who are not perhaps the most constructive, which is
why we’d always say there’s been a trend within
football to look at fans as customers and deal with
them as customer services and that kind of
relationship on a one-to-one level, whereas the beauty
of relating to a democratically constituted supporters
group is that you get a balanced view of what the
supporter base is thinking. You get a means of
communicating with people who are going to get rid
of the issues off the table which really are purely
operational matters which shouldn’t really be up for
discussion.
You mention about vetting supporters trusts and
supporters groups. As Malcolm said we do vet them,
we make sure that they’re democratic, we make sure
that they produce annual accounts, which are audited
independently, and we’d love to work with clubs. I
have to say my phone has never rung particularly hot
with clubs wishing us to perform that service, and
what I would say is where there are a lot of supporters
trusts where they haven’t been as successful as others
and haven’t made as much of a breakthrough. That is
partly because sometimes the way the club deals with
the supporters trust makes it very clear that this is just
a waste of time. When you set up a group, and a club
says we’re just not interested in talking to you, then it
takes a peculiar mindset to say, “I’m going to turn it
round and we’re going to win over the club.” A lot of
people would just say that this is going nowhere. If the
club actually opened the door and said we’d welcome
this—if you can get to this stage—I think you would
see a transformation.
Q331 Mr Sanders: The traditional model of the
English club is for the benevolent owner who runs the
club on commercial lines and that’s given us arguably
the most successful league structure in the world, so
why play around with this state? Why not leave it as
it is?
Dave Boyle: I think there’s a complete flaw in your
question; they’re not run on commercial lines. The
fact that they spend £50 million more than what they
have brought in—that’s not a commercial relationship.
Most of them do have benefactors and I think
increasingly we have to say the benefactor model is
more ruinous than contributory to the health of the
game. I’m struggling to know, without knowing who
an individual is, how you can gauge their intentions
for the club’s long-term future. They may have good
intentions, but what if you don’t even know who they
are and what their circumstances are? Benefactors are
often quite good in the short-term. The medium-term
record is very poor, and I think one of the biggest
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Ev 82 Culture, Media and Sport Committee: Evidence
15 March 2011 Dave Boyle, Malcolm Clarke and Steven Powell
contributory factors to football’s economic poor health
is the very short time horizon. They think in seasons
rather than longer-term, which is again what most
businesses would be doing. One of the advantages of
the supporters trust model is that it brings a more
corporate structure to the club, because there is no
subsidy. I mean benefactoring; you can call it
benefactor or you can call it subsidy for failure,
because the club is unable to generate the resources
to cover its ambitions. If you have to do that, I think
you become more innovative, you become more
expansive, you draw on a bigger range of talents,
whereas I get a sense that a lot of clubs have got
incredibly high revenues, but in their commercial
activities are not as advanced as they would have you
believe, because at the end of the day it doesn’t really
matter, a cheque’s going to get written by an
extremely wealthy individual to get you out of the
hole that your failure to generate revenue has left
you in.
You see it with very good public services. What’s the
reward for innovation, because the cheque from
Whitehall makes good all failure? The other thing to
add is on the record of insolvency; it might be a very
successful football system, it might be a very popular
round the world financial system; it’s not a
particularly good financial system in this country with
81 insolvencies.
assets. Stockport County, for example, had been quite
happy to see the shepherding of an asset for football
into another sport. When you get the train up from
Manchester you go past Edgeley Park, and it says it’s
the home of Sale Sharks, which will surprise anybody
from Stockport who’s watched Stockport County there
since about 1900, so that was the problem the
supporters trust had inherited, and in some cases
they’ve been able to get past it.
Exeter City have made a fantastic success of running
the club there, and one of the things which was a
massive help was when Tony Cascarino drew their
number out of the hat and picked them against
Manchester United, because the return they got from
that cleared the legacy debts which would have
hampered them most probably in the way that they’ve
hampered Notts County, Stockport County,
Chesterfield and York City. I would never say that
supporters trusts have an unblemished record, but by
the same token I think that it’s an unfair fight. If these
problems with supporters trusts cause doubt for the
model, then are we going to say the investor-owned
model has some serious flaws with 81 solvencies since
1986? An equivalent sort of comparison never seems
to be made that what problems there are would seem
to be systemic and structural within football rather
than being something which is peculiar to the
supporters trust form of ownership.
Q332 Mr Sanders: Okay, but we do have more
professional football clubs than any other country in
Europe.
Dave Boyle: We do, and we have more professional
football clubs, as the Chairman of the Football League
said, hanging off a precipice. Malcolm makes the
point I’ve heard him make in the past, so I won’t
plagiarise that, but it’s ironic that at a time when
English football has never had as much money as it
has now, it’s also never had as much instability and
financial problems for its clubs. There is an awful lot
of money in English football but there’s a lot left to
be desired, and the distribution of that between
leagues and between clubs does create its own
problems.
Q334 Paul Farrelly: There’s a world of difference
between compulsion, forcing a model onto every club,
and just encouraging supporters trusts if clubs want
them. Where would you draw the line?
Dave Boyle: You heard from John Bowler, who’s been
trying to create a trust. We’ve been speaking with
John and if there isn’t the willingness amongst the fan
base at any particular moment then it goes no further,
so clearly it will be wrong to compel anybody to do
this. What I would say is that there’s a difference
between compulsion at one end of the spectrum, and
a bit more encouragement would actually be helpful.
Mentioning what was said by the Burnley Chairman,
where’s the fans skin in the game? Well the skin in
the game is every week they turn up. The season ticket
revenues which form a key basis of the club’s
revenues are paid over by supporters. Supporters are
already contributing in that sense and I think the
nature of a club is that it isn’t really to be run on
commercial lines in the same way as an ordinary
business, because you have these investors who want
to be considered as investors, but they’re not able to
be able to be part of the shareholder base in the
same way.
A lot of clubs make it very difficult for supporters
trusts to come on board because they are no shares
available in them. There are only five clubs in the
English professional league which are quoted on stock
markets where you can actually go and buy shares and
become part of the ownership base, so actually
making shares available as a matter of course it would
be a good start. I think clubs could also encourage
fans by saying, “We’d like you to come and be part
of a dialogue. You can have a dialogue every three
months with the Chief Executive”. A lot of clubs don’t
get that far.
Q333 Chair: The alternative which you would
advocate with supporters trusts shows there have been
some success stories, but equally there have been
failures. Is there any evidence that the supporters trust
model is any better?
Dave Boyle: Yes, I note that what one would consider
failure is where, say, a supporters trust has become
the majority owner of a football club and then has had
to relinquish that. In every one of those cases I can
point to astonishing legacy problems. In York City’s
case, the previous Chairman sold the ground to a
housing developer and they had to take on a £10
million loan to buy it back.1 No supporter’s trust
has ever really inherited a club which was going well.
They’ve been investors of last resort, the people who
rescue it because the alternative is to let it die and
that’s just not an option, and because of that, they
have incredible problems with debt, with loss of
1
Witness correction following the evidence session: The
figure is in fact £1m as I understand it.
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Culture, Media and Sport Committee: Evidence Ev 83
15 March 2011 Dave Boyle, Malcolm Clarke and Steven Powell
Q335 Paul Farrelly: Malcolm, Steve then back to
Dave. We’re here in this fantastic club with its rich
history because the Government in their wisdom said
they wanted to encourage more supporter involvement
in clubs, but having decided that they knew what to
do with the NHS and universities, they then had a
collective scratching of heads and didn’t know what
the hell it meant actually, so over to us guys. Give us
a few concrete things that we should pursue that are
practical and feasible to achieve that end but don’t
restrict a club’s ability to develop.
Steven Powell: My colleague Dave is much better
qualified on the technical points of this, but I can give
you my own perspective as somebody who’s been
active in the supporters trust and I perhaps should just
for complete transparency here declare a couple of
non-pecuniary interests: I am a founding life member
of Arsenal Supporters Trust and a former member of
the board of the Supporters Trust but I’m also an
elected director of Supporters Direct; neither position
gives reward.
Q336 Paul Farrelly: We will hold neither of those
against you. Go on.
Steven Powell: I think that first of all we’re trying to
fit a square peg into a round hole with, for instance,
the Arsenal fan share scheme, which I know you’ve
been to look at with members of the supporters trust
and the Arsenal Chief Executive. There are
regulations I think need changing. Clearly there has to
be security for anybody who is investing money in the
scheme, but the hurdles we had to jump were designed
for a different sort of financial product. I’m a member
of the trust, and I invested my money every month.
I’m not looking at that to help me in my retirement,
I’m looking at that as an investment in my football
club and I’ve left my units in my will to the supporters
trust when I go, and I think if you survey the vast
majority of the 1,700 members of the Arsenal
Supporters Trust they’d all say the same thing.
They’re not looking at it for a commercial return
they’re looking at it as the investment in their football
club, so I think that’s one thing that they can do.
I also think that perhaps on the other side, as we
suggested in our evidence, we could look at a sports
law providing some carrots if you like rather than
sticks, to look at the form of registration. If I give you
one example in Australia, almost all the clubs in the
Australian Football League playing under Australian
rules are set up as not for profit. One club that did
convert to ownership by shares is converting back and
the reason it’s doing it is the Australian taxation office
is now challenging their tactics, their status because
they don’t think there’s sufficient community benefits,
because the structure there is very different. The
Australian rules clubs support the amateur game in
their community, and that’s part of the reason that the
Government invested in sport in that way. They
invested in the clubs who then invested in the
community playing of the game in their area, so I
think that’s one area we could perhaps profitably look
at here as part of the sports law. I know that when
Hugh Robertson addressed the Supporters Direct
conference a couple of years ago, he was interested in
the concept of a sports law for a number of reasons,
and that’s perhaps something we could profitably look
at and we’d be very happy to provide further details,
not to go into the whole ins and outs today, if you
would like us to.
Malcolm Clarke: Can I just add that ourselves and
Supporters Direct have submitted evidence on that. I
would just like to answer one point that repeatedly
comes up in some of the football authorises’ evidence;
this is caricatured as being Governments trying to run
football which would be not allowed by FIFA. Now
what FIFA are concerned about have been cases where
Governments have tried to directly run football, but
this is not what we’re talking about. We’re talking
about a legal framework for the regulation of the
game, analogous in Dave’s evidence to charity law or
the way that corporate laws has developed, so it’s
setting a legal framework which would give certain
exemptions and certain responsibilities to sports
governing bodies to operate in a certain way, but it’s
nothing to do with the Government running football,
so I think we need to nail that misrepresentation of
the issue fairly firmly on the head.
Dave Boyle: There’s a couple of things really; you’ve
got the localism White Paper making its way through
the House at the moment which gives a right to bid
to community groups for community assets, but the
drafting at present is unclear as to whether you might
consider a football stadium to be such an asset which
you could place on a register. Because football clubs
are incredibly public institutions, the danger is less of
a private sale in the dead of night, it’s more that you
don’t have the access to capital to undertake a
purchase or greater involvement. There’s a case in
Wrexham at the moment where whoever can come up
with £2 million worth of cash gets a football club and
the difficulty is that where liquidity and speed are
what is required that’s not necessarily the best
qualification for a community-minded owner of the
club. That’s what’s affected that club in the past, and
the supporters trust have got £300,000 to deploy, but
they could do with somebody lending to them, so the
idea of a big society bank perhaps providing liquidity
to such groups would be very, very helpful, because
at the moment it’s that speed of access to cash which
is often paramount, specifically where a lot of football
clubs have transferred ownership under crisis terms
where there needs to be an immediate injection to
cover losses.
Some other things which could be done are stopping
subsidising bad owners of football clubs by letting
them write off the losses against corporation tax,
profits in other parts of their business. It’s much easier
to undertake, shall we say, a speculative investment
into a football club knowing that if the other parts of
your business are profitable you can use this to write
off against the corporation tax liabilities you might
take on. We’d love to get to the bottom of how much
of a subsidy from the state it is, but the nature of
opaque ownership leading to beneficial trusts makes it
quite hard to find the actual transaction where this
takes place, where the debt is for tax reasons.
However, we do know it goes on and it’s something
which I think has negative consequences; in order to
qualify, you have to have a dominant owner who owns
75% plus one for it to be considered part of a group,
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Ev 84 Culture, Media and Sport Committee: Evidence
15 March 2011 Dave Boyle, Malcolm Clarke and Steven Powell
which immediately moves you away from, shall we
say, a balanced board like Arsenal Football Club
might have, whether it’s on discussion or strategy, and
more to a club which does what the owner says it
will do. Now that can be dynamic, but it can also be
incredible ruinous, which is why we prefer a
democracy to autocratic rule, because if the owner
goes off the reservation, as we’re finding in Libya to
say the least, then you’ve got no way round it.
So this tax system incentive not only promotes that
form of ownership it also subsidises the cost base
rising beyond the revenue base, which again
supporters trusts are not able to live with. They don’t
have a parent company, because they’re owned by the
community so they can’t access that so it’s not a level
playing field. The cost base which rises is harder for
them to keep up because the worst position in an
insane market is sanity, which is where most
supporters trusts owned clubs are.
On the issue of levelling the playing field, just to
endorse Steve’s point, there is an issue with section
21 of the Financial Services and Markets Act 2000,
which essentially treats supporters wanting to raise
funds to invest in a club as the investment business,
so you incur an awful lot of regulatory cost. At the
end of the day, whilst the Arsenal Supporters Trust
are blessed with an extremely professional and skilled
membership, they’re volunteers trying to do this in
their spare time, juggling it against their other work
and family commitments. I’d also argue that if you
are going to seriously get behind this you look at what
happened with the community share issue at FC
United at Manchester, where that attracted for peculiar
reasons which are not replicable enterprise investment
scheme allowance. That made a massive difference to
the take-up and the flow of funds into that investment,
so some form of incentive through the taxation system
like that which could be written off against an
individual’s personal tax liability would be very, very
helpful. And the other idea we’ve talked about is there
is an awful lot more. Football sets aside some of this
money for good causes through the Football
Foundation and grass roots investment. You could
argue that it would not be remiss to set aside some of
this to enable fans like those at Wrexham to say,
“Here’s a loan we can get from an organisation which
has got a big fund for investment, and we will pay it
back over a few years”. The beauty of that is by
getting people involved who have to pay it back
you’re instilling the business discipline which is sadly
lacking at a lot of these clubs. I think there are lots of
small steps you can make but I would also endorse
the point that Steve and Malcolm make that at some
stage you end up with a square peg in a round hole.
It is very true that we have a legal and regulatory
framework which I don’t think is fit for purpose in the
21st century, and certainly not if you want this idea of
community engagement involved in it as well.
Q337 Paul Farrelly: I’m going to take my life into
my hands now and comment on a live situation; in my
area—and I’ll ask you a question about it—
encouraging good stewardship is more important than
necessarily foisting a particular ownership model on a
club. The second team in Stoke is Port Vale. Port Vale
is now under assault by a man called Mo Chaudry
who has got a documented interest in property and
financial services but no record in football. He’s being
helped, quite frankly, by a local press that’s not
sufficiently investigative and critical beyond just
reporting who said what and when for easy stories.
Bill Bratt is a Chairman who’s got a long track record
of running the club as a decent man, but he’s got an
ownership structure through previous restructures that
limits shareholders to 25%, and you can see from the
outside that might make it more difficult to restructure
the club again. The loss of that ownership structure
might not necessarily be a bad thing if the good
stewardship of the club is encouraged. So where do
you stand on that question?
Dave Boyle: I would agree with you that stewardship
is exactly the kind of modus operandi you want at a
club, somebody who respects where the club has come
from and where it needs to be passed on to. What I
would say is that the regulatory framework of English
football is entirely agnostic about stewardship because
it promotes a model of financial operation which says
that doesn’t really matter. What do you want from
your owner? Do you want stewardship? No, you want
support for negative cash flow because the finances
are insane, and as long as what you need as a club is
to consistently subsidise the fact that you don’t earn
enough to cover your costs then all talk of what you
might like in an owner beyond their liquidity is
ultimately parlour room talk—it’s not really going to
be germane. The issue at Port Vale I would say is that
you’ve got people like Bill Bratt. Why does Bill Bratt
have financial difficulties? Why shouldn’t Port Vale
be able to be a sustainable operation to end in a small
surplus each year maybe for reinvestment? The fact
that he can’t do that with all the good intentions they
have says an awful lot to me about the financial
environment of English football, and most of the
issues you’ve spoken about in the earlier session seem
to me to be about a failure to get to grips with that
fundamental tension.
You’ve got all these clubs who will say it’s an
impossible environment and yet nothing gets done
about it with the speed and urgency you would suspect
it would be. You know the football creditors rule is
essentially a sticking plaster for a game which knows
that a systemic risk is that you will be insolvent at
some point in the near future. If you weren’t in a
position where you took that as a very strong
likelihood you wouldn’t need it because you wouldn’t
be in that position. Going back to the Port Vale
situation, first, why does Bill Bratt need to move it on
because of this insane situation? The second aspect is
that should there be a supporters trust at Port Vale,
and which wanted to be part of it, it would struggle
because they’ve not got the thing the club needs right
now, which is ready cash to support the loss-making
enterprise, which the rules of football and the structure
of football almost compels them to do.
Q338 Paul Farrelly: Malcolm you were nodding.
Malcolm Clarke: In agreement with Dave, yes.
Q339 Damian Collins: Dave Boyle, in the
Supporters Direct evidence to the Committee you
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Culture, Media and Sport Committee: Evidence Ev 85
15 March 2011 Dave Boyle, Malcolm Clarke and Steven Powell
recommended a licensing system for English football
clubs similar to the one that applies in Germany. Now
would you like to take the German licensing model
and bring it here?
Dave Boyle: I start from the perspective that in 47
years they’ve had no insolvencies and we’ve had 81
since ’86, so they’re doing something better than us
in that respect. How likely it is to actually just
transplant it? I think it will be wrong and foolish
policymaking to just transplant; you would look at
what are the rudiments of a successful model, and the
main thing it seems to me it shares with the UEFA
licensing system is that it looks at the key matrix you
want to ensure clubs take account of, and then assess
them against it. Julian Tagg mentioned the due
diligence issue. A licensing system is just taking the
lead on the transaction costs of doing due diligence
on behalf of everybody at the start of the season. It’s
an incredibly sensible thing to do, so you have to ask
yourself why on earth haven’t we had it. You got a
hint of that with the evidence from Leeds and
Burnley—there’s a feeling that it might stop us doing
something, even though there is an understanding that
the current state of affairs is not optimal, shall we say.
With the failure to bring in a licensing system, we
must ask whether the governing apparatus of English
football is fit for purpose. The fact that it has not been
able to introduce something like a costs control
mechanism when all the evidence says it’s screaming
out for it, says to me that that’s the fundamental error.
Steven Powell: If I could just add briefly on licensing,
there are a number of models that you can use to look
at. I know you’ve been across to Germany, so I won’t
detain you with that, but I also think the model as used
in France, whilst it’s far from perfect is also worth a
look. It’s essentially a board with a Chinese wall
within the French professional league—the equivalent
of the Premier League of the Football League here—
which has autonomy to go into clubs and to basically
implement special measures. It’s not perfect—there
are some financial problems in the game in France at
the moment—but it does show that you can create
within the governing or the competition-organising
body in France something which has sufficient
autonomy to exercise real financial control, because
the sporting pressures are always there to spend
more money.
That’s the constant plea and what you have to do is
find measures of curbing that, and there are a number
of models. I don’t think a salary cap is going to work,
because the sports that use them tend to be restricted
to one, two, three maybe four countries, but I think
there are measures that can be looked at. Germany is
the obvious one but there are also various models that
are used in North America and Australian sports. In
terms of the conditions which are placed on clubs and
transparency, sanctions are applied in the Australian
Rugby League. The Melbourne Storm, which won the
championship, had a massive penalty imposed on
them for keeping two sets of books, which shows that
you can have financial regulations with real teeth, and
the club is still suffering in competition as a result
of that penalty, which was imposed by the national
rugby league.
Q340 Damian Collins: In practice, looking at the
German licensing regime, today is the day for
submission of cases. The reason no one’s ever lost
their licence is because the licence is reasonably
liberally applied and is really just a basic liquidity test
for the coming season.
Dave Boyle: It might be, but then I come back with
the fact that in 47 years they’ve had no insolvencies,
so even though it might not be the hardest test you
could possibly conceive of, it does appear to instil the
discipline which is the ultimate aim of the process,
which is to ensure that clubs are able to meet their
commitments through the course of a season. The
single problem you have in English football is that all
of the regulations are reactive rather than proactive as
Julian Tagg has mentioned. They’re all about dealing
with insolvency after the event, and not as much as
stopping it before it happens. Now that’s slowly
changing.
The Premier League’s tests, which they’ve brought in
this year, are a welcome step forward; they could still
go further, but the major argument against these kinds
of regulatory impositions or interventions was always
that the Premier League’s big end clubs compete on a
European playing field so we couldn’t tie their hands
for domestic purposes, which would weaken their
ability to compete at European level. Now UEFA have
taken that off the table there is no reason why it can’t
cascade down. The clubs submit forms at the start of
every season to do with the players, to do with the
ground they’re going to play in, and I don’t really see
why they can’t be submitting what their financial plan
is for the next twelve months and then you can assess
them after the fact that if they get it wrong, because
then you’re into the issue of either somebody’s not
very good at sticking to an operating budget or there
was some degree of misinformation, both of which in
different ways are things a league can start to tackle.
Q341 Damian Collins: Do you think rather than an
absolute licensing system, there should be a greater
role for the governing bodies of the game to have an
ongoing dialogue with clubs over their financial
status, because with the one in Germany, one of the
points that came out is that it sometimes can be
difficult at one point in the year—or in Germany, it is
two points in the year—to say exactly what the
income is going to be. You know this will depend
greatly on performance, particularly whether or not
they qualified for European competition, and German
clubs filing for their licence today won’t know
whether they’ll be playing in the UEFA league next
season, and that will have a huge impact on their
finances.
Dave Boyle: Absolutely. I think the issue is how you
would implement it in detail on a day-to-day seasonto-season level, and where you would want to liaise
with the leagues, because they’re the ones who’ve got
a lot of the data anyway, and they’re the ones who
have the primary relationship with the clubs. There’s
a curious contradiction. On one level, when you asked
some of the previous witnesses do you think you need
something like this, they were saying it should really
be done by the clubs themselves, they should be
disciplined, and then with the very next question, the
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Ev 86 Culture, Media and Sport Committee: Evidence
15 March 2011 Dave Boyle, Malcolm Clarke and Steven Powell
clubs said we find it almost impossible to cut our costs
because the players and their agents make it very
difficult. To me, that says that it’s crying out for
somebody other than the clubs to help them instil the
discipline which has been lacking for so long. You
could call it licensing, you could call it monitoring,
you could just have more active engagement with the
clubs, but it should be something which says to the
clubs we will set the framework which constrains your
field of operation. That’s the absolutely essential
thing, because it’s all very well saying you want to
leave it to the discipline of the club to manage its own
risk, but the record says that English football clubs
collectively are pretty appalling judges of risk.
Q342 Damian Collins: Do you think there is an
absence of leadership in the FA, a while issue of
monitoring the financial performance of clubs and
managing risk?
Dave Boyle: I was greatly enthused when I saw Lord
Triesman’s original submission to the former
Secretary of State’s seven questions, which clearly
calls for something like a licensing regime. I just find
it saddening that in their submission to you this time,
the FA seemed to have moved further away from that
approach. I think the FA are often unfairly criticised,
but until Lord Triesman came along and that process
led to them saying this is what we’d like to do, it is
fair to say that there had been an absence. Partly, as
you know, when you speak to people who work at the
FA, it’s not the case that there’s no activity going on
behind the scenes. For example, with the fit and
proper person test or agent’s regulations, the FA were
taking a very strong lead, but I think as Malcolm can
probably speak about that more accurately me. The
way the governance of the FA works makes it not a
particularly well-suited body to this particular task. I
just did a small calibration of the evidence you’ve
received, and only three out of the 85 submissions say
the FA and the league structures are fit for purpose,
80% of them say not, which is pretty overwhelming
to me and I think that’s something which is borne out
by the evidence of their own eyes.
Q343 Damian Collins: And finally, can I assume
from what you said earlier that you would support the
ending of the football creditors rule?
Dave Boyle: I think the football creditors rule is
totemic of football basically trying to—it’s a second
order solution to a first order problem. A simple
problem is that football clubs are inherently unstable
financially and the football creditors rule is a sticking
plaster to deal with that and the immorality that comes
with it. It’s a sticking plaster which underwrites the
risks taken by clubs, with the community they are
surrounded, which says—
Q344 Damian Collins: Is that a yes?
Dave Boyle: That’s a yes.
Q345 Mr Sanders: To you Malcolm, in your written
evidence to the committee you advocate wide-ranging
reforms to the FA board and the FA council. What
reforms would you most like to see and why?
Malcolm Clarke: I shall preface my remarks by
saying, as I did in my evidence, that there are, and as
Dave has just said, are a lot of very talented people
working very hard at the FA on a lot of these
problems, and I wouldn’t want to gainsay that at all,
neither would I want to gainsay the contribution that
many of my fellow members of the FA council have
made to the development of football in this country
over a long period of time. It’s not about people,
essentially it’s about structure. I don’t actually agree
with all of the report by Lord Burns. I know that some
people are saying we want the full implementation of
Burns. I think as he said to you himself, he sort of
stopped short of some things. I think that if you look
at the Council, the role that he envisages is, firstly,
that it should hold the board to account, and secondly,
that it should act as the parliament of football in order
to debate the key issues. The reality is that it’s not
able to do either of those.
I have here the last Council agenda. There are 121
pages of council committee minutes which have to be
worked through, some of them well before the council
meeting, and it’s virtually impossible in a body of 118
people to have a critical challenge to the board about
what it’s doing, partly because the decisions are long
since passed and partly because of the sheer format of
a body of that size. If I just give you a few examples.
The first one would be the FA’s evidence to this
Committee. That hasn’t been anywhere near the
members of the council including myself, and in fact
there are what I call the football family six: the
representatives of the players, the managers, the
supporters, the referees and the equality and disability
advisory groups who are not represented on the board.
We can’t stand for the board, we can’t vote for
anybody on the board, we’ve got nobody on the board
who represents us, so we have no input at all into the
evidence that the FA itself has given you.
We were never told why Ian Watmore resigned. We
didn’t have a proper debate about the failure of the
England team in the World Cup; I raised that on a
minute and there were two contributions and then the
debate was closed down. Now admittedly there was
then an away day which I wasn’t involved in to look
at some of those issues. It was left to me to ask a
question at the last council meeting about the failure
of the World Cup bid because there was one sentence
in the General Secretary’s report that said the board
have looked at this and learned the lessons. It didn’t
even say what the lessons were—this was an £18
million investment, and it now appears we never stood
a chance in the first place. Peter Coates made this
point to you and Niall Quinn said it was covered in
arrogance or whatever. So if the council can’t address
an issue like that then there’s something wrong with
it, and in terms of the board, I’ve already made the
point that some people aren’t represented. You had
evidence from the former Chairman about the way in
which it operates, as if people are delegates. They
have their meetings beforehand and you’ve got these
two groups, so there’s a desperate need for a different
way for the whole process to operate.
There has been a lot of discussion about the two
independent directors, which I’ve tried to promote for
the extraordinary general meeting in the Autumn but
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Culture, Media and Sport Committee: Evidence Ev 87
15 March 2011 Dave Boyle, Malcolm Clarke and Steven Powell
only managed to get 1% of shareholders to sign up to
it, instead of the 5% you need even to get it on to the
agenda, but it now looks as though the new Chairman
is taking that agenda forward. But one of the things
that worries me is that it shouldn’t be seen as the end,
it’s the first step not the major or the last step that is
needed, so I think we need to have another look and
I welcome the fact it says that the FA are carrying out
a review of governance. I’m not sure who’s doing that
or what the involvement of stakeholders is going to
be, but it is still very much needed.
I know there’s a lot of journalistic caricatures of
blazers and things like this, which I think is not
helpful, but there’s a lot of good people there with a
lot to contribute on both the executive and on the
council. The problem is the structure and the way in
which the whole power lies with the Board, but the
Board itself consists of people with vested interests,
and other witnesses have given you the sort of analogy
about banks running the regulatory body, and I think
that’s probably a fair analogy. Sorry I’ve spoken at
rather great length.
Chair: I think we’re probably going to have to draw
it to a close anyway since it’s now 1.10 pm. We will
be hearing from Mr Watmore later, and also having a
look at the bid so we may be able to illuminate some
of these areas that you have so far failed to. Can I
thank the three of you very much for your appearance
this morning?
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Ev 88 Culture, Media and Sport Committee: Evidence
Tuesday 22 March 2011
Members present:
Mr John Whittingdale (Chair)
Ms Louise Bagshawe
Dr Thérèse Coffey
Damian Collins
Philip Davies
Paul Farrelly
Alan Keen
Mr Adrian Sanders
Jim Sheridan
________________
Examination of Witness
Witness: Ian Watmore, former Chief Executive, Football Association, gave evidence.
Chair: Good morning. This is a further session of the
Select Committee’s inquiry into football governance
and I would like to welcome, as our first witness this
morning, Ian Watmore, the former Chief Executive of
the Football Association. Can I invite Louise to ask
the first question?
Q346 Ms Bagshawe: Why did you resign as
Chairman of the FA?
Ian Watmore: I didn’t resign as Chairman, I resigned
as Chief Executive.
Ms Bagshawe: Chief Executive, I am sorry.
Ian Watmore: That’s okay. I think the words I used
at the time were, “Well there was nothing chief or
executive about the job”, and that is why I left. I was
frustrated about a number of things that you just
couldn’t do and in my experience the Chief Executive
of any organisation would have been able to have just
got on and done some stuff and most of what I was
trying to do either hit the buffer of treacly governance
or just wasn’t possible to do at all because we didn’t
have control of our money and our resources.
Q347 Ms Bagshawe: Can you elaborate on some of
those things that you found impossible to enact?
Ian Watmore: Yes, first of all I sent a note to the
Committee in which I argued that the board of the FA
should be independent of all its vested interests and
the reason I argued that is because I think an
organisation like the FA is seen to be the governing
body of football in this particular case and yet it has
got people on its board who have a severe conflict of
interest. They may be very good people, they may
have a lot of knowledge and experience and so on but
they are conflicted and I think the usual analogy that
I use is you wouldn’t want to be running Ofcom with
Sky, BT and the BBC on your board, it is that kind
of sense.
The governance was a problem; the staff were not a
problem and a lot of people write about the
dysfunctionality of the organisation and I think one
thing I would like to put on record is that the staff that
I worked with at the FA were absolutely fantastic and
they are so not the image that they get portrayed with.
They are very knowledgeable, they are very energetic,
they achieve an awful lot behind the scenes that you
know nothing about and they were great to work with,
so that wasn’t a problem.
One of the other problems I found was that the
organisation’s money wasn’t under control of the
executive team so we raised whatever money we
raised—usually about £200 million a year, through
TV deals and sponsorship deals—and then once we
had spent our core costs for running the actual
association at Wembley the rest was distributed 50–50
to the professional game and the national game.
Apart from the fact I begrudged giving FA money
back to the professional game—because I didn’t think
they needed it and the national game did and I thought
it would have been much better to have channelled
the money in that direction—the sheer fact was that
we didn’t have responsibility for how that money was
spent. A number of the programmes and projects that
you would want to do just weren’t possible to do
because you didn’t have control.
Q348 Dr Coffey: Can I ask specifically about the
independent board? You have used the analogy of
Ofcom, where the Government appoints a regulator to
manage private competition. What it suggests to me,
your suggestion, is more the civil service utopia
perhaps, of having a Government with no Ministers
because they are pretty inconvenient, because they
speak to constituents and make policies, whereas if
the civil service ran it all it would be fine and so that
independence would have a tickety-boo gain. I am not
sure that is really true.
Ian Watmore: I am not sure that would be the civil
service utopia anyway, and I am certainly not going
to say it even if I thought it. The reality is that I think
when you are in one of those leadership jobs in an
organisation like the FA, to use the analogy, you are
as much like a Minister as you are the civil servant;
you are the person on public display, you are the
person that the public thinks and expects to make the
key decisions and I think both my Chairman at the
time, Lord Triesman, and I felt that we were seen to
be responsible for a lot of things but not with the
ability to make the decisions and actually carry them
through.
Q349 Ms Bagshawe: You are hardly the first Chief
Executive of the FA to resign recently, given there has
been such an enormous turnover of FA Chief
Executives since Graham Kelly left the job. Would
you say it has become an impossible job for the
reasons that you state; there is no actual decisionmaking power in the job?
Ian Watmore: I felt it was impossible for me and that
is because I was used to, both in the private sector
and in Government, a different form of governance
that supported what you were trying to do and so I
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Culture, Media and Sport Committee: Evidence Ev 89
22 March 2011 Ian Watmore
didn’t feel I could carry on. I think it would be for
others. I wouldn’t want to say it was impossible for
anybody to do what they wanted to do in the job but
for me it wasn’t right.
Q350 Ms Bagshawe: Do you feel that the resignation
of past Chief Executives was motivated by the same
concerns though that you have just expressed?
Ian Watmore: Interestingly I went to see them all
when I got the job; I went back as far as Adam
Crozier. I didn’t meet Graham, I probably should have
done but I didn’t. Anyway, I met the others and of
course everybody has a different perspective on why
they went and different reasons but I think the
common theme is that around the board table, you
have got all of the people from the counties in the
professional game and they all have different interests
in what they are trying to achieve and there is no
independence and clarity that emerges from that and
that gets very frustrating as the Chief Exec, whether
you’re picking a new manager or trying to spend a
relatively small amount of money on something quite
unimportant in the big scale of things; all these issues
blow into one when you’re sitting in the middle of
it all.
Q351 Ms Bagshawe: How would you characterise
the relationship between the FA and the Premier
League?
Ian Watmore: One of the interesting questions; who,
for this purpose, is the Premier League? When I met
with the key club members, the sort of people who
run and manage the clubs, the relationship was very
good. All of these clubs belong to the FA as much as
they belong to the Premier League but they have been,
over many years, grouped in a sort of pack around the
league that they play in, so individual clubs, no
problems at all. When we got the collective things it
depended on what the issue was. Some things we had
real strong agreement with, for example, goal line
technology where our common enemy, if you like,
was FIFA who wouldn’t sanction that; we joined up
very well on that.
On other issues we might be miles apart or have a
disagreement over whose responsibility it was. I think
that my Chairman at the time mentioned in his
evidence that football regulation, in the sort of
financial regulation sense, was deemed by the leagues
not to be something for the FA, it was deemed to be
something for them and Lord Triesman disagreed with
that and that is where the tension first emerged
between them. I think it is issue by issue.
On a personal level Richard Scudamore—who is
possibly one of the best operators and runners of
anything in football—and I got on, I think, pretty well.
We had our sort of Roy Keane-Patrick Vieira moments
and things but afterwards there was kind of sort of
mutual respect I think and that wasn’t an issue.
Ms Bagshawe: Okay, thank you.
Q352 Chair: You say you got on fine with Richard
Scudamore. You will have heard the evidence of Lord
Triesman that he had rather greater difficulty getting
on with the Chairman of the Premier League whom
he found to be aggressive, was that your experience
as well?
Ian Watmore: I kind of take the view that David said
what he said then and I think that is probably the most
evidence you need. I think there is a football saying,
isn’t there, what goes on in the dressing room stays in
the dressing room and I think probably I would rather
stick there.
Q353 Paul Farrelly: So you wouldn’t contradict it?
Ian Watmore: I wouldn’t contradict it.
Q354 Jim Sheridan: Can you just explain what you
mean by these people who have conflicts of interest.
Who they are? Give us a flavour for what these
conflicts of interest were and perhaps give us a
tangible example of what that means?
Ian Watmore: Okay. As you probably know the
current FA board—or the one that has been in
existence for the last few years—has five members of
the professional game through from the Premier
League, two from the Football League and five from
the counties and then an independent Chair and Chief
Exec. You might get an issue. Let’s take the one that
we talked about which is the financial and debt
position.
It is very hard to have a sensible discussion around a
boardroom discussion when the Chief Exec of Man
United is one of those board members and his house
is being daubed back at home green and gold by the
fans who oppose the Glazer ownership. He is a great
guy, David, I have lots of time for him but on a topic
like that he is conflicted. If we talk about where the
international game might benefit from perhaps the FA
being tougher about calling up younger players so that
they always played for the England teams rather than
went off on club tours and so on, then the club people
are, by definition, conflicted on that. It is great when
they do have a really successful international player
but they are juggling different interests whereas we,
as an FA, are thinking purely and simply about how
to develop the national team.
On the other side of the fence the county people who
do wonderful work on the ground, and I can’t speak
more highly of them about what they do, they give up
their time year after year after year and make all sorts
of things happen in communities where football is
really socially cohesive and it really binds people
together. But they are worried about losing out by
picking a fight, being seen to pick a fight with the big
guys from the Premier League or the Football League
or whatever.
There is this kind of tension that really exists between
them and the consequences that unless it is a common
enemy type of topic, like goal line technology—where
everybody can get round the table and agree on it—
you find everybody is coming at it from a slightly
conflicted position, which is why I think you either go
to the German model where kind of everybody is in
one entity and it is all part of one entity but I suspect
we are a long way from that, or else you go for
independence and that is what I would like to see.
Q355 Jim Sheridan: Are you suggesting then that
the FA would be far more effectively run if we didn’t
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Ev 90 Culture, Media and Sport Committee: Evidence
22 March 2011 Ian Watmore
have big clubs like Manchester United represented on
the board?
Ian Watmore: On the board, yes. I think very strongly
that we can have all the dialogue with the big clubs
that we need. If I wanted to pick up the phone and
talk to any one of any of the clubs in this country or
go and visit them or see them on a Saturday or
whatever, it was no problem at all. You get access to
everybody when you need it and I think we could
involve them and get their opinions and understand
what they wanted and all the rest of it, as we do with
other people who aren’t on the board. We go and talk
to Gordon Taylor at the PFA or Richard and his
colleagues at the LMA and a whole variety of other
places; you can get inputs from a variety of sources.
But when it comes to making hard decisions I believe
the best board is one that is made up of the exec teams
of the organisation and independent non-execs and
that is what I would recommend.
Q356 Dr Coffey: What was your vision for the FA?
Ian Watmore: I ended up just encapsulating the
vision. I called it football first and the reason I did
that was because I remember somebody earlier on said
to me, “I quite often go to meetings in the FA and the
word ‘football’ never crops up and it is always about
money or something else and the essence was not to
put the football first”. A really good concrete example
of that was Stuart Pearce who, running the under-21
team, came to me and he said—they usually play the
under-21 games in one of the clubs around the
country, grounds around the country—“I would really
like to play at Wembley. I think these guys would
benefit from playing at Wembley so that when they
come up into the first team and play at Wembley—”.
The crowd size at Wembley is likely to be much too
small for the thing to even break even, let alone be
profitable so it is going to cost us money to put on the
game and in the past I think that would have been
blocked for that reason whereas I said, “Yes” because
it seemed to me it was more about the football and
less about the money; this was about trying to grow
the talent, so putting football at the heart of
everything. I was very strong on the Wembley pitch,
for example, and I thought the history of Wembley
has been dogged with controversy—and I don’t want
to go back over that—but the stadium itself physically
is great but at the time the pitch was terrible and it
seemed to me that people were more worried about
the business case of Wembley than they were about
the quality of the football in it and I happily—well
not happily for me as an Arsenal fan—went to the
Carling Cup Final as an Arsenal fan to see my team
humiliated in the last minute but the pitch was
absolutely stunning because they have now done
exactly what I think they did at the Emirates and other
places with this new pitch technology.
I was trying to just inject in every decision and every
thinking about what the FA stands for, to put the
football at the heart of it and then let the other things
take care of itself. That then cascades right across the
game from international football at the highest level
to kids playing on a Sunday morning, and I could talk
for hours about where we go with that but that was
the essence of it.
Q357 Dr Coffey: Just to refer to the stadium or
aspects of the stadium as your first two responses to
the vision of football and how you use that, the
stadium has been criticised as being a debtheavyweight around the neck of the FA. What changes
would you perhaps like to see to that? Is it a conflict
of interest that David Bernstein is both Chairman of
the FA now and of WNSL?
Ian Watmore: Wembley is kind of a subsidiary of the
FA so I don’t think there is a conflict and David is
one of the people who helped save the Wembley
project when it was going in a very bad direction. I
think he has got huge experience and he was also very
successful at his club in his business career so I think
he is a good choice of Chairman, not that it is for me
to comment but I do happen to think he is.
The stadium does drag financially and the FA is short
of money so it is a concern but we are where we are;
it was built on a debt model—I forget the exact figure
that is still in the books that’s overdue but it is
something in the hundreds of millions that still has to
be paid back—and every year that is a financial drag
on the FA, which it would be great if it wasn’t but it
is what it is.
Q358 Dr Coffey: Coming back to your idea of
football first, do you think the FA still has that as a
priority? Is it implementing those tasks effectively?
Ian Watmore: I can’t tell really from the outside. My
sense is everybody agreed with it on the surface but,
as you know, probably in Government it is quite easy
to agree in principle but not in practice and we see a
lot of that going on, so I couldn’t tell on the ground.
But when we come back to why do people criticise
the FA, they criticise it because they perceive it not
to be making sensible decisions in the regulator in
governance space and they criticise it for seemingly
to always get it wrong, vis-à-vis the England senior
team, those are the two things that dominate whenever
you ask the public about the FA. Until we crack both
of those and have a clear programme that builds to a
long term success of the England team and get a sort
of regulatory discipline environment that people trust
then I think they will continue to be dubbed in that
way.
Q359 Dr Coffey: What do you think was the worst
decision that was made at the FA when you were
Chief Executive and can you explain a bit about the
governance process and why it went so wrong?
Ian Watmore: The worst decision, that’s interesting.
Dr Coffey: I will ask you in a moment what your best
was but I would like to hear—
Ian Watmore: No, that is a good challenge. I think
probably the one that frustrated me most was the pitch
at Wembley just because it was something we could
control in our own backyard and it wasn’t about
intergalactic football and all the interrelations of
everybody else and it was really frustrating. When
Michael Owen ripped his hamstring or whatever in
the Carling Cup Final with Manchester United and he,
to this day, believes it was the pitch that did it. You
could just foresee that happening to a whole bunch of
England players just before the World Cup—and as it
turned out it probably wouldn’t have mattered—but at
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Culture, Media and Sport Committee: Evidence Ev 91
22 March 2011 Ian Watmore
the time we thought we had real high hopes at the
World Cup. That one was definitely a frustration.
But I think the real strategic issues that we weren’t
grappling with were the areas of what role does the
FA have in regard to governance of the game. The
answer was quite a weak role and weakening every
year and yet people perceived it to have so much more
power than it actually had, and I think that was the
biggest source of concern to the Chairman and I. You
could look at what I said about the financials of
football clubs. I was frustrated that the women’s game
was the first casualty when Setanta went bust,
everybody just said, “We won’t do the Women’s Super
League” then I had to fight very hard to bring that
back in.
We had a lot of issues around the staff and I had to
take some very tough action with the staff, the sort of
thing that is going on in Government at the moment;
pay freezes, we have ended the final salary pension
scheme. These are people who don’t earn a lot of
money, who have given their lives to the game and
what was really annoying at the end of it all was that
50% of every pound we saved there went back to the
professional football game and that didn’t seem right
either, that was a hard sell to people. So there was a
combination of things.
Q360 Dr Coffey: To give you the other side, what
was your best decision? It might be the pitch.
Q361 Ian Watmore: No, because that came after I
went, they made what I thought was the right decision
later on. I hope the best decision will turn out to be
two things: one was to reignite the National Football
Centre project. We had bought the plot of land in 1999
I think and it was still 2009 at the time and nothing
was there really, realistically. Working with David
Sheepshanks and others I think we breathed a lot of
life into that project and I think that is now off and
running.
I think we made some pretty sensible decisions around
the money side because when Setanta went bust the
finances of the FA were in freefall; it was the
equivalent to a Lehman’s Bank moment for us, we’d
lost 15% to 20% of income overnight and then the
market for what was left was deflated. So knowing
next time round we put a lot of financial stability in,
and I am sure there is still more to go, in that area.
We started the web-based TV channel, FATV, which I
think in the long run will be very important as people
move towards the internet for their football
consumption. The final thing I did do was sign the
press release that made the Women’s Super League a
reality because I was very passionate about trying to
do something for the women’s game and had some of
my best actual moments I think on tour with the
women’s team in Finland the previous summer when
they got to the final of the European Championships.
I really hoped to see that that combination of them
playing well and the start of the Super League would
get the women’s game off to a future.
Q362 Dr Coffey: What I am trying to tease out is
that you were able to make good decisions and also
decisions you were less proud of as the FA, what was
different in the governance process, if you like, that
allowed you to achieve some success? I suppose I am
trying to come from the fact that sometimes as Chief
Executive, you will get what you want all the time
and other times you don’t take everybody with you,
so what changes to the governance of an independent
board would make that different?
Ian Watmore: I think the fundamental thing when you
are a Chief Exec of any organisation is you want the
board to challenge you but you want the board to think
of themselves, first and foremost, as part of the
organisation. People from various sectors of the game
would sit in meetings of the FA and talk about the FA
as though it was a third party. They were not driving
the best decisions for the organisation, which is the
FA; they were driving the best decisions for whichever
area they came from. Sometimes they coincided and
sometimes they didn’t. I believe you need a board that
is single-purpose and focused on the organisation and
I didn’t think it was.
I also found it very regrettable that the board leaked
like a sieve, if that is not being unkind to sieves. It
sort of started on the day I was interviewed for the
job. The headhunter said to me, “We won’t send the
papers out on the Friday night because it will all be
all over the Sundays, we will do it Monday night and
the interview is on Tuesday and you’ve got a chance
of staying silent” but it was in the papers on Tuesday
morning and it went on throughout the period and I
felt that was a problem too. Again, that’s another thing
that I think is sacrosanct about boards. Boards should
be trusted by everybody on it that what is said and
done in it, is confidential to that board and it clearly
wasn’t.
Q363 Damian Collins: When you were the Chief
Executive how much time would the FA board spend
on certain things like internationals?
Ian Watmore: I would say in the board meetings I
attended, quite limited amounts of time.
Damian Collins: Once or twice?
Ian Watmore: Yes, and of course in the era I was in
everybody thought we were on a roll and Fabio was
coach of the year on the BBC’s Sports Personality;
we all thought we were going to do something special
in South Africa. It wasn’t the crisis point that it can be
periodically but in the FA board as a whole it wasn’t a
major topic of discussion when I was there.
Q364 Damian Collins: There seems to be disconnect
between what England fans, the football writers talk
about and what the FA board talks about and the
ongoing concerns about the fact that our players have
probably never played in a league consistently at such
a high level in domestic football and lots of them play
abroad, there is never more money in the game and
yet the national team grows weaker and weaker. It is
the debate probably football fans have more than any
other debate and it is one that doesn’t particularly
seem to grip the FA board.
Ian Watmore: One of the things I think is, again, I’ve
said that the board should be independent. I also think
it should be half-executive, half-non-executive and the
reason I say that is I would like to see people like Sir
Trevor Brooking in his current role as football director
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Ev 92 Culture, Media and Sport Committee: Evidence
22 March 2011 Ian Watmore
and probably Hope Powell as the leader of the
women’s game, on the board of the FA talking about
football; people who have played it, people who are
responsible for developing it in the men’s and
women’s game, people who have a pipeline of
knowledge about who is coming through the system
and what is right and what is wrong. I would like to
see the board have more people of that ilk on it from
within the FA so that these topics would be discussed,
they would be driven out and the consequences and
conclusions of that would be arrived at sensibly.
Q365 Damian Collins: How would you characterise
the failure of the FA board? Is it that there is no great
desire for reform or change, there is plenty of
discussion about it, reports written, views expressed?
Does the board either not share those views or can it
just not agree amongst itself what to do?
Ian Watmore: I think there is a very small
conservative nature to it all so change is not a
welcome word in that sense; people want to evolve
slowly rather than radically. But you do have quite
different interests around the table from the five that
come from the professional side and the five that come
from the counties. Half of the money goes to each of
them, as I have said; one half works out how to spend
this lot and the other half works out how to spend the
other. So the actual board meetings, they could be
tetchy on certain issues but they tended to be one
group of people talking about a subject, everybody
else staying quiet or vice versa and I think it was just
a sort of unholy alliance between the two groups not
to tread on each other’s patch and I don’t think that is
the way the board of the FA should be.
Q366 Damian Collins: Just finally, do you think if
the board was reformed in the way that you have
discussed—an independent board of experienced
football people—that the FA would be, if you like,
more realistic in the way it uses its resources and you
could question the way the FA has spent money in the
past on Soho offices, salaries or how managers are
paid, even the company contract Capello was given
before the World Cup? Do you think a reformed board
would be more practical about the way it uses its
money?
Ian Watmore: I do. I think particularly if you had
some good genuine independent non-execs of the type
who are used to challenging company Chief Execs
and executive teams on how they are investing
shareholder money. I don’t particularly name names
but people like Terry Leahy, he was a fantastic
supporter of ours when he was at Tesco through the
Tesco Skills Programme. You just know that people
of that calibre would drive better spending decisions.
Q367 Alan Keen: Ian, you seem to be saying that—
and I agree with you because I know virtually
everybody involved in football administration—there
are some excellent people doing excellent jobs. If we
take Richard Scudamore, who I agree with you is one
of the top people and a proper football supporter; he
supports Bristol City—
Ian Watmore: He does.
Q368 Alan Keen: He understands how supporters
feel as well as everything else but Richard’s boss is
the 20 club owners. Their interest is not in the future
of English football or the future of football at all. It
is, in almost every case, the ability of the club that
they own to make money. They may have come into
it not being worried too much about making money
but I think ego comes into it as well. But certainly the
main thing is that their interest is not the same interest
as the future of football involving youngsters’
development and everything else and supporters of all
the clubs around the country, whatever level the club
that they support is at.
It is the structure, isn’t it, that is wrong and Richard
does a great job representing those people. But if he
or you were the managing director of football as a
whole then self-interest would work, with a right in
there. Do you think it needs Government legislation
to set out a structure for football? It is obviously a
shambles, isn’t it? What do you think about legislation
to set up a structure that is for the benefit for the whole
of football, like there is in other European nations?
Ian Watmore: I think I agree with a lot of what you
say, except the concept of Richard having a boss is an
interesting one. Sorry, just joking. I agree heavily with
the fact that, as you say, the running of the Premier
League and making it the global success that it has
been today, which Richard and others are primary
movers of, has been a stunning success story and one
that we all enjoy if we like watching that sort of
football, which I do. They would argue that money
trickles down through the leagues to the other clubs.
I don’t know whether that is better or worse than in
another situation.
But what it does do is it becomes a single objective,
which is to make that league a huge success, whereas
I think what you have said is there are more objectives
than that. We want that but we also want a strong
England team and we want a growing national game
in communities around the country and we want more
women’s football, and so on. So these are things that
I think we need to line up and say, “Here’s a series of
objectives for football as a whole”. That is what I
argue in my note to the Committee, which you may
not have but you can read afterwards and see if it is
more coherent than my verbal ramblings here. You
should set out what the strategic objectives for
football as a whole are and then what role the FA
has within that and then how the FA might have a
governance structure to determine that. I don’t think
it will come about through natural causes. It will only
come about through an external impetus that is either
your Committee or the Government through a Bill or
something, because I don’t think it will happen on its
own merits. It took something like the Lord Justice
Taylor report to change football once before and
maybe this is the time to do something equally
significant for the game in the long run.
Q369 Alan Keen: You mentioned Terry Leahy. An
analogy with Tescos, if one part of Tescos is doing
exceptionally well, whatever that part of Tescos
makes, if it doesn’t fit in with the overall aim of
Tescos internationally then Tescos will do something
about it from the top downwards, whereas football is
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run completely separately. It is all run by good people
with the best intentions and if you are being paid, as
Richard is, by those 20 owners then he does a fantastic
job and it is his duty to do that, even though he
understands very well that the thing is out of balance.
Ian Watmore: I think it is possible to square the circle
of competing objectives. In a world where the best
global talent is playing in the Premier League, which
is what people want to succeed, it ought to be possible
to use the money that comes from that to develop the
best local talent to be as good as that. It is cheaper to
make, not buy, if you do it over a long period of time
and there are various clubs around who do that very
well. We can see some of those clubs beginning to
churn out really top talented English players who
aren’t just the best in England, they are actually
making it with the best players in the world. Whether
there are enough of them is highly debatable and
whether the system that is producing them is
producing them more by accident than design I think
is definitely worth questioning. I would think one of
the key objectives that we should set for the whole of
football is to grow that pipeline of talent systemically,
using the wealth that is here because of the Premier
League.
Q370 Chair: Can I just clarify: is it your view that
for the FA to have the powers you believe necessary to
impose a greater governance on the game that would
necessitate some kind of Sports Act being passed by
Parliament?
Ian Watmore: I don’t think it needs to be because it
is obviously something that people could agree to do,
but I don’t think they will agree to do it so it is going
to be an external intervention that causes them to
change. You may not agree with what I am saying but
if you did agree with it I don’t think it will come about
through just the natural process. I think it will require
something different. Whether that is an Act or a
strongly worded demand from Government, I don’t
know, but I think it won’t happen otherwise.
Q371 Chair: There is no particular reason to believe
that a strongly worded demand from Government is
going to produce a response either.
Ian Watmore: Sorry?
Chair: It doesn’t necessary follow that a strongly
worded demand from Government is going to produce
a response either.
Ian Watmore: No. I think in the end you have to look
at the restructuring. If you need to do restructuring it
needs to be forced, or at least to be threatened there
so that people might change themselves if they know
it is in the background.
Q372 Chair: Does all your experience suggest that
is going to have to happen?
Ian Watmore: If you agree with the line of direction
that I am recommending, yes.
Q373 Dr Coffey: Is the risk of legislation that it will
open up the FA to judicial review on a regular basis?
Would that be helpful?
Ian Watmore: There is a lot wrong with legislating.
Parliament has some big things to worry about and
using parliamentary time on this is one thing. FIFA
statutes don’t like government interference. It is more
aimed at different governments than ours but
nevertheless I am sure it will be used. People will
argue that it is threatening their livelihood and so on.
So it is not without risk. It would be much better if
people just said, “Look, in order to give this a fair
crack of the whip let’s have an independent structure,
run it for five years and let’s see where we go from
there”.
Q374 Chair: We have received evidence, not from
FIFA but from UEFA, recommending that we adopt
some kind of Sports Act.
Ian Watmore: okay, that is more a party role then.
Q375 Jim Sheridan: Can I clarify: external
intervention; by that you mean Government, or is
there another external intervention?
Ian Watmore: No. I think in this case it is
Government. The analogy I had with the Lord Justice
Taylor report, I don’t know whether that was a Royal
Commission or something but it was something
similar. Maybe a Royal Commission could
recommend such things.
Q376 Jim Sheridan: But there is no other
intervention?
Ian Watmore: Not that I can think of, not unless it
was a commercial proposition that dwarfed everything
that there is today and I can’t see that.
Q377 Mr Sanders: From what you are saying, do
you think the FA should have a more leading role,
actually take the leading role in regulating the
financial activities of professional football clubs?
Ian Watmore: I think the answer to that is at the
strategic level, yes. In other words, I think the FA
should set the financial regulatory environment in
which professional football operates but I think it
should then be for the leagues and the clubs to
implement that, usually through their competition
rules, which is the most effective way of doing it. A
lot is talked about UEFA’s Financial Fair Play scheme
and I think there is a sort of assumption that UEFA is
like a European governing body, somewhere between
us and FIFA. In fact that is not true. UEFA is a
confederation of associations, owned by the national
associations. What UEFA is doing is using its
Champions League competition, and to a lesser extent
its Europa League competition, to say, “If you want
to play in our Champions League competition then
you have to comply with these rules”. So it could be
that the British clubs all said, “No, we’re not doing
that”, but of course they won’t because they are
desperate to play in the top club football in the world,
so they will eventually comply.
UEFA use a competition as a means of achieving a
piece of regulation that they think will benefit the
game. I think we should set the environment at an FA
level and then let the individual competitions, in this
case the leagues, determine precisely how to
implement that, their own roles within the rules that
they impose upon the clubs that play in the league.
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Q378 Mr Sanders: But the FA could set some
parameters by which your membership of the FA is
determined. If you don’t meet them you can’t be a
member.
Ian Watmore: That is the kind of thing, yes.
Q379 Mr Sanders: Do you think the FA is fit for
that purpose, though, under its current constitution?
Ian Watmore: No, for the reasons I have said.
Whether it has the staff in there to do some of that
stuff—I think some of the people I had in that area
were absolutely brilliant. One of them has gone off to
run Portsmouth, which I think shows how good he is.
Q380 Mr Sanders: The football club or the city?
Ian Watmore: I think the city is easy by comparison
to the football club. The football club was, of course,
the disaster club of a couple of seasons ago. I think
you would need to ensure that the capability was there
in the organisation to really understand, but I think
that is a soluble problem.
Q381 Damian Collins: You joined the FA just after
Lord Triesman presented his response to the then
Secretary of State for Culture’s questions on football,
and that covered some of the ground you are talking
about. He talked about whether there should be a
financial governance system based on the UEFA fair
play rules. When you joined, what was your view on
those plans and what happened that led to the collapse
and rejection of those ideas?
Ian Watmore: It was, as you said, just before my time
but my understanding was that David and the staff
from the FA produced a version of a response to I
think it was Andy Burnham at the time, and the board
members told him that was not the submission he was
going to put in, that he was going to put in a different
one, which in paraphrase said, “See the submission
made by the Premier League and Football League and
that is the FA’s position on these topics”. I think that
was right at the start of the problems between him and
the professional game. I think he had also made a
speech that they didn’t like about debt in football, and
the combination of those two things meant it was very
tense on that subject whenever it came up in any
meeting.
Q382 Damian Collins: Were these ideas pursued?
They were in Lord Triesman’s report but from your
time as Chief Executive was this something you felt
that, “This should be an agenda item, this is something
we should be taking up on a regular basis”?
Ian Watmore: It was one we would have liked to have
done but it was made clear that the situation was not
changing, that these were matters for the leagues and
not the FA. That was kind of the line and so that was
what prevailed.
Q383 Damian Collins: Given what you said about
the FA, you can probably see why the Premier League
might not have very much confidence in the FA to
take on that role?
Ian Watmore: You can argue every one of these
things. My argument would be that if you regard the
FA as essentially an assembly of the people from the
counties who may or may not have the sort of
experience and know how to deal with this sort of big
business type of thing then, yes, you would have no
confidence, I’m sure, if you were in the professional
game. But if the body concerned was properly
resourced, staffed with the right sort of calibre people
and had the right sort of board structure then you
should have confidence. You might not like what they
decide but you should have confidence and that is why
I think a different sort of FA is required for these
purposes, one that is independent of both its heritages.
Q384 Damian Collins: When we took evidence a
couple of weeks ago from David Gill, Niall Quinn and
the Chairman and Chief Executive of Stoke City they
all agreed that the UEFA Financial Fair Play rules will
be a good model for enforcement through the Premier
League. Do you agree with them?
Ian Watmore: Each one of these sort of regulations
tends to tackle a different problem and the problem
that Michel Platini and co were trying to solve was
the combination of billionaires coming in and just
buying any player they want and paying whatever
wage they want out of the petty change of their
wealth, or alleged places where the local cities were
putting local money into the clubs. He felt it was
unfair that clubs of the Chelsea-Manchester City type,
or perhaps the Barcelona-Real Madrid models, were
bound to be strategically much more successful
because they had all this money being poured into
them and he felt that by doing the Financial Fair Play
rules that would cap that possibility and it would mean
that clubs would then have to survive on the resources
that they naturally developed. So that is what is now
coming in.
I don’t think it inherently deals with the sort of
leveraged debt takeover of a club, which you might
feel is something else that isn’t an attractive thing to
do. When Manchester United or Liverpool or any of
these other clubs find themselves in the position they
are in, or were in in Liverpool’s case, I would have
thought you should at least consider whether there
was a regulatory environment that said that sort of
thing shouldn’t be allowed from the outset. You have
some sort of capital ratio or something in the way that
the club is owned. That won’t come up, I don’t think,
with Financial Fair Play. You would have to do
something else, but Financial Fair Play will probably
eventually cap the billionaire, “I’ll have that one”
approach to football.
Q385 Damian Collins: On the Manchester City and
Chelsea stories, is their high profile something of a
distraction? When we took evidence last week in
Burnley, the Chairman of Burnley said that if you
want to sustain a smaller club in the Premier League,
on top of what you get from gate receipts, on top
of what you get from TV money, you basically need
someone who is going to put in £50 million a year in
cash every year just to hold you in the Premier
League. That has to be unsustainable.
Ian Watmore: I would argue that it is, although they
do seem to keep finding people who are prepared to
do it. People do argue that it is smaller sums but it
has always been that way in English football a bit.
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But I do believe the sustainability of that should be
questioned. I do believe that if you apply Financial
Fair Play at the highest level it should force its way
right through the system. Was it Burnley you said you
took evidence from? One of the reasons that the
Burnleys of this world get to that level is because the
Chelseas and Manchester Cities of this world have
stretched it so much up here that just to get ordinary
players they now have to pay twice the wages that
they used to have to pay and so on, and the television
money hasn’t kept up with it. So, I think having a
dampening effect at the top will eventually filter
through to the rest of the system. I think what UEFA
are doing is promising on that front, although we’ll
see if people find ways round it.
Q386 Damian Collins: In your time at the FA did
you ever look at licensing models that operate in other
countries? The licensing model in Germany is one that
is talked up a lot. It seems to be a fairly flexible
system but nevertheless it does at least guarantee a
level of oversight from the governing body of the
financial performance of the clubs and whether they
compete on a fair level, a fair level being that they
can pay their bills without going into administration
during the season. Is that something that you looked
at?
Ian Watmore: The German model is a good one on a
whole range of fronts. It is integrated to start with.
The DFB looks at leagues and the national association
is one integrated whole. It has all the strengths that
you say and we have seen for more years than we
care to remember how good they are at churning out
international teams of all types: men’s and women’s,
all ages and so on. The only counter to that argument
would be that the Bundesliga is not the Premier
League. It doesn’t have the global pulling power; it
isn’t the exciting league that the Premier League is. It
doesn’t reach consistently the last stages of the
European Champions League with three or four clubs.
I think if you were to look at the Premier League on
its own you would say it has been more successful
than the Bundesliga. On the other hand, if there was
some global downturn in football finances the
Bundesliga is more likely to come through as a sort
of HSBC bank and the Premier League would be more
difficult to pull through in that. But nevertheless I
think, for the period that we are looking at, the
Premier League has a long way to go before it runs
out of opportunity. It is only really tapping into the
early reaches of the global audience.
Q387 Damian Collins: I suppose, to stretch an
analogy, the question would be whether English
football clubs are becoming too big to fail and the
relative price of failure here is small. Leeds United
will be back in the Premier League, if not next season
within a couple of years, as probably one day will
Portsmouth. The Germans have the ultimate sanction,
which they don’t use or haven’t used yet, but there is
potentially a case where they might.
Ian Watmore: I would like to see a system that didn’t
weaken the Premier League but did strengthen the FA.
I love the Premier League as a spectator and so on. It
has transformed football in this country from where it
was in the late 1980s. I have nothing against the
success of the Premier League as a league competition
and it is well run. It has its issues, that I would like
to talk about in a sort of technocratic way some time,
but right now it is in a good place. The FA is not in a
good place at the strategic level. I would hope that we
can elevate it to have a much stronger role in football
and then we can have a strong FA and a strong
Premier League, not a strong FA or a strong Premier
League, and that I think is the fundamental thing.
Q388 Damian Collins: Finally, with regard to
financial oversight, we discussed last week with Leeds
United the fact their Chief Executive doesn’t know
who owns the club. Do you think that is wrong? Is
that the sort of thing that the FA, even if not having
actual power over, should take a sort of moral
leadership on and say on some of these practices,
“There might be nothing wrong with what is going on
but it is questionable and not transparent and not the
way we do things”?
Ian Watmore: I think one of the good principles of
governance in any organisation is transparency, and I
would apply that to football.
Q389 Paul Farrelly: Ian, I just wanted to return, as
we wrap up this session, to a few specifics about the
FA. First of all, I wanted to take a few of the points
that Damian was exploring on finances and talk about
something that did happen on your watch. We know
what happened to Lord Triesman’s paper but I have
been passed a paper—not by you or anyone associated
with you—called Football Finances that you
prepared, I understand, in February 2010 and which
was for discussion among a joint management group,
including yourself and the Chief Executives of the
Football League and the Premier League. That was
prepared just a month before you resigned. Could I
ask you what was the reaction to that paper that you
prepared?
Ian Watmore: I think it was more of the same as we
have been talking about, which is this is not a matter
for the FA really. I think there was an initial worry
that we were trying some sort of takeover or some
political stunt or something, which I wasn’t. I was just
trying to write down the issues as I saw them and try
and put them in a sort of consultative way that would
get us talking. It was made reasonably clear that that
wasn’t the direction that people wanted to go in. They
gave us comments on it but I think it was just one of
many things where I realised I was just butting up
against the governance ceiling and it was time to stop
wasting my time and go and do something else.
Q390 Paul Farrelly: Was that the straw that broke
the camel’s back?
Ian Watmore: Not especially. It was one of them.
There was a month of quite a lot of things happening.
One of the ones I found hardest to deal with, although
it is probably never spoken about, was I think David
Gill rather sensibly recommended that the decisionmaking bit around who gets what suspensions and did
they really punch somebody in the face or not, the
sort of compliance unit thing, should be outside of the
core FA and in some way with some unimpeachable
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figure running it. I have quite a lot of sympathy with
that. The flip of that is that the Football Regulatory
Authority, which is the bit that sets all the regulations
and so on in the first place, would come back inside
the FA. At the moment it is in an arm’s length status.
I think it is analogous to a Government Department
setting a regulation but running the operation within,
which is 100% the wrong way round. The problem I
had when I was reviewing that was if I brought the
FRA back inside it would go immediately under this
conflicted board and then it wouldn’t be able to make
the decisions that it needed to make. So I got into a
place where on almost everything that I was moving
on I saw cul-de-sacs and I decided I would just go
and do something else.
Q391 Paul Farrelly: You have just covered one
question I was going to ask, probably the last
question. Your paper, was it ever discussed at the FA
board at all?
Ian Watmore: No.
Paul Farrelly: It just remained among this
management group?
Ian Watmore: Yes. We tabled it over time but—
Q392 Paul Farrelly: When you said that they
thought it wasn’t for the FA, who in particular thought
it wasn’t for the FA?
Ian Watmore: I don’t want to go into particular
individuals, conversations that are private, but I think
the generality of the position that David had when he
first tabled his approach remained, which is that for
these matters the leagues were the people to do it and
they should do it themselves and we should just butt
out.
Q393 Paul Farrelly: The danger here is that there
are so many papers lying around, so many
recommendations, that someone will always find a
reason to disagree with something because somebody
else has said something different. That is something
we have to wade through. You make some interesting
comments that at present the game is applying the
so-called fit and proper rule in a sort of not legally
disqualifiable way, which is taking a different
judgement. You have mentioned capital ratios
previously but you argue that perhaps the game might
adopt a fit and proper business case approach as well.
You argue in particular about a ban on securitising
future revenues and player securitisation so that we
don’t get the West Ham-Sheffield situation. You even
go on to the football family taking such a collective
responsibility that, like the Government with schools,
it puts clubs into special measures. All of these
suggestions were batted away, were they?
Ian Watmore: In effect. The topics in there, the
intention of that paper—as you say, it has never seen
the light, I think it was leaked by somebody to
somebody else and it has probably moved around—
was to say there is no right answer, there is no silver
bullet, but we do have some issues. We have our two
most famous clubs in these debt problems, in
Liverpool and Manchester United; we have the club
that has produced more England players of high
quality than ever, in West Ham, in the hands of
creditors to an Icelandic bank that has failed; we have
one of our oldest and most famous clubs, in
Portsmouth, being the laughing stock of the Premier
League, as it was at that point. We ought to be at
least discussing the sorts of things I put in that note
in deciding are any of these things really the answer
or should we just let free market reign? As somebody
once put it, debt is the slavery of the free and I think
debt is the slavery of the free market if you take it to
an extreme. There is obviously good debt, there are
reasons to go into debt to build a stadium or
something like the approach that Arsenal have taken
to building Emirates and then selling off their old
ground and gradually getting back into financial
balance, but debt for the sake of it is troublesome over
the long term. I think we should be looking at ideas
for how to control that without stifling the inherent
success of the underlying leagues, which I am proud
of.
Q394 Paul Farrelly: I have a couple more questions
about the FA. I think we are quite clear on what you
would like to see. It is going way beyond Burns and
having an independent FA. What would be the best
model in professional sport or professional football,
possibly from overseas, that you would compare your
ideas with?
Ian Watmore: I don’t think there is a particular sports
model where I would go, “Yes, that’s the one to
follow”. Each of them has their flaws. The German
football one is a great one but it could be challenged
on the strength of its primary league. The Spanish
produce great clubs but one of the reasons they do
that is they skew all their television money towards
Barcelona and Real Madrid and not through the rest
of the league, while the Premier League is very good
at flattening its distribution of cash from top to
bottom. We all know that most of the other sports,
England cricket, English rugby and so on, have had
some of the same problems. It has emerged from one
place into another. I think the thing that makes
football in this country different is the global success
of the Premier League makes it such a
disproportionately big event. To some football fans
now club football is what they watch in preference to
international football and in almost all the other sports
it is the other way round. Even today club rugby
hasn’t reached the point where it dominates national
rugby.
So I don’t think there is an obvious one. I looked at
the States models and talked to Ivan Gazidis who
came out of major league soccer in the States. There
are some things there but it is a closed system there
and I don’t think we have that. So I think we have to
fall back on the fact we have the model we have with
strong leagues and a national association. If you put
governance around the national association, like you
would a top PLC company, which is half executive,
half non-exec, where the non-execs are chosen for
their independence and their skills, I think you have a
real chance that the national association could thrive
without killing off the other two things.
Q395 Paul Farrelly: Under the governance
arrangements, would you like to place the FA Council
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in the position of a supporters’ trust with a club where
it may be consulted but it doesn’t necessarily have
any—
Ian Watmore: I think I argue that it needs to cede
more powers to this independent board and not be the
ultimate parliament of football, but I wouldn’t do that
without the independence, because at the moment it’s
a check and balance thing that is there to stop
ridiculous things happening. But I do like the people
on the FA Council, not just because I like them
individually but they do have a real breadth and
wealth of experience and I think we should tap into it.
Q396 Paul Farrelly: My final question is that the
coalition agreement talks about supporting the cooperative ownership of football by supporters. My
party’s manifesto, for whatever reason, talks about
mutualism at the heart of football as well. What is so
special about football that we, as a committee, should
be making any recommendations about the future
direction of the FA at all?
Ian Watmore: That is perhaps a question for you, but
I think the difference between football and other
sports in this country is it does occupy a greater
importance to people up and down the land en masse,
whether it is playing or refereeing or watching or
talking about it in the pub or helping your kids
through or finding a way if you’re disabled into
participative sport. It is just massively impactful on
British life, and it is British life not just English life.
I think it is therefore appropriate that the Parliament
of the day should have a view on whether something
that important to the people is in a healthy state. If it
is not it should certainly ask questions and then it
should decide whether it goes further than that and
make recommendations and even laws.
Q397 Dr Coffey: You were quite glowing about the
German game earlier and the German FA. They do
not have any independent directors on their board, so
is it about structure or is it about personality and
people?
Ian Watmore: I think the lack of independence in
Germany is because they have bundled everything
together. It is one integrated organisation where they
look at the whole. We have separated. We might as
well recognise that, and that the Premier League is a
self-standing entity under its own right. It is
technically called the FA Premier League, but to
everybody in the world it is the EPL or the PL. The
Football League has reinvented itself massively
successfully after the ITV digital fiasco, and we have
the national association, that is the oldest one in the
game. It annoys people around the world that it’s not
called the England FA, it is the FA, a bit like the Open
Golf Challenge, it is not the British Open. It is the
oldest; it is 150 years old in 2013. I don’t think we
should be trying to push all of those organisations
back together à la Germany. You might take a
different view. I think we can achieve the success of
the Premier League and the success of the FA by
giving it strength and teeth, and I think that comes
from independence, but you may form a different
view.
Chair: Thank you, that has been very helpful.
Q398 Jim Sheridan: You spoke earlier about a
vested interest in the FA. There is no one with more
vested interest than the fans, is there, or should there
be a structure that involves some sort of interaction
with the fans and the FA?
Ian Watmore: I think that is a great question. I argue
very strongly yes, that whatever the FA is, it should
be consulting with the fans and the players, the mass
participation of the game as well; it is not just fans, it
is players, Sunday morning kids and parents and that
sort of thing. I think the FA needs a much better way
of consulting with and engaging with those people.
There are groups, as you know, like the Football
Supporters’ Federation and those sorts of things where
I think that there is a councillor slot on the FA Council
for at least one of those groups. They have a role to
play, but they are campaigning on particular issues
and I think they tend to attract people who are
passionate and fanatical about the way sport is run, so
they have an interesting view to tap into, but I think
the FA needs to find ways of engaging with the broad
mass of the public. I would say a bit like in
Government these days, people are looking
increasingly to the social media as a way of tapping
into people. I think football needs to do that much
more broadly.
Q399 Jim Sheridan: Secondly—hopefully a yes or
no answer on this—after listening to what you have
had to say today, would it be proper to assume or do
you feel that at any time that you, and subsequently
the FA, were bullied by the Premier League, or by
individuals of the Premier League?
Ian Watmore: Do I think that the FA—
Jim Sheridan: Do you ever feel you were bullied?
Ian Watmore: No, I am not a person who is easily
bullied, so—
Jim Sheridan: Were there attempts to bully you?
Ian Watmore: I don’t recognise bullying. People have
argued passionately the opposite case and people have
become frustrated when I have made my point, but I
didn’t personally ever regard I was bullied.
Chair: Thank you very much.
Ian Watmore: Thank you.
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Ev 98 Culture, Media and Sport Committee: Evidence
Examination of Witnesses
Witnesses: Richard Bevan, Chief Executive, League Managers Association, Steve Coppell, Former Manager
of Reading, and Martin O’Neill OBE, Former Manager of Aston Villa, gave evidence.
Q400 Chair: For the second part of this morning’s
session, can I welcome Richard Bevan, the Chief
Executive of the League Managers Association, with
Martin O’Neill and Steve Coppell? Your organisation
represents managers from the Premier League and
then goes all the way down to League 2. Can you just
set out what you see as the main issues affecting them
and to what extent they differ between the top and the
bottom of the pyramid?
Richard Bevan: Yes, on the main issues affecting the
managers, the LMA’s history goes back to 1919. It
used to be the League Secretaries and League
Managers Association. The LMA was formally
launched in 1992. I think probably the biggest change
since 1992 will simply be employment issues. That is
the key one. The average tenure of the job back in
1992 was about three and a half years. It is now sitting
at 14, 15 months—I think I am about to lose a
manager in the next five minutes as well. But also in
the Football League last season, the average tenure of
a sacked manager was around about 10 months. I
think a very worrying stat for the game, which is
reflective of the game and worrying for all the
stakeholders, is that there are about 46 clubs at the
moment that have a manager that has been in place
for less than 11 months. If you take the manager being
the most important person at the club, as the one that
gets the sack most regularly when things go wrong,
then you have to presume that is very bad news for the
game. Certainly in a business corporate environment,
politics and any other environment, that would be
something that you would have to address fairly
quickly at the top.
Secondly, not particularly sexy issues but very
important issues, many of our managers don’t get
private healthcare, so in the LMA we recently set up
a health trust. We now have 60 managers in that. If
you can imagine getting the sack every 12 months and
you are out of work for, on average, 16 months, you
have to make sure that there is healthcare as well as
other basic needs. So the LMA is very much a family
from that perspective.
Thirdly, I think very importantly, what we are trying
to change is our ability to collectively take the views
of our members and to lobby both at home and
internationally across Europe. We have 91 managers
in 30-odd countries. I think it is somewhat ironic that
today in UEFA they are voting on new members of
the UEFA executive. There are 13 nominees for seven
places, and out of those 13 nominees, there are five
ex-players that have been nominated by different
countries around Europe by different FAs. The FA has
never nominated any ex-player, nor to my knowledge
has it ever had an ex-player on the board. Even Trevor
Brooking isn’t on the board of the FA. I think what
you need, like Mr Platini did representing France, you
need to make sure that you have young, energetic
people, not people, with all respect, in their 70s
joining the UEFA executive. So over a period of 10
years, or 15 years, we can try to ensure that we get to
a much better position, that we can help influence the
game in a better way. Perhaps taking our stock at the
moment, the Under-21 Championships, we went in for
that alongside Wales, Bulgaria and a couple of other
countries and it was recently awarded to Israel, so that
probably reflects where we are at.
Lastly, we are in regular communication now with
coaches across Europe. We are setting up a number
of meetings and think-tanks and we do intend to be
proactive. In many ways, like it or not, with some
stakeholders, the LMA, the players and perhaps the
supporters as well are probably the best policemen in
the game at the moment.
Q401 Chair: Can I come back to the first point you
made about the ever-diminishing average tenure of a
football manager? To what do you attribute that and
is there anything you can do about it?
Richard Bevan: There are a number of things that I
attribute it to, mainly the world we live in, the lack of
managing expectations at a certain number of clubs,
the 24/7, the pressure, the financial issues as well, the
reward for getting into the Premier League are now
reportedly in the region of £90 million. Equally, if you
get relegation or even going out of the league, the
pressures will be different, and they are exaggerated
by the very nature that we are living in a 24/7 media
world and the internet, Twitter and everything else.
In terms of can we do anything about it, yes, we can,
short, medium and long term. Short term we are
pushing for standard contracts. We are encouraging
our managers to have the objectives of the club very
much written in writing, “What are we looking to
achieve in three months, six months, 12 months?” and
helping to manage those expectations, and very
importantly, the LMA is very much moving into the
role of developing training, coaching and management
education. We are moving into the National Football
Centre in July next year, and along with three business
schools, we intend to build upon the leadership
management. We have recently been working with
companies, major plcs in the country such as Castrol,
Barclays, Jaguar and a number of other companies,
because we are looking to bring that leadership model
in, because there are probably three aspects of being
a football manager in what I have learnt in the last
three years since I’ve joined: leadership, management
and coaching. The FA are very much delivering the
coaching and education and we are going to be
delivering the management and the leadership
training.
The total spend in football is embarrassing for the
game. Less than £750,000 is spent on the development
of our technical staff—that includes referees—in
terms of technical training. We did a recent report with
the Warwick Business School on the film industry, the
comparison between the film industry and football.
Very similar, £3 billion turnover—the entertainers, if
you like—and in the film industry, they spend around
about 5%, 6% of their turnover on training of their
technical staff, which is fantastic, because that is why
our British technicians are wanted all around the
world, and that is why we are winning Oscars. So
hopefully if you were to look at the LMA in five
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Culture, Media and Sport Committee: Evidence Ev 99
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
years’ time, you will see it is very much focused on
the delivery of coaching and management. I think if
we achieve anything like the goals we have set
ourselves, then we will improve longevity, because we
will prepare our managers better.
Q402 Mr Sanders: Can I ask Steve and Martin your
experience of management? Is it becoming harder for
clubs to bridge the gap between the Championship
and the Premier League?
Steve Coppell: I would say most definitely without the
input of a benevolent millionaire who would invest,
as we spoke before, the massive sums of money. In
my experience at my club with Sir John Madejski, at
Reading in particular we tried to bridge that gulf, and
even though he is a wealthy man, his ideal all along
was the club should sustain itself, which it can do
very successfully at one level, but when you get to the
Premiership now, the Premiership is without doubt a
power league. You can more or less forecast who is
going to finish in what position at the start of any one
season, based on the power reference of each club
within that league. There are always one or two
exceptions, but that cannot be sustained without the
finances involved. So to answer your question, I
would say most definitely it is very, very difficult to
go beyond the one or possibly two seasons’ success
without the input of substantial funds.
Q403 Mr Sanders: Can I ask, Martin, is it possible
to challenge for a Champions League place on a
regular basis without a very significant financial
outlay?
Martin O’Neill: On a regular basis, I would probably
very much doubt that. I think statistically it has been
proved that only Everton and Tottenham Hotspur
obviously have broken into that top four in the last
seven or eight years. I think it is the dream and I think
the dreams are always worth pursuing. I suppose from
the country where I was born that is what we lived on
most of the time. So, yes, I think it would be very,
very difficult, as you mentioned, on a regular basis.
However, Tottenham Hotspur are making a terrific
effort at the moment. First of all, they have done it,
and I think it has been a magnificent achievement, not
only in getting there, but what they have done in their
first season in the Champions League, now contesting
the quarter-final. So for teams of that ilk, and I am
talking about perhaps maybe tradition, history, crowd
support, yes, I still believe—Tottenham have shown
the way recently, Everton did it before that—that it is
possible. But on a regular basis without that input, that
financial input, it is difficult.
Q404 Mr Sanders: Can we ask why you left Aston
Villa?
Martin O’Neill: You can, and I would not answer that,
primarily because there is a tribunal coming up in the
next month or two and I am not at liberty today to
speak about that, but I appreciate you asking me the
question and asking about my wellbeing.
Q405 Mr Sanders: In general terms, is there a
connection though to the difficulties and the
competition for wanting to achieve a top four position
and where you are today?
Martin O’Neill: You make a very, very good point. I
think that Richard touched on it. The managing of the
expectation is—well, let me start by saying that the
world in which we live in now seems to be—I only
say seems to be—instancy. We are looking for instant
success and because we have instant access to things,
I think the other seems to want to follow, or people
feel, if it is there for you, you are capable of doing it.
What I am saying is that you set out with a number
of ambitions, a number of goals, you try to achieve
those and if you have a little bit of a success early on,
then people are looking for more, they are looking for
more. I think that that has been the difficulty in the
game. I am not saying that it didn’t exist some years
ago, of course it did, but with the financial situation
being so, so strong now, the possibility of failure in
the Premiership, the possibility of relegation, then the
thoughts of getting into the Champions League, it has
reached a zenith.
In my 20 years of management, I have seen a lot of
positive changes in the game. It is still a wonderful,
wonderful game, and, for instance, if you look at the
stadium improvements, if you look at the racism that
we were trying eradicate, all great news. Then I often
think to myself, “Well, has the game changed at all?”
and I will bring you back to just a little story. About
31 years ago, I sat in a dressing room in the City
Ground, Nottingham Forest, as a player, and we were
part of a very, very successful team, the team was
going very well indeed. In stomped a colourful
megalomaniac, who had obviously had a bit of an
issue that morning with something or someone. At
that stage, he was the most successful manager in the
country. He had just won the European Cup, and
within a couple of months he was about to win another
European Cup, and he stomped into the dressing
room—now Brian Clough could stomp into any
dressing room and he could be irked by anything, but
obviously he was chuntering about his board. They
had upset him that morning, I don’t know, perhaps
because they hadn’t given him something that he had
felt was his due, but he almost read the situation,
because there was a number of us who were reaching
that age where we were thinking about management,
certainly thinking about coaching, and I think he had
almost a telegnostic feel about it, because he said, “If
any of you lads are thinking about management,
don’t”. He said, “The only inevitability about this job
is you’ll get the sack.”
I wonder whether anything has changed over that 31year period. Certainly statistically, as Richard talks
about, it wasn’t as severe, managers were getting
longer in those days, although still getting sacked, but
it has reached a level now where I think managing is
still a terrific job but it has become exceptionally
difficult.
Q406 Mr Sanders: Is it more difficult to manage
expectation than it is to manage a football team? I
wonder whether, Richard, I could ask you, what
support you give to managers in order to help them
manage expectation.
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Ev 100 Culture, Media and Sport Committee: Evidence
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
Richard Bevan: That is a very good question.
Managing downwards and managing upwards are of
equal importance, and I think probably the traditional
Chairman in football is going. Issues have arisen in
negotiating over 100-odd compromise agreements in
the last 12 months or so, because we also represent a
lot of coaches, we have lost about 36 managers and
about 48 coaches so far this season. One of the
problems is who in the football club am I ultimately
responsible to? There seems to be in a lot of clubs,
particularly in the Football League, two or three
directors that have investment in the club, they are
having a say in the club, that want to play in a
different way and so I think that is very hard for
managers. In terms of what we are doing about it,
particularly when managers are out of work, we have
the Warwick Business School football management
course. We are working on 16 three-day modules of
leadership and management, and media training is in
that. Also, we monitor media interviews of our
managers and we help them, and some have a greater
need than others and some have a bigger drive, but
what I find working for these guys, is that there is a
massive appetite for learning. There are 100,000
matches of experience between the members. That is
a lot of knowledge, a lot of passion and I want to try
and harness that.
I think you talked earlier about Europe, and we looked
at Europe, we looked at the way Holland works, we
looked at the way Germany works and the one thing
that is very clear—to me, anyway—about Europe is
there are very few turf wars in those countries. They
work together. Their strategy is more unified and I
think proper governance, correct and successful
governance, is all about participation of the
stakeholders in making the right decisions, but getting
them to embrace those decisions and that doesn’t
happen, if at all.
Q407 Paul Farrelly: We have heard from Steve
about John Madejski at Reading, but Martin, can I
just come back to Aston Villa? I can understand the
difficulty of managing conflicting objectives, such as,
“We expect the team to do this, but we are only going
to do this and we are only going to give you this” and
some people might want to take a stand and say, “I
cannot fulfil that objective for you”. But if you are
looking at the Premier League and below in the round,
take the perspective of just up the M6 from Aston
Villa, from my club, Stoke City, for the likes of Stokes
City it is an absolutely good thing for people like
Randy Lerner to pull the horns in and not join the
splurge, just as it would be for John Madejski not to
join the splurge. Because if it is unsustainable, the
way all the decisions on transfers and paying people’s
wages filter down, it affects the financial viability of
all the clubs below, so isn’t it a good thing that the
horns were pulled in in terms of not going on any
more spending sprees?
Richard Bevan: Can I answer that question, because
there is a Premier League managers arbitration and if
Martin answers that question he could conflict himself
out for what is going to be an important tribunal? So
I don’t think you can ask questions that relate to Aston
Villa because—
Q408 Paul Farrelly: Let me phrase it generally: is it
generally a good thing that unsustainable spending
sprees do not happen?
Martin O’Neill: I think that Mr Watmore touched on
this, and he talked about the top clubs in the
Premiership, where they have been on massive
spending sprees, and therefore other teams, to attempt
to catch up, proportionately they have to spend some
money. Now, I accept your point entirely. I believe
that football clubs—was it Deloitte that mentioned
something about the 65% wages to turnover? I think
that is something that clubs should aim for and
attempt to go for, and I do agree in principle that you
can only deal with what you are able to bring in, and
if you cannot compete against Manchester United and
you cannot compete against Chelsea, it doesn’t stop
you attempting to do so, but then I think then that you
have to get some sort of—for want of a better word—
reality check. But that doesn’t exist in the
Premiership, and you have just mentioned Stoke City.
Tony has done a wonderful job there, absolutely
wonderful job. The day that they made it into the
Premiership was a fantastic day for Stoke, but Stoke
believe that they belong there, even though they
hadn’t been there for quite some time, and now, last
year, when they finished I think about 10th in the
league, it was terrific. This year, would 11th be good
enough for Stoke City this year? I wonder. I will
throw it back to you.
Paul Farrelly: We might come on to that in a
moment.
Steve Coppell: Can I just add a little bit there? You
cannot compete with the big clubs financially, so you
try and compete at a different level, which is the
nurturing and development of talent. Now, again, the
big clubs can spend more money, but you can provide
a more caring atmosphere with a route through to
progress. I think that is the attraction of the clubs who
are trying to compete against the mega-giants. It is the
only way you can sustain it and perhaps, in the future,
if we have more home-grown players demanding to
be in the squads, which I think is a fine development
for English football and would protect our national
team to some extent in the future, I think that is the
way forward.
Richard Bevan: Certainly in the Football League, I
think there is only one club that has just posted a
profit, which is Swansea. There are 653 clubs in 53
leagues across Europe and over 50% are losing
money. So certainly, whether it is under a licence or
whether it is a different type of UEFA financial play
rule that is reflected down the leagues, we would very
much like to see the ability of clubs managing cost
controls to a greater extent.
Q409 Alan Keen: Just a small question about the
LMA. I am mindful of what the FA are trying to
achieve, and that is to professionalise, not just at the
club managers’ level but coaching and further down
so that we can bring people up through the game. But
there is one problem, sometimes it is managers who
sack coaches. A new manager goes into the club and
they quickly get rid of three or four coaches and take
it further down to bring in people that he works well
with. I can understand that. Martin is known to have
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Culture, Media and Sport Committee: Evidence Ev 101
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
worked with a team of coaches, but how has the LMA
approached it to sort of deal with that? Are you trying
to aim at getting a level within a club where they
would be looked upon as permanent coaches, say with
the under-17s and others, so that a new manager
coming in is free to bring his own coaches in at the
level for the first team coaching and other assistant
coaching, maybe for the reserve sides, so that that
coherence of tactics and everything else is okay, but
at least the other people in the club below that level
are fairly safe to pursue their career for five or six
years or indefinitely, as it were?
Richard Bevan: Certainly in 1992, when Graham
Taylor, Howard Wilkinson, Lawrie McMenemy and a
couple of others formed the LMA, it was very much
because there were issues between coach and
manager, whereas in recent years, it has gone the other
way. We are representing and have represented—
employment issues in particular—over 40-odd
coaches so far this season, and those coaches have
been represented because of the request of the
manager. Certainly there are some cases where
managers will take their coaches with them. In terms
of managing the conflict, I think there is conflict in
every walk of life and it is how you embrace it, so if
we were dealing with a manager and a coach in the
same club, where there was a breach—I have not had
to do that in three years—we would use separate legal
advisors, as with the PGA, if they were dealing with
golfer on golfer.
Steve Coppell: I think you would find as well most
clubs within their academy system have fairly stable
environments. I think they were designed to not be
affected by the incomings of a new manager, so the
development of young players is very much insulated
from who is managing the club. It is not a separate
entity, but it does have a special consideration.
Q410 Alan Keen: At what level would you go to?
Academy would be the obvious level that you want to
perpetuate for years. In my own team, Middlesbrough,
they set a—
Steve Coppell: Yes, development, you’d go to
development level, I think. It is the prerogative of any
owner or manager to employ his inner sanctum staff:
people, like any relationship, you have to trust, and
that trust is usually developed over time.
Q411 Alan Keen: Even with physio, would the new
manager want to bring his own physio in, for
instance?
Martin O’Neill: That is possible. I take your point, in
principle as much as anything else. Any new manager
who is stepping into a football team and will concern
himself immediately with what the youth team is
doing is deluding himself. He should take himself off
to the nearest insanity place, because he is not. He is
dealing with football. He is dealing with football first
team issues. That is what his job consists of. It
consists of that immediately. If he gets the time, if he
gets, as they have often talked about, these five-year
plans—I have never seen one myself—where
someone steps in and has time to look and see what
is happening at youth team level, he might get an
opportunity to have a look at the youth team within
six or seven weeks of coming into the football club
and then it is up to him to take as much interest or as
little interest as possible.
Steve has made the point that they are usually almost
separate entities and chairmen like them to be separate
entities, because the chances are if the manager is
going, it would be because of first team results,
obviously. Yes, a manager will take in some of his
staff, but surely that is something that the club must
be thinking about when they are about to sack the
manager in the first place.
Q412 Dr Coffey: Mr Coppell and Mr O’Neill, you
have both been exceptionally distinguished players
and successful managers, are you concerned that the
influx of foreign managers is restricting the
opportunities for English or UK managers?
Steve Coppell: Personally, I am. As an English coach,
I feel to a certain extent offended that we don’t have
an English manager of the national team.
Dr Coffey: That was going to be my next question.
Steve Coppell: As you know, I think the LMA at the
moment are working with initiatives to try and
educate our coaches and managers to be better at their
craft so that in the future that won’t be an attractive
option. The same with our players; to have so few of
our players playing every week, every Saturday in the
Premier League I think is something that we should
be concerned about as regards the overall picture of
the success of the national team. I just think it is
wrong. We should have more protection within our
game for talented people. The responsibility is with
the clubs to produce the best home-grown players they
can. It is their responsibility, without doubt, not to
cherry-pick around the world and invite those players
to come and take advantage of the finance that has
been generated within our game. Similarly, with the
managers and coaches, there should be a more defined
route of progress, educational process, which again
the LMA are taking a lead on, so that when an owner
of a club, whether he be English or foreign, looks at
the contenders out there to run his club, he will say,
“Well, the English system is the best system, they give
the best education and time has shown they produce
the best results”.
Richard Bevan: Can I give two important facts before
I pass it on to Martin? One, there’s only nine overseas
managers in the 92 clubs. It is a misconception there
is a lot, but obviously in the same way that the best
players in the world want to come and play in the
Premier League, so do the best coaches and the best
managers. In terms of having an Englishman as our
English manager, there are about 60 Englishmen
managing in the 92 clubs, and I come back to the
training point I made earlier: what are the FA doing
in terms of vision and strategy for four, five, 10 years
ahead, and are they saying, “Are we identifying the
talent? What are we doing to help train those
individuals to improve, so we end up with a dozen or
so candidates to become the next England manager?”
Martin O’Neill: My view was concurring with
Steve’s, but having listened now to Richard and those
statistics, I think I will keep quiet.
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Ev 102 Culture, Media and Sport Committee: Evidence
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
Q413 Dr Coffey: I was going to ask, do you think
the FA should restrict the manager to being a UK
national, but I think there seems be consent that that
is true.
Steve Coppell: I think the qualification rules for the
national team now should apply to the manager as
well, which doesn’t restrict foreign managers but it
makes it more difficult.
Richard Bevan: We have about 10 managers, who
are managers of other national teams as well, Finland,
Panama, Uganda, India.
Dr Coffey: Tony Adams, Azerbaijan.
Richard Bevan: Yes, Thailand, and 90-odd guys
working abroad, so as we train and develop our young
coaches, they will go abroad to get experience.
Q414 Dr Coffey: From what I have taken from what
you have suggested, the LMA is taking the leading
role in educating managers, but should there be more
mandatory levels of UEFA licensing, not just in the
Premier League, but up and down our leagues?
Richard Bevan: If you look at the number of UEFA
qualified coaches in this country, it is around about
2,700. If you compare that to Germany, it is 32,000,
to Spain it is 29,000 and Italy is about 27,000. But I
think what the National Football Centre will bring is
a focus on quality, not quantity, and as well as the AB
and the pro licences. We have about 140, 150 coaches
with the pro licence; the figure in other countries in
Europe is over 1,000. I think the key for a coach, a
young coach, and a manager is that there needs to be
a clear pathway. If you go to Holland and you want
to become a coach or a manager, there is a very clear
pathway of how you go up the ladder. If you have not
played the game or if you come out of the game early
and you want to become a coach, there hasn’t been
that clear pathway. Although we are leading the way,
we are not trying to take control of coach and
education management, what we are trying to do is to
work in partnership with FA learning in order to
ensure that the people we represent get a broader
cross-section of training. In League 2, for example, it
is my opinion that you need to probably understand
the commerciality of the club if you want to survive
longer than 12 months. You need to understand what
the ambitions of the Chairman are, you need to
understand the budgets and the cash flows and maybe
even read a balance sheet.
Q415 Ms Bagshawe: I just want to come in on a
little supplementary to Mr Coppell’s answer there.
You said that it is the responsibility of the clubs to
develop players for the national team and that it is a
great shame that we have so few English players
playing in the Premier League. Would you support
some kind of quota for English players per team in
the league?
Steve Coppell: Yes, I would. I would, to protect our
own talent and to put more emphasis on clubs to
produce the talent that will play for England in the
future. Again, it is a pathway, as Richard was saying
there. If you sign for a big club now, you know that
the big club, unless you are the top of the tree, are
going to buy somebody from somewhere around the
world, and that makes our league game more
attractive. If you go anywhere in the world, they will
be watching Premier League on the television in the
afternoon, so it is that dilemma. But as somebody who
played for his country and loves the England team, I
want the England team to almost run parallel with the
success of the leagues. Is it possible? I don’t know,
but I think we can just move a little bit more the
balance away from the league itself towards a
national team.
Q416 Ms Bagshawe: What about you other two
gentlemen, quickly?
Martin O’Neill: I think it would improve Mr
Capello’s choice of a game on a Saturday afternoon
anyway, if he is getting to see more English players
playing in the Premiership.
Richard Bevan: Personally, I am less about quotas,
less about restrictions. I am more about better
governance, better people leading our game, a more
unified approach, an agreed strategy, and if we had
those, we wouldn’t have to worry about quotas.
Q417 Philip Davies: Just pursuing this theme,
shouldn’t it be the free market and it all be done on
merit, and presumably given that it is such a resultsorientated business, if the best players are English,
they will get in the team; if they are not, they will not
get in the team? Do you not think that if you had this
kind of—laudable though it is—aim to force clubs to
develop more English talent, would that not in itself
damage the Premier League in the sense that one of
the reasons presumably why there is so much money
in the Premier League is because of all these stars
come from around the world to play in it? That is the
thing that gives it the kudos, why it is so important.
Would it not damage the league itself to do that?
Richard Bevan: I think on that particular point, you
only have to go to the top of the tree in the FA, and
what you need is you have to first of all identify
players, identify the talent. Secondly, you have to
make sure they have enough hours to be trained.
Thirdly, you have to make sure that the coaches that
are coaching them are the best in Europe, and the
point where you do need assistance, which is why I
am sure the Premier League have gone for their 25man squad rule, and the use of a minimum of eight
players locally, I think that has to do with making sure
that the Premier League and the FA have the ability
to—I have just forgotten the thread. The point I was
making, the last point, is that you must create
opportunities. I think the Premier League and the
Football League, it is about opportunities for our
domestic players, that is key.
Steve Coppell: If the purpose of the English game was
to provide the best and most exciting league
throughout the world, I think you could say that we
have been fairly successful, but if the purpose of the
English game was also in combination to make a very
competitive England team, which every two years
would make us very happy, rather than making us
reasonably unhappy, then we have been unsuccessful.
We need to try and combine the two, and I don’t even
know whether it is possible, but I think we can make
a better fist of it than we are at the moment. Again, it
is all down to that responsibility of clubs and the
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22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
Premier League to a certain extent to maybe shift a
little bit of power towards the national game.
Q418 Philip Davies: Can I ask about the
qualifications issue for football managers, because
every so often it seems there is a controversy. The last
one—Alan will know more about this than me—the
one that springs to my mind, I think, was Gareth
Southgate, who I think had been appointed as manager
of Middlesbrough and he hadn’t gone through all of
his coaching qualifications and all the rest of it. Where
do you stand on that? Just because somebody does not
have a particular qualification does not surely mean
that they are not going to be any good at managing a
football club, does it?
Richard Bevan: I think if you are going to become a
surgeon, you wouldn’t expect a surgeon not to have
the right qualifications.
Q419 Philip Davies: It is the same parallel?
Richard Bevan: I think it is a good example, yes. If
you take Europe, we are the only country in Europe
that doesn’t have mandatory qualifications, although
the Premier League do now, and the Football League
have been moving very closely towards that. In Gareth
Southgate’s case, it was also because Steve McClaren
was taken by the FA to become the manager of
England, and they wanted to promote him through.
There have been four or five occasions. What the
Premier League are doing is saying that as long as the
manager is going through his qualifications, they do
on occasions and have made about five or six
exceptions.
Q420 Philip Davies: My reading of the situation is
that somebody like Martin O’Neill has been a
tremendously successful football manager, not
because of his coaching qualifications—if you do not
mind me saying so—but because of your ability to
inspire the people that play in the club, your man
management skills. It always strikes me, as an
observer, that the ability to manage people and to
inspire them to play better and to fulfil their potential
is a far more important asset in being a successful
football manager than necessarily the coaching
qualifications that you have. So surely somebody who
is a great man manager, somebody who inspires
people, who might not have all of the coaching
qualifications, I put it to you would prove ultimately
to be a more successful manager than somebody who
cannot inspire the players in the same way but has all
the coaching qualifications.
Richard Bevan: I think the point you are making is a
good one. At the same time though, being a successful
manager is about leadership, management and
coaching: can you teach leaders to be better leaders,
can you teach managers to be better managers? Of
course you can, and in business, if you were going to
be looking at any of the plcs, do they train their senior
team, their managers? Yes, they do. So you want to
provide the opportunity for a coach to have as many
qualifications, to have as much learning as possible to
survive and be as successful as he can as an
individual.
Steve Coppell: You need to have qualifications. You
can’t just say, “Open house, who do we want to be
manager next week?” I think it is a requirement of
the trade that you do have some basic knowledge of
coaching techniques. As you say, it is all about man
management. I am not sure whether Fergie has all his
coaching badges, but you look at the success he has
had down to man management. Gareth Southgate had
spent 15 years in the industry as a player. It is a
natural progression. He wasn’t a rookie by any means.
He had been in many dressing rooms with many top
managers and obviously learnt an awful lot from
them. So I would say qualifications, yes, but it
shouldn’t not allow people with man management
abilities to be able to do the job.
Richard Bevan: There is also a big appetite among
our members. We recently had the Royal Marines
working on a particular course with our guys, there
were about 40 members. We run coaching clinics and,
in my time, there have never been fewer than 70
managers and coaches turning up on one particular
day. There is a big appetite for learning as well.
Philip Davies: Martin, I prayed you in aid.
Martin O’Neill: No, I am so pleased you mentioned
that. I am beginning to agree with you. I have always
been a bit sceptical about—Richard won’t like me for
saying this—the licence, the procedure you go
through. I do accept it. I accept because, again, you
have to do something about it. It might be the worst
analogy in the world, but it might be a bit like getting
a driving licence, you have to pass the test at some
stage or another. Will that be how you drive in the
next two or three years? Well, if it is anything to do
with my driving, it certainly wouldn’t be, but I think
that there are certain things that you can learn during
these courses. I must admit, I don’t have my licence
myself at this minute, and hopefully it won’t debar me
from going back into the Premiership. I will certainly
do it, but I will do it because I want to do it. I want
to do it, because there are things that I can learn from
it. Now, I don’t for one minute suggest that when I
take a coaching course just for the purpose of passing
an exam—it will give me that experience, of course,
but will that be any good to me in the heat of the
moment when I am having to make a decision as to
whether a game can be won? I am not so sure. Maybe
that is just experience, but I do accept the point. I
didn’t always think this, but I am coming round more
to thinking that the licence is there for a purpose. As
you say, I am not even sure that Alex Ferguson has
this particular badge. It hasn’t prevented him from
being one of the greatest managers of all time, and I
am still debating the point.
Richard Bevan: Well, 50% of first-time managers
never get back into the game when they get the sack,
and so—
Q421 Philip Davies: I was going to move on to the
respect bit, because as we have mentioned Alex
Ferguson, it seemed a good point to ask just briefly—
the FA tried to introduce a respect campaign to help
the amateur game as well, parents not having a go at
the referee and all this kind of thing. As we touched
on Alex Ferguson, what is the League Managers
Association doing to make sure that managers set the
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Ev 104 Culture, Media and Sport Committee: Evidence
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
best example of all to their players, which is not to
challenge the referee’s decisions, that the players
therefore do not challenge the referee’s decisions,
because unless the managers and the players at the
highest levels of football show some respect to the
referee, there is no chance of anybody lower down the
chain doing it.
Richard Bevan: The Respect programme is a very
important programme, and when the FA and Lord
Triesman launched it, we were, and still are, very
supportive. I was in a meeting yesterday, and am
pleased to see that the results of the Respect
programme have been working, that there has been
turnaround in terms of the amount of referees, there
were about 7,000 amateur referees leaving the game a
year, that has been turned round.
In terms of managing at the very top and the
volcano—I think they call it, sitting on a volcano—at
times there will always be moments of high emotion,
but behind the scenes our guys are extremely hardworking. We have completed a document and we have
meetings on a regular basis with the PGMOL, the
body that works with the referees. We had 80
managers working over 500 hours, chaired by Greg
Dyke, where we came up with a number of
recommendations on how we could help referees, and
that is on an ongoing basis.
Steve Coppell: The only thing I would say, after a
game that has been very intense and the be-all and
end-all of your week, your preparation, your thinking,
everything you do, 20 minutes after the game finishes,
you have somebody asking you questions, it is very
difficult to be even-tempered and conclusive about
what happened. So I think it is just the passion of the
moment. It is what makes our game, it is what all the
supporters want to see, they want to see the
management team show passion. Sometimes words
don’t come out the way you would mean, but I don’t
think it is a bad thing. I think there is an awful lot of
respect emanating—certainly I call Sir Alex the don
of managers. He is the don of managers. He does so
much for the game that is positive and I think so many
of the top managers are of that ilk, but just for 20
minutes sometimes you just don’t think straight.
Richard Bevan: These guys do a fantastic amount of
work, as I said earlier, behind the scenes, and
something that people are not aware of is we have
been debating for the last three, four weeks in terms
of what happens in post-match interviews, in terms of
not answering any questions regarding the referee.
They tried that in Scotland recently and it didn’t hold
together, but it is something that we are looking at.
There was a case with one manager that said after the
FA Cup match that he didn’t want to complete the
interview, but he was told that he was legally
contracted to do that, which wasn’t the case in the FA
Cup, and, again, his emotions were very high. You
look at the likes of Peter Jackson up at Bradford, he
has three or four games to prove his worth up there
and to hopefully get a full-time contract there running
the club, not as a caretaker manager, and one decision
could affect that. But it is an entertainment world. At
the same time, our guys behind the scenes do very
much care, they are very positive about it. As I said,
we had a five, six-hour meeting on the subject
yesterday.
Q422 Damian Collins: There has been a lot of
discussion about debt and profits in the game. How
much pressure is there on football managers to spend
more money?
Steve Coppell: That is a good question. There is an
awful lot of pressure on most managers not to spend
money. There are very few occasions where a
Chairman has said to me, “Well, why aren’t you
spending the money that I’ve given you?” The reality
is I think you know you have to compete. I think most
managers, given the opportunity to spend money,
would rather see that money running around on the
pitch than sitting in a bank account gathering interest
and looking after the financial security of their club in
the future. You know you are managing in the instant
and you have to get results. You are judged on results,
so if you get the opportunity to spend money—but
again, I have never known a Chairman who has
allowed me to spend more than he has offered.
Q423 Damian Collins: But you must know in your
conversations with the chairmen of football clubs that
if they have an ambition to reach a certain level, it is
going to cost them money, and if a manager wants to
stay in a job beyond the end of the season, he knows
he is going to need money to do that.
Steve Coppell: I very often say to people in football,
“The success of football is easy. If you have the
money, you buy the best players and then you have
the best team. It’s easy”. But most clubs don’t have
the freedom of the finances to be able to do that, so
every judgement call you make then is just trying to
get the best value for the money you spend, and that
is the art of management.
Q424 Damian Collins: Mr O’Neill, I think it was
reported you spent £120 million in four years at Aston
Villa, and that was not enough even to get into the
Champions League, but to get within touching
distance of it. I appreciate you cannot talk about Villa
directly, but I would be interested in your views on
this: are managers in a position where effectively they
are driving debt within the game, because they have
to be advocates for spending more money?
Martin O’Neill: Well, one thing I will say, the figure
was much, much less. What generally happens in a
football club is they talk about the amount of money
that is spent on players coming in. What they forget
to do is that you have to attempt to balance some
capacity by letting other players go, and in actual fact
the figure that we are talking about was closer to £70
million net over four years. Yes, there is seemingly an
outside pressure, there is a pressure from supporters
who feel that when a club is taken over, the owner,
the Chairman, has just carte blanche to put this into a
different stratosphere when, in actual fact, most
people would want to run football clubs as a business.
As Steve has just mentioned, I am not so sure that
there have been that many chairmen who would say,
“Well, here’s a spare £50 million. Go out and see what
you can do with it”. I think that prudence seems to be
the key word these days. But, yes, it is a difficult one.
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Culture, Media and Sport Committee: Evidence Ev 105
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
You have to try and compete at some stage or another
and if you feel that there is something out there,
someone out there who can help, of course you will
have these discussions. But the owner of the football
club will have the ultimate sanction.
Q425 Damian Collins: Do football clubs have a
strategy beyond spending as much money as they can
to try and sustain a league position? Some clubs are
striving to either get into the Premier League or
compete at a higher level within it. You have talked
about youth football and other things within the club,
and clubs have limited resources. It would strike me
that a club would need a strategy to say, “We have a
certain amount we can spend. There is a certain
amount that has to come from internal development
within the club, a certain amount we have to raise
through a better commercial strategy”. Do clubs have
serious strategies like that, and given the management
might be there for a relatively short period of time,
what role does the manager have in that?
Richard Bevan: That will vary dramatically from one
club to another, and there are some very good
chairmen and boards out there. We spoke earlier about
a model, Stoke City, Peter Coates, the Chairman there,
is very experienced—it is his second time, I think,
at Stoke—and the chairmen at Crewe and Doncaster
Rovers and numerous chairmen and boards are very
talented and have very successful models in that they
can break even at the club and operate in a positive
cash flow. I think it will depend upon the boards. I
find that particularly on the employment tribunals and
the legal issues we have. About a third of the clubs
are probably struggling with some of the quality of
the leaders of their clubs and the way that they operate
their model.
Q426 Damian Collins: Mr O’Neill, do you think we
will ever again see a club like Nottingham Forest with
a European Cup?
Martin O’Neill: Funnily enough, I was thinking about
that last night. Again, it is a dream. I think it is highly
unlikely, highly unlikely, the way that football has
gone in the last 20 years, and I think that would be a
shame. It doesn’t mean that there couldn’t be a
manager who could bring all of these things to pass.
You could inherit a very, very good youth team in a
couple of years who might come through, if they stick
together, and I am talking about the Manchester
United side of about 1994, 1995 time, but I suppose
that was at Manchester United. Nottingham Forest are
a provincial football club, steeped in the history now
with two European Cups. I don’t think it is
impossible, but I think it is highly unlikely, certainly
in the 20 years.
Richard Bevan: Perhaps the expectation has come
away from winning the Champions League to getting
into the Champions League, as Everton did in 2008,
and getting to the last 16. That was obviously a
major success.
Q427 Damian Collins: I record for the record that
Steve Coppell was giving a no to that.
Steve Coppell: That was a massive no. Absolutely
impossible without the massive support of a
benefactor. If you are producing a team, if you have a
great youth team then in the next transfer window you
lose your three best players. It is the very nature of
football now.
Damian Collins: One final question, if I may, I know
we are getting tight on time.
Martin O’Neill: I wasn’t expecting him to be as
strong as that.
Q428 Damian Collins: I could see him vigorously
shaking his head, so I thought I would give him the
chance to put it on the record. One topic that we have
talked about quite a lot in previous hearings is the
football creditors rule, and when we discussed it with
the Premiership chairmen and Chief Executives they
expressed a view they thought the rule should go, and
that without the football creditors rule clubs would,
out of necessity, need to be more transparent in the
way they deal with each other. Clubs would be more
cautious about selling a player to a club if they didn’t
know that that club had the money to pay for that
player and that it would be fairer, because it seems
unfair that a football club with smaller creditors from
the community that they serve lose out when a
football club the other end of the country is protected
by it. As managers, I would be interested in your
views on that. If the football creditors rule went, do
you think it would make a difference to the way you
do your jobs and do you think it would be good for
the game?
Richard Bevan: First of all, before I pass on to these
guys the football creditors rule doesn’t apply to
managers and coaches. It is obviously something that
has had a lot of debate recently and probably still
needs to have more debate, but I think that would
come if the clubs could have a licence, in looking at
how they would operate. But it does need a debate,
and certainly the man in the street running the small
printing business and not getting paid is an issue in
today’s commercial society around football.
Martin O’Neill: Are you referring perhaps to
transparency? For instance, I have never understood
this idea about a player being sold to another club
and it was a non-disclosed fee. I have never been into
that idea.
Q429 Damian Collins: No, I think what I was
referring to is if a player is sold to a club and that
club might be in financial difficulties. The football
club selling might not be as concerned that it might
not get its money if the payment was being paid in
instalments, because they are protected by the football
creditors rule, but if that rule didn’t exist a club might
want to know a lot more about how a club is going to
pay for that player.
Martin O’Neill: Obviously.
In the temporary absence of the Chairman, Mr
Adrian Sanders was called to the
Chair for the remainder of the meeting.
Q430 Mr Sanders: If the Chair were here, he would
be calling on me to ask the next question, which is
what impact has the increased level of overseas
ownership had on standards of governance in the
English game?
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Richard Bevan: We have about 11 or 12 overseas
owners in the Premier League. To be honest, whether
the owner comes from America, Birmingham,
Australia, Wales, wherever they come from, I think
that they need to be operating within a much tighter
environment. We would like to see a licence going
from the FA to clubs, a framework where a new
owner, wherever he came from, had to work within
much closer guidelines, and that would protect the
future of the club and also give more integrity.
Certainly, there are the UEFA fair play rules, and there
are still some issues around ownership and offshore
ownership and transparency. But I think it is not so
much about overseas owners, it is more about the
quality and making sure the framework is correct. If
you do have overseas owners coming on board, as we
have recently, I think we have to—the leagues and the
FA and the media—impart upon them the importance
of the tradition, the philosophy, the supporters and the
actual community, and I think if we do that—in many
ways the Government are also a union for supporters.
It is representing—
Q431 Mr Sanders: Would you see this in place of
the fit and proper test or is it in addition to the fit and
proper persons?
Richard Bevan: Do you mean the licence?
Mr Sanders: Yes.
Richard Bevan: The fit and proper persons test or the
director test, I see that as part of a licence.
Steve Coppell: I think good governance is all about
protection. You have to protect the people within the
game and I think the people who need to be protected
on this particular point are the supporters, because that
is the only loyalty in football, the supporter for his
own club. Almost every other loyalty can be bought,
but the supporter for his own club, when he is at the
whim of bad governance then he is vulnerable and I
think everybody within the game is going to be very
mindful of that.
Q432 Mr Sanders: Martin, can I ask you, because
you are in a unique position. You will have
experienced a club run as a committee at Nottingham
Forest; you have experienced the traditional English
club ownership model under, say, Doug Ellis; and you
will have experienced foreign ownership at Aston
Villa. How would you compare the differences
between the three?
Martin O’Neill: Yes, I joined Nottingham Forest way
back in 1971 as a 19 year old player and they were
the only team in the Football League who were run
by a committee. That of course, changed in—you may
say it might have changed about 1990-odd or
whatever it was. It changed in January of 1975 when
Brian Clough arrived, because it was no longer a
committee, it was his decision. It was interesting for
those couple of years to see how that committee was
run. Of course, I was a young professional footballer
at the time, more interested in trying to break into
the first team, but I did not know the basic difference
between that and the board. I felt that the committee
at Nottingham Forest seemed to run itself reasonably
well at that stage. It did not find itself in serious debt
until 1979, when they decided to build the East Stand.
They needed £2 million, would you believe, and I
think they found a little bit of difficulty, and even
winning the European Cup at that time did not cover
the cost. So that was the first time that I realised that
the committee could find itself in a bit of difficulty, of
course there were shareholders and such things like
that.
I have been involved with football clubs where they
have been run by boards. I have been in board
meetings too; those are interesting in themselves. I get
back to the point that Richard and Steve make. If you
have good governance, I think that will transcend
most things, and I think that is the best way for me to
explain it. If the club is run exceptionally well, has
transparency, obviously, and I suppose if the supporter
believes in the way that club is being run and thinks
that this club can have a future for a start and,
secondly, can have some ambition, I believe then that
that is the best way. If there is a comparison between
the three, it would have to do with the governance of
the club itself, not the way in which it was done.
Q433 Jim Sheridan: Can I ask a question about the
role of football players’ agents? We have the extreme
example of Wayne Rooney, who made it known that
he was not happy at Man United and then regained
his enthusiasm when another couple of zeros were
added to his contract. You guys depend in your job on
getting the best out of players, they have to remain
focused on what they are supposed to be doing in
terms of playing football, but if players are being
distracted by being promised extra money, or moving
clubs, or to stop being players, that will impact on
your job, I would imagine. I was trying to get a feel
for what managers think of agents, and should there
be a code of conduct between managers and agents.
But also should the manager and the player have the
same agent?
Richard Bevan: That is a big question. I think the role
of the agents is something again, a little bit like the
governance issue, where there will be good and bad
out there, and we probably experience both. There are
400 licensed agencies, I think, in the UK. Our biggest
concern is that FIFA, I think in 2012, is going to be
relinquishing their regulatory control over agents, and
I think that is going to be a major problem. I think,
probably because of legal issues, administration
issues, if you have agents bringing young players from
country to country, indeed from continent to continent,
you are going to have a lot of issues. Certainly, from
my experience, I have seen a lot of good agents
working. Probably the biggest negative for me is the
size of agency fees. I think that is something I have
been extremely surprised at.
Steve Coppell: From my experience again, as Richard
said, there are good and bad. A good agent is a huge
ally in dealing with some players, particularly difficult
players. A bad agent needs to be regulated, and again,
that is where you need guidance from your governing
body, to make sure it is not just a code of conduct but
actual regulations whereby bad agents are eliminated.
Martin O’Neill: You would hope that when you sign
a player that if he signs, for instance, a four year deal,
that you would be hoping that you would have some
control of this. I think that this might be a separate
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Culture, Media and Sport Committee: Evidence Ev 107
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
issue, but the control has left the football clubs and
gone to the players and therefore the agents. I think
that is one of the major changes I have seen in the
game. When I started out, the player had no control
whatsoever, he was at the behest of the football club.
Now it has gone full circle and I think the players are
now in charge, which is a bit of a shame.
Richard Bevan: Recently I heard it is a bit like the
wild west out there, we can’t do anything about it, we
are where we are, and I think that is an inappropriate
approach to it.
Q434 Jim Sheridan: I think the fundamental
problem as I see it is that there is an incentive for
agents to move players on, simply because of the
commission they get, so it is in their interest to keep
moving players on. The other factor is the fact that
the agent also is paid by the club. Would it be fairer
if the player pays the agent rather than the club?
Richard Bevan: I think you probably need to look at
other models around the world and pick up
experiences. For instance, if you take America, in a
number of sports the agents’ fees are paid centrally. I
am not necessarily saying that is the right way to go,
I am just saying there needs to be a focus on the
framework and if there is not it will be chaos.
Q435 Jim Sheridan: Steve, you say you think that
agents should be regulated?
Steve Coppell: I believe so, yes.
Q436 Jim Sheridan: Would you agree with that,
Martin?
Martin O’Neill: Absolutely.
Q437 Damian Collins: Do you think the Bosman
ruling has had an inflationary impact on players’
wages?
Martin O’Neill: Yes, I do. Interestingly, I think that
you can trace an awful lot of these questions today
back to Bosman. Bosman set out in the first place with
right on his side, because he had been given a free
transfer, his money for the following year was going
to be less than the previous year. In English football
he would have been given a free transfer and therefore
he would have been free to negotiate another deal with
someone else. But he was held back. He was held
back by the club, who had freed him, and were not
prepared to keep him but were looking for a fee. He
took this to a higher authority and won his case, and
I think quite rightly won his case. Had he been dealt
with in England, it would have been perfectly all right.
But suddenly, just from that, the fallout from that was
extensive, so much so that we were possibly debating
the idea that football itself could have its own rules,
and I think there is certainly a case for that. Because
the minute that there was a possibility of a player
having a bit of a difficulty with his contract, suddenly
he could go to European law, and find a loophole
there, and sort things out. Clubs were finding out
loopholes as they were going along. For instance, a
player with two years left of his contract was in the
position, by some sort of law—made way back, I
think, during King John’s time—that he could actually
get out of his contract, and certainly in his last year,
could buy himself out and agents were using these to
manipulate situations. Bosman himself set out on the
side of right, but a lot of fallout from that has
happened. It has triggered a number of situations
which I believe could have been resolved early on.
Q438 Jim Sheridan: Can I just clarify the question I
asked about, is it unhealthy or bad practice for the
player and the manager to have the same agent?
Steve Coppell: I would say it is bad practice, with the
potential of being unhealthy.
Martin O’Neill: Yes, absolutely. Conflict of interest
would almost certainly take place there.
Steve Coppell: With the Bosman thing, I think we can
realistically say now, for most good players, a contract
is probably at least 12 months short of the reality,
because you know you have to protect that asset.
Q439 Damian Collins: You have to renegotiate
before you get to the last year?
Steve Coppell: Yes, very much so. At least 12 months.
And that, with the combination of increased TV
income, has made it very inflationary, yes.
Q440 Alan Keen: Because we are short on time, I
am going to try and be brief. It is the main structure
of the game in this country that needs changing. Do
you agree that it should be the FA that is the body that
is strengthened so it is superior in power to any other
body in football? That would be with an LMA
representative on there as well, of course. But it is the
FA surely, that must be strengthened to be the
regulating body above any other part of—
Richard Bevan: I think, if there is one thing that can
come from the select committee and the
encouragement to the game to do various proactive
things, one of them will be to work together to unify
the family and absolutely a pyramid system in which
the FA are on top. The FA are the representative of
FIFA and UEFA. At the moment the FA just manage
the business. Like Ian said earlier, I think a lot of the
criticism of the executive is unfair. In my three years
I have come across a lot of fantastic executives in the
FA and in the Premier League as well, and their speed
and their communication and the discussions we have
are very good. Unfortunately, the framework in which
they operate does not encourage them to be
innovative, proactive and, most importantly, it does
not encourage leaders. It is the framework that needs
to be changed and if you do not change the framework
then they will not develop.
Q441 Alan Keen: Do you agree that the PFA also,
along with the LMA, should have a representative on
that?
Richard Bevan: I think, if you wanted effective
governance in the world we live in, whatever sport it
was, if you do not embrace the players, the coaches,
and certainly, in our case, the managers, then you will
fail in delivering that participation. It is only when
you get participation in decision making, if you
achieve that then you will find people are on the same
wavelength and we will deliver far greater success. A
little bit like, I was talking earlier about Germany and
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Ev 108 Culture, Media and Sport Committee: Evidence
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
Holland, where you do not see the turf wars, for want
of a better way of putting it.
Martin O’Neill: Richard had said earlier that we do
have the determination, we have the passion, and I
think we have the knowledge, although that might not
be universally accepted. But I do believe that we have
an important role to play, simply because we are, or
are supposed to be, the most important person at the
football club.
Richard Bevan: I think there has been a fair amount
of talk as well, about whether there should be
independent directors. If you had a very efficient
structure in the way we have just been mentioning,
then the need for independent directors would not
come out. But you do need, as it stands at the moment,
guys who will challenge, and the PFA and the LMA
represent people across all of the leagues. I think that
is very important.
Q442 Alan Keen: Do you agree that the independent
directors, the sort of people who would be appointed,
would listen to you? At the moment you do not have
that voice at the top.
Richard Bevan: I think we have the voice, insomuch
that the guys that are members of the LMA have got
a powerful voice collectively. We try to use that very
professionally, whether it is the professional way
forward document; we have a current review with
Southampton University going on in the technical
area; we are looking at transfer windows; we are
looking at a whole range of technical issues. But there
is not a technical committee in the FA. The Technical
Control Board they got rid of in 2006. Then you can
look at the true governance, you have the Professional
Game Board, which sits below the FA, and the
Professional Game Board’s remit is the finances of the
FA yet the Chief Executive and the Chairman of the
FA do not have a vote on that, which is why I believe
Adam Crozier resigned.
Q443 Paul Farrelly: We have run over our time, I
am sorry to detain you. I only have two questions on
which I wanted to seek your views. Firstly, with
regard to the game and the FA, we went to Germany,
and without being naive and taking everything at face
value, we got an impression of a more collective
ethos, particularly when we were told the story of how
they reacted to their disappointing performance in
Euro 2000, to try and change their game. My specific
question is about youth development. Do you think
that the current proposals for youth development in
the country—with all the different interests involved,
including the Premier League—are right, or is there
something better that we could be doing?
Steve Coppell: To be honest, I do not know the answer
to that. I know there is progress being made at the
academy level at the moment, and changes are afoot.
But in any walk of life you are judged on results and
if we are not getting results, if we do not have the
input of young, home-grown players coming through
the way we would like, to give us a very competitive
national team, then we must change, we must do
something different. We must have a more innovative
approach to how we are producing our players rather
than just leaving the blinkers on and saying this is
what we have done for so many years and we are all
right. We have to be more open-minded and flexible,
I think.
Richard Bevan: Youth development is massively
important. Our Chairman, Howard Wilkinson, who
sadly could not be with us today, has a lot of good
thoughts and views which he is imparting upon key
people in the game. I think the responsibility for youth
development essentially should be with the FA, but
the Premier League are taking some key movements
into their new academy system. I think what is
important is that they embrace the Football League,
which they are in negotiations with, and I am sure
they will come out together. But what is important is
the likes of Watford and Crewe and Southampton and
Middlesbrough. Those clubs are doing fantastic work
with youth development. They are still incentivised,
they are still encouraged, and they still see that as an
important role. If you look to Germany, they are
spending £500 million on their youth development
and their structure. But they are more or less one
organisation and so they do work much closer
together. But I absolutely believe that the Premier
League are a very efficient organisation. If they were
to work closer with the Football League and indeed
with the FA, giving clear guidelines, then we would
be in a better position.
Q444 Paul Farrelly: I am just wondering, Martin,
whether over this issue we can square the circle by
persuading people to give away some of their own
money and share it out a bit more, if not in their own
interest, then in the national interest?
Martin O’Neill: Yes. I did not realise until I read it a
few days ago that each member of the German World
Cup side, the 23 players, had actually come through a
Bundesliga academy system. If you tell me that is a
fallout from 2000, then that is very, very
commendable, and there are parts that we could pick
up from that. Like Steve, I am not really sure—I will
only go from my personal experience at club level, I
am all on for the youth academies. When I went to
Aston Villa, I did not ask them to go and produce four
or five players within a year. But I hope over time
that we will get some very, very good players coming
through the football club, and I think that is happening
at the moment, and that is exceptionally good news.
Steve also mentioned we are in the results business.
To try and see that through, to see the end of that fiveyear plan that a manager and owner or Chairman seem
to set out in the very first place, you have to be
winning games at that first team level. And you are
hoping by the end of that five-year period that you
might have at least three or four of those young
academy players playing regularly, consistently well
in your team to hold down a place in a side that is
doing very well.
Richard Bevan: The investment in the National
Football Centre is fantastic. 1999 was the year when
the FA bought the land. They probably should have
built the National Football Centre then, instead of
building Wembley and wasting £92 million on legal
fees around Wembley. That is probably a lack of
strategy and vision. But the hardest thing I think for
the Premier League and the Football League and the
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Culture, Media and Sport Committee: Evidence Ev 109
22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE
FA, and indeed any of the other countries that invest
time and money in youth development, is creating the
opportunities, that is the hardest thing of all. You can
find great coaches, you can invest in those sort of
structures, but creating the opportunities for these
guys to play is the hard part.
Q445 Paul Farrelly: Burton, the brewing capital of
Britain, in my county of Staffordshire, leads me neatly
to my last question, which is about supporters, which
is what this inquiry really picked up on in the first
place, from what the Government and various political
parties were saying in their manifestos. As you all
know, a fortnight, particularly at this stage of the
season, is a long time in football. With Stoke City, if
you do not beat West Ham in the quarter-finals of the
FA Cup to get to the semi, and then if you do not beat
Newcastle United 4–0 to stave off the relegation
battle, within a fortnight you can go like Tony Pulis
and Peter Coates at Stoke, from walking on water to
being dead men walking. You hear supposedly sane
and rational supporters, who are not idiots, grumbling
and you just want to tell them to get a life sometimes
and get some perspective. So given that, my question
is, you have been under these pressures, do you like
supporters, and if the answer is yes, what role do you
think they and their organisations have in the
governance arrangements of clubs in the country?
Steve Coppell: We exist to make the supporters happy.
They are the people that need to be entertained to
continue our industry, so they do have a massive
voice. How that should be channelled, I do not know,
because, as you mentioned with your own club, it gets
almost so centred to their own team that you can’t see
the bigger picture. But without doubt, we have to keep
our customers happy, they are our number one bosses
and they have a massive voice to say in the way
football in this country is going to be developed in the
future, whether it be paying through the turnstiles or
paying for TV. Someone with a better footballing
brain than I will determine how that can be done, but
they have to have a say in the way our game is
developed.
Martin O’Neill: Are you concerned about the
madness that Stoke City’s fans are showing at the
moment?
Q446 Paul Farrelly: I would not want to single out
one club. I am sure it is across a lot of clubs in the
second half of the division. But the question really is,
Martin and Richard, should there be specific structures
imposed, specific models imposed or, within the
realms of involving supporters, should the clubs be
allowed to evolve their own models?
Richard Bevan: Supporters’ trusts operate
successfully in a number of clubs, and absolutely they
are key stakeholders. On the board behind you is the
word “participation” all the way across. I think it is
participation—they need to have their voice listened
to, they are absolutely key to the game and the more
that the Football Supporters Federation can get a seat
at the right tables, then the better for the game.
Martin O’Neill: Steve mentioned earlier, I think it
was a good point, that the only loyalty in football is
the supporter with his football club. I think that they
always want the best for their football club. They want
the very, very best. If they have a good manager in
charge, they want a better manager in charge. I just
think it is the modern day approach to the game and
I listen to the occasional phone-in, the website, this
instancy. You want to be better, you want to be better
than the previous week, you want to be better than the
previous day. That fortnight you talked about where
the manager and Chairman can go from walking on
water to being dead men walking, that exists at every
single football club. When you have won a few
trophies, as Sir Alex Ferguson has done, just a few,
then I believe that you can transcend that. But we are
mere mortals in this game and we have to live with
that. I believe there is a touch of insanity about it, but
I do not know how it is going to be eradicated.
Supporters are the most important people because they
will still be supporting the football club. How you
involve them, I do not know. Would you be thinking
about a renegade group joining the board, or
something like that? I just really do not know at this
minute, and I have not thought it through.
Q447 Jim Sheridan: I think the sad reality is,
everybody I have spoken to agrees that supporters
should have some sort of tangible role in football, but
there is always resistance. It is like the constituents
who always want to play a part in community but they
want it somewhere else. That is exactly what we find
with football. Yes, there should be a role for
supporters, but I am not going to give up my position
to give it to a supporter.
Martin O’Neill: I must admit, honestly, I really have
not thought it through.
Mr Sanders: I am sorry, gentlemen, I think we must
wrap this up. You said earlier that you thought
somebody was going to go imminently. It almost
makes Martin’s point. I believe it is Ronnie Moore at
Rotherham, who only a few weeks ago was in fifth
position in League Two, and five poor results and it
looks like he has been shown the door today. Can I
say a very big thank you to Steve Coppell, Richard
Bevan, Martin O’Neill, for giving evidence today. It
has been a very good session, thank you.
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Ev 110 Culture, Media and Sport Committee: Evidence
Tuesday 29 March 2011
Members present:
Mr John Whittingdale (Chair)
Ms Louise Bagshawe
Dr Thérèse Coffey
Damian Collins
Paul Farrelly
Alan Keen
Jim Sheridan
________________
Examination of Witnesses
Witnesses: Mr David Bernstein, Chairman, the Football Association, Mr Alex Horne, General Secretary, the
Football Association, gave evidence.
Q448 Chair: Good morning, everybody. This is a
further session of the Committee’s inquiry into
football governance and I thank the FA for inviting us
to Wembley to hold this morning’s session. I
welcome, as part of our first panel, David Bernstein,
the new chairman of the Football Association, and
Alex Horne, the general secretary. Mr Bernstein, you
are relatively new in post. Can you set out how you
wish to see the FA develop in the coming months?
David Bernstein: Yes indeed. First, may I say how
pleased we are that we have been able to play this
fixture at home? There is a great deal, clearly, that
needs to be done in football and we believe that the
FA should be a leader and seen to be the leader of the
game in this country and should provide, in many
ways, what might perhaps be dangerously described
as moral leadership as well.
We are taking this inquiry extremely seriously and
obviously the recommendations that you come
through with and the Government come through with
we will listen to with the greatest of care. When I took
this position, I knew that the status quo was not an
option, that some change is necessary, but the change
needs to be for the right reasons and at the right pace.
I am confident that Alex, whom I have worked with
in different capacities for a number of years, and I can
deliver that change.
There were five themes that I identified very quickly
as part of the agenda that I want to pursue. The first
deals with football in terms of Club England, that is,
the international side of football, the first team and the
other teams that we have, and youth development
which clearly is vital; I am sure we will come to later
on. Secondly is respect, because the respect side of
the game is very important to me. There is a huge
amount of what we have done at the bottom end but
I think that those at the top end of the game that need
addressing. Also I suppose respect for the FA because
perhaps one of the reasons we are here today is that
there are some questions about that. Thirdly,
governance which is obviously one of the key matters
for today. Fourthly, relationships, both in terms of
overseas relationships and relationships within the
UK. Finally, efficiency because I think in terms of
running the organisation efficiently and prioritisation
of resources, there is a great deal to be done there.
Those are the five themes that I have come up with
early on, and while only two months have gone, I feel
they are reinforced by those two months and it
revolves around those five issues.
Q449 Chair: Alex Horne, you will have heard the
evidence we have received from predecessors in your
position, particularly Ian Watmore, who said he was
neither a chief nor an executive. You changed your
title to “general secretary”, I note. Do you have some
sympathy with that comment? Do you agree that your
job is nigh on impossible?
Alex Horne: No, I do not agree that it is nigh on
impossible. I understand some of the frustrations that
Ian experienced, but in the year since Ian left we have
achieved an awful lot as a team of executive. We have
delivered against a stretching business plan across all
the divisions in the organisation and, most notably, for
the first time in the 11 years that we have been talking
about it, we have moved forward with the
development of our St George’s Park National
Football Centre, our home for coaches nationwide,
which will change fundamentally our approach to
youth development in this country. We have delivered
a 25-point plan for youth development with
recommendations stretching right across the game,
showing that the game can work together and, as it
happens, we have delivered a Desso pitch here at
Wembley and we have a very, very good playing
surface. With a bit of patience, we have delivered a
lot in the last year.
Q450 Chair: But do you see scope for further
changes?
Alex Horne: As David has outlined, the status quo is
not an option; we have already put forward
recommendations for further independent directors on
the board. What we have done as well is to put a
number of independents into our structure at what I
believe are the right places. For example, we have
independent directors on the Wembley board.
Operating an asset of this nature holding multiple
events requires specific skill sets and we have looked
for directors who have those skill sets.
We have done the same thing with our St George’s
Park development and also with our Football
Regulatory Authority where the body responsible for
setting the rules across the game has a balance of
professional game, national game and independent
members. We are not averse to change. We have
independents in a number of places, but we should
never be complacent about looking at that structure.
Chair: Okay, we are going to come on to a number
of those issues.
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Culture, Media and Sport Committee: Evidence Ev 111
29 March 2011 Mr David Bernstein and Mr Alex Horne
Q451 Paul Farrelly: The reason we started this
inquiry was that the coalition Government, following
each party’s manifesto, put in a commitment to
encourage more supporter involvement but it clearly
did not have much of an idea as to how to do it, so we
have stepped in to give it some thought. A question to
both of you: what role, if any, does the FA consider is
right for supporters in either the running or
governance of football clubs?
David Bernstein: As with many of these questions, it
is a more complex question than perhaps first meets
the eye. There are a number of different levels of
supporter involvement. The first would be
information; undoubtedly, supporters are entitled to
full information from their clubs—a proper dialogue,
whether it be financial or about ownership. They are
absolutely key stakeholders and there should be a very
free flow of information between clubs and
supporters. I think anything less than that is
unacceptable.
Board representation varies greatly from club to club
and I have already met some supporter organisations;
I met with the Arsenal Fanshare people who run a
very sophisticated supporters scheme. I was most
impressed with them with what they are doing and of
course also with Arsenal who are a very progressive
club in these matters. They do not want board
representation in that particular case; they are not
looking for it. I think that board representation could
be, in some cases in some clubs, highly desirable, in
others it could be risky for supporters; there are some
boards that they may better not be on. I don’t think
there is one rule for all. I think in some cases board
representation is a good thing. In others, I think it may
be less desirable.
The other key area of course is shareholder
representation and one needs to distinguish between a
controlling holding by supporters or minority
supporter shareholdings. I think on the whole minority
holdings, where possible, are quite desirable. As
chairman of Manchester City, we were a public
company. When I was chairman, we had 5,000
shareholders. We had an AGM where 800
shareholders turned up and I was very, very proud of
that and I was very disappointed, in many ways, when
the club was taken over and all the shareholders were
removed to a single ownership.
I think controlling shareholding, however, is a difficult
one and it will depend very much on the club and the
state of the club. I have already been round the
country visiting quite a few clubs, one or two outside
the League, and there is, we all know, a huge
imbalance of finances within many clubs, both League
clubs and non-League clubs. My concern would be
that if supporters rush in to ownership they may find
that they are involved in something that is rather more
than they expected; the funds have to go in the
beginning and then, maybe, depending on what
happens in the financial areas—I am sure we will be
talking about it later on—the funds need to be put in
year after year and we all know that many owners
are subsidising their clubs year on year. That is not a
situation I suspect supporters would want. I think it is
complex. Clearly, more involvement is better than less
involvement, but I don’t think there’s one rule for all.
Alex Horne: That was very comprehensive, but I can
add that I think what we would seek to see are no
barriers to entry to these models, if supporters go into
them eyes wide open and they understand the risks
that David referenced in terms of liquidity and
ownership of clubs and the fiduciary responsibility as
directors of clubs. I am intrigued by the notion of
fiscal support or tax breaks, which I know has also
been floated into the Committee.
Q452 Paul Farrelly: We have just produced a report
into the arts and heritage and we commented that the
big hole at the centre of the Government’s so-called
philanthropy strategy was that they propose nothing
to encourage it. They must have read some minds
because in the budget they did put forward a policy
on inheritance tax and legacies. Do you think football
is such a special case that it merits special incentives
and tax treatment to encourage supporters to invest in
clubs or not?
Alex Horne: I certainly think, given the community
nature of clubs, it’s something that is worth the
Committee looking at further.
David Bernstein: Yes, I think I would support that. I
don’t have that much to add but, yes, given the sort
of the complexities involved and maybe the financial
scenario. I certainly thought of the Arsenal supporters
people. They were very much pushing the need for
some help in that respect.
Q453 Dr Coffey: You are very familiar, Mr
Bernstein, with the finances of Wembley stadium, To
what extent is the requirement to pay for Wembley
stadium, that constant top-up, constraining the ability
of the FA to support the national game, the
grassroots game?
David Bernstein: Yes, I am familiar with our finances.
By 2015, we will have paid £150 million of debt plus
interest and by 2015 we are anticipating that Wembley
will become cash-positive and will start pushing cash
back into the game. There is a lot to be done between
now and then. In this environment, as you will know
from the many businesses in sport or entertainment, it
is not an easy call but that’s our aim. Clearly, in the
interim, Wembley has been using FA finance to
balance its books, but I think given what we see, given
the fact over this few weeks we are in now, we’ll have
eight events attracting 700,000 people to the stadium,
it’s a fantastic national asset. Yes, there has been a
degree of restriction of funds going to the rest of the
game, but it is short term and hopefully it will turn,
as I say, by around about 2015.
Q454 Dr Coffey: I recognise you have the national
game strategy, which is trying to develop that. My
understanding is that the amount of money going to
the Football Foundation has been cut at certain points.
David Bernstein: It has.
Dr Coffey: It seems quite concerning trying to
develop the grassroots instead of topping up the
stadium.
David Bernstein: Yes, obviously, no one wants to cut
that sort of funding, but it is short term and, as I say,
by 2015 we should start move into cash-positive
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Ev 112 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr David Bernstein and Mr Alex Horne
territory. We should have a double whammy positive
effect for all those areas.
Q455 Dr Coffey: We heard last week from Ian
Watmore that he considered that the professional
game got a 50:50 with the national game. He didn’t
think that was the right thing to do. Given the
straitened finance, is there a view to, in the future,
giving more priority to the national grassroots game?
Alex Horne: If I may, it was recommended by Lord
Burns that we formally recognise a 50:50 split of
surpluses to distribute to the professional game and
the national game. It is now set in our articles of
association. To change it would require, not only 75%
shareholder vote, but also Premier League, Football
League and the national game board approval. I have
to say, I think it reflected the priorities at the time. I
understand the model. However, I do think it is very
restrictive. If the size of the surpluses change
dramatically, it’s a very restrictive mechanism to have
written into our articles and there may well be, five
years on, a better way to invest our resources against
that of strategic priorities.
Q456 Alan Keen: I was reluctant to ask this
question; I was reminded when Thérèse asked about
the stadium. I’ve been on this Committee since 1997
and I remember at one stage the FA were given £20
million, providing they made sure there was an
athletics track at Wembley or the facilities to build
one and take it away again. Was that liability ever
taken away from the FA or does it still exist and, if it
does, should you pay it to West Ham?
Alex Horne: I’m not sure I do know the answer fully,
Alan. Can we take it away and can confirm to the
Committee?
Q457 Alan Keen: I will support you in not having to
pay it back but I just wondered whether that was
still—
David Bernstein: Yes, I am sorry. It is something I
am not conversant with it. We can come back to you
on that, if we may.
Alex Horne: I think our commitment to the IAAF
remains in that if we were asked to we would have to
convert the stadium into an athletic stadium but, on
the basis of the Olympic Park development, I assume
that liability has been expunged.
Alan Keen: I am sure West Ham will—
David Bernstein: I can say I was very involved with
the City of Manchester Stadium and the whole move
from Maine Road to that and certainly the view of
our supporters—and I am sure supporters across the
country—is English supporters do not like stadia with
athletics tracks around them. I know there are ways
that one can convert from one to the other. Certainly,
at City of Manchester Stadium, we did make a quite
sophisticated move from the Commonwealth Games
to a football stadium which went extremely well. I
think it was probably very much a very good example
of how a stadium—
Alan Keen: If I remember, I think it was Sport
England who provided the financing.
David Bernstein: They did, indeed. They did, indeed,
but we complied absolutely with Sport England on the
list of requirements.
Q458 Dr Coffey: Could you remind us how many
directors there are at WNSL because I can recall
Melvin Benn, the music promoter, is an independent
director?
David Bernstein: On the board we have seven, I
think.1
Q459 Dr Coffey: Seven and how many of them are
independent?
David Bernstein: There are two independent nonexecs; Melvin Benn and Ian Ritchie. I will be coming
off as chairman, because it is clearly not proper that I
am chairman of the FA and chairman of that; that will
happen very quickly now. Alex is on the board and
then we have two executive directors. It is a much
more conventional board, as a board that would stand
up to plc corporate governance.
Q460 Chair: Can I come back to the FA’s investment
in the national game? You also receive quite a
substantial amount of public money—something like
£25 million over four years to invest in the national
game. While the target that the FA have set is to
increase participation by 150,000 people over that
period, recent figures show that participation has
dropped by over 45,000 in the last four years, so it
appears you are going in the wrong direction. Can you
say what you are going to try and do to reverse that?
Alex Horne: Yes, the national game strategy very
much has in its heart increased participation and that
is of players but also of the support infrastructure
required for the players to deliver: quality coaches,
referees, and so on. One of the issues that we’ve had
with the Sport England measurement is that it’s global
across all sorts of social football and our investment,
historically, has been very much structured around 11a-side formal affiliated football. Over the last two or
three years, we have worked very hard to make sure
that we’re embracing all forms of the game and
encouraging football to be played in many formats.
The small-sided game is much more relevant to
people now who are time-hungry, where resources
allow for that flexible playing after work and so on.
Very specifically though, to turbo-charge the move
towards those targets, we have brought on board our
sponsorship with Mars and absolutely targeted a very,
very substantial investment from Mars in delivering
adult social play. Towards the start of next season, we
will be launching our Just Play initiative which will
see 100 centres and 800 Just Play co-ordinators
operating across the country, designed exactly to help
deliver against those Sport England targets.
Q461 Chair: Do you agree with the estimate that
participation has fallen by that amount and, if so, what
do you put it down to?
Alex Horne: I could not challenge the statistics. I
think one of the anomalies is that the numbers we are
1
Witness correction: There are 8 members of the WNSL
Board (1 Independent Chairman, 2 Independent NonExecutive Directors)
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Culture, Media and Sport Committee: Evidence Ev 113
29 March 2011 Mr David Bernstein and Mr Alex Horne
measuring, which are around the number of registered
teams, we are not seeing the same decline. We are
seeing the number of teams, at least to hold static if
not increase across the men’s game, the women’s
game, 11-a-side and smaller forms of the game. We
are probably scratching our heads a bit in terms of
why the Sport England numbers have come down by
so much.
Q462 Chair: But even by your measure, holding the
number of teams static when you are investing that
kind of money in is not an enormous achievement.
Alex Horne: No, no, I appreciate that and, as I said,
we are absolutely targeting improvement in those
statistics over the remaining two years of the fouryear whole sport plan funding.
David Bernstein: There are social trends which one
has to fight against with many young people moving
away from active participation in sports generally. I
am chairman of a tennis club and the same thing
applies: there are fewer people playing generally so I
think there is a hill to climb in that sense.
Chair: Certainly, it is a challenge facing all sports but
it is also perhaps the key objective for the legacy of
the Olympic Games.
David Bernstein: Absolutely, absolutely.
Q463 Jim Sheridan: Could you expand on your
answers to Mr Farrelly about the financial regulation
of English clubs, particularly about ownership and
indeed the scrutiny of the clubs? Do you think that
the current financial regulations are robust enough or
are there changes that you think should be made?
David Bernstein: There is a lot happening and some
of what is happening perhaps is a little piecemeal; we
have Financial Fair Play coming in with quite a part
of the Premier League. We have forward testing. We
have a degree of wages control at the bottom level of
the Football League. So there is quite a lot now
coming together in a sort of a maybe slightly
piecemeal basis. I think my view would be that,
although one is comparing a very wide range of
economic models between the Premier League and the
Football League, nevertheless, there possibly should
be more consistency across the field.
I would like to see Financial Fair Play potentially
extended across the whole of the Premier League and
maybe moving in to the Football League as well, but
I think progress is being made; it’s being taken very
seriously, I know, by the Leagues. I think perhaps the
question should lead on to as well is the FA’s role in
this and a number of other areas that you may want
to touch on. We believe that the FA’s supervisory role
should be increased. I think perhaps we have allowed
some of these things to drift away from us. The way
the Leagues are run with self-regulation we think is
absolutely right; we wouldn’t want to change that or
try and pull that back but I think our supervision over
the way that is done could be upgraded.
Jim Sheridan: Do you have anything else to add,
Alex?
Alex Horne: No, I don’t think so. I think that
covered everything.
Q464 Jim Sheridan: David, I think you mentioned
in an earlier question that supporters have a need for
as much information as possible; we heard at a
previous session when Niall Quinn was telling us
there was some sort of clandestine organisation that
looks at people trying to take over clubs or ownership
of clubs, but he did not think it was important that
the fans knew just exactly who was lurking in the
background and who was taking over the clubs. What
do you think? Is that right, given that what you’ve just
said about supporters’ information?
David Bernstein: I’m sorry, but I haven’t read what
Niall Quinn said; I have great respect for him but, no,
I disagree with that. I think that supporters should
have very open access to ownership of their clubs.
One comes down to this whole fit and proper person
question. No, it is absolutely key that supporters know
who runs their clubs and we have seen incidents over
the years of perhaps ownership falling into hands that
are not totally ideal.
Q465 Jim Sheridan: Can I use two clubs as
examples? There is the telling case of Leeds United
where supporters do not know who owns their club;
that has to be looked at. Secondly, look at Portsmouth
last season who managed to get to the FA Cup without
any sanctions whatsoever. Is that acceptable best
practice?
David Bernstein: That is a difficult one. The Leagues
can and do put sanctions on clubs going into
administration. Administration is not a cessation of
trading; companies who go into administration
continue to trade. Of course in the FA Cup it would
be difficult to find a sanction other than throwing the
side out of the competition—obviously you cannot
deduct points—which would disrupt the competition
and have all sorts of other effects.
In one way one would say, yes, it would be great to
do something for a club in that situation, to penalise
them in the FA Cup, but it would cause difficulties.
There is no halfway measure; you either let them stay
in or you take them out. If you take them out, then
you have to be able to have a walkover I presume and
you would have all sorts of implications. Not ideal
but I would have thought probably best dealt with as
it was.
Alex Horne: In the matter of Leeds, it is worth noting
that the ownership structure is known to a limited
number of executives in the League and in the FA.
Our rules do not allow us to be transparent with that;
I think it is time to look at the rules because I agree
with David that fans should know who owns their
clubs.
Q466 Jim Sheridan: As part of this investigation,
the Committee visited Germany. We have seen how
the system works in Germany in terms of the licensing
system; I take it you know the licensing system in
Germany. Do you have any views? It seems to me that
the president of the German FA had a far more
effective role in terms of organising club football.
Would you like to see that brought into the English
FA?
Alex Horne: I’m familiar with the licensing scheme;
it is very similar to the UEFA licensing scheme that
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Ev 114 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr David Bernstein and Mr Alex Horne
exists in European football, which I’ve been involved
with for six or seven years. I sat on the original UEFA
licensing panel that wrote the licensing rules and then
the latter rules around Financial Fair Play and the
model was based on the German model and the
French model where they license their clubs.
The danger with an overly formal licensing scheme is
it becomes bureaucracy for the sake of it. There are
a number of good practice/best practice governance
measures that come through that licensing scheme,
most of which the Premier League today has adopted
and put into its rules, most of which are now moved
down into the Championship rules. I think English
football adopts good practice where it’s appropriate,
for example, around qualification of managers and so
on.
Turning to financial regulation, I think there is a
decision moment for the game because I agree with
David; I think it is time to look now at the gap and
consider closing the gap between the salary cap that
exists in League Two and the cost control measures,
the Financial Fair Play measures, which now exist for
clubs in Europe. There is a moment to reach across
all four Leagues and look at appropriate cost control
measures in all four Leagues and listening to the
Chairman of the Football League’s evidence. I think
that would chime with their position and their
concerns regarding debt in their clubs. If we were
going to go down a more formal hard financial
regulatory model we would not need some form of
overarching licensing system to make sure it was
transparent, auditable and fair.
Chair: But it is not the position of the FA but that is
the direction you are going to move.
Alex Horne: That is the direction that David and I
would both seek to move in. One of the things I will
add as well is that David, in his point about
relationships, has called a meeting of the chairmen
and chief executives of the Premier League, the
Football League and the national game to make sure
that we are sitting down and understanding some of
these whole game issues and making sure that we are
agreeing our approach: if you like, uncluttering some
of the regulatory framework that exists, making sure
our roles and responsibilities are clearly defined across
each of those bodies and making sure that we’re
adopting the right strategic approach when it comes
to, for example, financial regulation of clubs or
perhaps future youth development measures. That is
something that David has already put in train.
David Bernstein: This relationship area is incredibly
important. There are natural tensions between the
leagues and ourselves, that’s healthy but there’s also a
huge area where we have mutual interest. I think we
need to sort of embrace that, work with our colleagues
in the leagues and the national game to work on the
positives, although there are a lot of positives. Of
course, the Premier League and the development of
the Premier League, which gave rise to these tensions
but is a fantastic success, arguably, is one of the great
sporting successes of all time.
Q467 Chair: Indeed, but do they agree that you
should move towards a licensing system?
David Bernstein: Well, we will see. No, I’m not
saying they agree that at the moment and we have yet
to begin to explore some of these things, but I’m
hopeful.
Q468 Chair: It appears to be your view that you
should move in that direction but if you don’t have
the support of the Premier League you will run into
the same brick wall that all your predecessors have
run into.
David Bernstein: Understood, but it’s a journey that
people have to take and the way we’ll be taking it
quickly and we will work them, hopefully, to a
positive conclusion.
Q469 Jim Sheridan: Is it, therefore, the intention or
the ambition of the FA to take over—or primarily take
over—financial responsibility for the clubs?
David Bernstein: No, sorry, definitely not. I just want
to emphasise that is not the intention. I think the
delegated authority that exists is absolutely right, I
think it is absolutely right that the leagues have
primary responsibility for that, but it is, I think, for
us, as I said earlier, to ensure that our overview, our
audit, if you like, of what is happening is more
extensive than it has been.
Q470 Ms Bagshawe: Just a quick summary: Mr
Horne, you seem very uncomfortable with the issue
of transparency, that the supporters of Leeds United
have no idea who runs their clubs. Earlier, Mr
Bernstein, you drew a distinction between
transparency for supporters sitting on the boards of
clubs and ownership models, where supporters own
the clubs, but you said that in some cases, it might be
dangerous for supporters to have representation on the
board of some clubs, but not on the board of others.
In what way would it be dangerous for supporters to
be represented on the boards of clubs?
David Bernstein: Well, dangerous perhaps is too
strong a word, but yes, what I mean is that being part
of a board has responsibilities and exposures, and it
would be very important for anybody going on to a
board to understand those. Given the imbalances in
football at the moment and the situation in some clubs
at the moment, I think there are some boards that
supporters should be very wary about joining, for
obvious corporate reasons.
Q471 Ms Bagshawe: Fair enough, but assuming the
supporters would delegate somebody who would be
commensurate to fulfil those responsibilities, would
you agree that it is a regrettable situation that in a
major club like Leeds, their supporters do not know
who owns it?
David Bernstein: Absolutely. Sorry, I said earlier—I
thought I was clear—I think the supporters should
know who owns all and any club, absolutely. I do not
think there should be any exceptions.
Q472 Damian Collins: I just go back to Leeds
United. Mr Horne, you said that executives within the
game know who owns Leeds. By that, do you mean
they know who the investors are in the trust, the
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Culture, Media and Sport Committee: Evidence Ev 115
29 March 2011 Mr David Bernstein and Mr Alex Horne
Swiss-based trust that owns the majority shareholding
in Leeds United?
Alex Horne: Yes.
Damian Collins: There are, so have you—?
Alex Horne: It is my understanding, yes, Damian.
Q473 Damian Collins: Who told you that?
Alex Horne: The director of governance at the
Football Association, so—
Damian Collins: So he knows?
Alex Horne: Yes.
Q474 Damian Collins: Who else?
Alex Horne: Well, as I say, I think there are two or
three executives within his team who know. The
requirement to submit that information is a
requirement to become an affiliated club under
Football Association regulations, so in order to grant
them that access, which they need to be a voting
member of our shareholding and to play in the FA
Cup, we had to understand that information and then
we were able to grant that access.
Damian Collins: So presumably, there are issues like
dual interest, which you have oversight over?
Alex Horne: Correct.
Q475 Damian Collins: So would that mean you
would need to know whether a major investor in that
trust also had a stake in another football club?
Alex Horne: Correct, which is why we know, but as
I said earlier, our rules do not then allow us to openly
expose that shareholding, for want of a better word.
Q476 Damian Collins: But is it required that you are
told the names of those people so that you can assess
whether their club passes the test, even though their
names as individuals are not even known by the chief
executive of the Football Club?
Alex Horne: Or indeed, the general secretary of the
FA.
Q477 Damian Collins: Would the FA would have
dealt directly with the trustees to understand those
points?
Alex Horne: Yes.
Q478 Damian Collins: With regards to what I might
call the FA’s licensing system proposal, is that similar
to the recommendations that Lord Triesman made in
his report that he submitted to the Committee in
response to the questions by the previous Secretary
of State? He recommended that independently audited
club accounts were lodged with the FA, that the FA
would have oversight over that. Are you working from
his report, his recommendations? Is the FA continuing
in that vein of thinking?
Alex Horne: Just to reiterate, we are working on the
premise that the UEFA licensing model which exists
works, and it works in co-operation with FA
executives and league executives. The work is done
by a combination of those executives. The decision is
made by a committee of FA members, on behalf of
the FA board, but much of the work is delegated to
the league executives, supported by FA executives. So
it is a hybrid model, if you like, of co-operation,
which I think is the model we should be looking at.
Q479 Damian Collins: You say the UEFA Financial
Fair Play regulation model works. Does that mean that
you have had discussions with UEFA about
enforcement of that? Does that mean that UEFA have
made decisions about how they are going to enforce
the regulations and work potentially with national
governing bodies to help them do that?
Alex Horne: UEFA absolutely enforce their
regulations in their competition and they recognise the
national associations in each of the countries as the
body responsible for regulating and for licensing the
clubs. So that is what happens right now. UEFA has
no authority to extend that into domestic leagues,
because they are only competition organisers, so they
can only do this on the basis that those clubs want to
participate in their competition.
Q480 Damian Collins: Lord Triesman floated these
ideas nearly two years ago. Has the FA been in
constant dialogue with the Premier League about
moving to a licensing model or a model at least where
the FA has or other bodies have scrutiny of clubs’
accounts, the ability to call them in, or even sort of
what was suggested to us last week, you know, put
clubs in special measures that they think have
financial problems? Are these issues that you have
been actively discussing with the Premier League?
Alex Horne: Yes, and they are issues that the two
leagues currently enact. There are already special
measures put in place where clubs are submitting
financial information for a season, forward-looking
information, and where leagues have concerns,
particularly in the Football League, they are
embargoing them from, for example, entering into the
transfer window. So sanctions do exist, the work is
happening and it is happening at League level in
consultation with ourselves.
Damian Collins: But you are talking about something
much more substantial. What I am trying to get at is,
if we take Lord Triesman’s word for it, it sounded like
Sir Dave Richards and the Premier League were not
particularly interested in the FA’s view on this subject.
Are you making more headway?
Alex Horne: I am not necessarily talking about
anything more substantial. As David said earlier, I
think this can work with the delegated authority to the
Leagues. What I think we need to do is to agree with
the Leagues that it is time to do this. We need to set
the rules very clearly so they work across the
spectrum of the four senior professional Leagues in
particular to make sure there then aren’t any gaps or
unintended consequences, for example, for conference
clubs. As regards headway, I think that is where
stability of leadership with David and myself comes
into play and David’s meeting that he has called to try
and move some of these agenda items on.
Damian Collins: In terms of stability of leadership, I
suppose only time will tell.
Alex Horne: Yes, sure.
Q481 Damian Collins: An issue that we have
discussed quite a lot with clubs and other individuals
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Ev 116 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr David Bernstein and Mr Alex Horne
who have come before the Committee is the football
creditors rule. What is the view of the FA on the
football creditors rule?
David Bernstein: I can understand the rule being the
subject of some criticism, because there is clearly a
perceived—and probably actual—lack of equity in
some respects. However, I think from my point of
view, the FA’s point of view, we would, on balance,
remain supportive of it. Why? Because the integrity
of the competitions is protected by it, and without it,
there could well be a snowball effect if a particular
club hits the buffers. I think I’m more confident in
saying that in the context of the additional financial
regulation and control that we’re talking about; that,
with Financial Fair Play, with forward testing, with
creditors being paid more promptly—I mean, there
has been all sorts of issues of course with Inland
Revenue liabilities. Well, that is going to be much
reduced now. They have to be paid more promptly.
As part of that, I think if Alex and I had our say, we
would like to go back to the days of football transfers,
of money between clubs being payable within one
year and getting away from extended terms, which
have their dangers. So I think, on balance, not an easy
call. We would want to maintain that, but with much
stronger controls around to avoid the exposures that
have arisen.
Q482 Damian Collins: The chairman of the Football
League told us he could not find a moral argument for
keeping the football creditors rule. Do you think he is
wrong? Can you find one?
David Bernstein: As I said, I can see there is a moral
argument, but I think on balance, I respect his view.
My view would be that, with these other measures,
the exposures could be greatly reduced and integrity
and protection of the league is very, very important,
and very important for supporters.
Q483 Damian Collins: Lord Mawhinney said he
takes a completely different view about integrity of
competition, and that clubs going into administration
and clubs being allowed to over-extend themselves,
safe in the knowledge they may not have to pay all
their non-football creditors damages the integrity of
the competition, and certainly damages, I think, the
moral authority of the game in terms of its standing.
Alex Horne: It is a difficult one, this, on the basis that
it is a closed league, the participants have to interact
with each other for the duration of a season, they have
to play matches against each other and they will trade
with each other in terms of players. So the rule seeks
to make sure there is no advantage or unnecessary
advantage to a club in entering some form of
insolvency, particularly on the other members of the
League. So it is quite a selfish sort of members’ club
rule, but I think very necessarily it is a selfish
members’ club rule, because I think if you were to
allow a club to fail owing large sums of money to
other clubs, there’d be a real call for that club to be
extinguished from the League.
Q484 Damian Collins: I agree with you. I think it is
a selfish club rule that allows businesses that support
a local club within its community to lose out and
potentially face financial hardships themselves,
whereas a football club at the other end of the country
is completely protected by the integrity of these rules,
and other people in the game have spoken out about
this. In fact, David Gill said when he came before us
that he thought that we could get rid of the football
creditors rule, and that if we did, clubs would be more
responsible in their financial transactions with each
other, because they will have a vested interest in
ensuring that the clubs they are dealing with can truly
afford to pay their bills. Do you think David Gill is
wrong?
Alex Horne: No, I understand both sides of the
argument, and I think it is a difficult one. Corporately,
we’ve defended this hard over years, and I understand
why we defend it. If now is the time to re-debate it,
then it is another topic for our discussions.
David Bernstein: You see, if the forward look test
works and football liabilities were perhaps more
confined, in other words, long-term credit was not
given so easily, I think you may achieve, in a sense,
what we want without doing away with this rule.
Q485 Damian Collins: That may be, but I must say,
in your opening remarks, Mr Bernstein, you said that
thought the FA could give moral leadership for
football, and I’m not seeing much moral leadership on
this issue, I’m afraid.
David Bernstein: I hear you. I think we have a
number of roles. One of them is to maintain the
integrity of the leagues and ensure this whole thing
continues to work properly. I repeat, it is a view which
goes along with the controls which I think is so
important, which would change the whole look over a
period of time, of football clubs’ balance sheets,
which we all agree is desperately needed.
Q486 Alan Keen: We are talking about finances:
could I come on to what I believe is the crux of the
whole thing? I am a great supporter of the private
enterprise system. I spent all my working life, 38
years before I came into Parliament, most of that time
as a company director in a national company as well
as having my own business for a spell. I am a great
supporter of that, but there are restrictions on the free
enterprise system. In fact, I even felt sorry for Sky
when they had taken such a wonderful initiative and
took a gamble as well when they started to pour
money into football in order to increase their intake
from subscriptions, and it has been vastly successful.
I felt sorry for them in a way that that initiative that
they took and the gamble had to be penalised; Europe
wanted more competition. Now, coming on to the
football itself, the vast amount of money in the game
is put in by supporters, either through subscriptions
through Sky and through to the Premier League, the
sale of merchandise and entrance fees. It is supporters
who put the mass of the money in. If I was a Premier
League club owner, whether I was one who had
bought the club by using the club’s assets to borrow
the money and my intention was to take as much
money as I could out in as short a time as possible,
by either selling the club or taking it out in
management fees, or whether I was somebody like
Abramovich, who I think is a genuine football
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Culture, Media and Sport Committee: Evidence Ev 117
29 March 2011 Mr David Bernstein and Mr Alex Horne
supporter, there is still a vast amount of money in
football and we are scraping to fund grassroots
football. So the balance is not right.
I understand the ownership of clubs. You cannot just
go and take it away from people and it would damage
the game, but would you agree with me that this is
whole crux of the problem that we are facing? I mean,
it is connected with the ownership of clubs and
supporters’ rights. It is a long question, this. If, for
instance, the next television agreement doubled the
amount of income for the Premier League clubs,
would you not agree with me that all that money
should not go to Premier League clubs and there
should be some sort of regulation? Football should be
able to demand much larger chunk of that money to
fund grassroots football. It is how we do that that
really is the crux of the whole thing. Do you agree
with me on the case I am putting forward?
Alex Horne: I think the thing I would point out is
that, while there is an awful lot of money going into
the Premier League, there are very few clubs making
a profit.
Q487 Alan Keen: But if the TV deal was doubled
next time, as it almost was last time, would that still
be spent on salaries to players? It is not going
anywhere else, apart from some club owners whose
intention is to take money out of the game. Whatever
it is, it is supporters putting the money in, and they
care about grassroots as well, and there are at least
three of us on this Committee still playing football at
our advanced age now, because we care about the
game at every possible level. Do you not agree with
me?
That is the crux of the problem that we are facing,
that the vast amount of money in the game is going
out in players’ wages and we would only have to take
a relatively small amount more than we are taking
now, but it is not easy to take that money out from the
Premier League. I am a great supporter of the Premier
League. Its achievements have been absolutely
fantastic and we are very proud of it, but there is an
imbalance, and it is an injustice as well, when we are
struggling to finance grassroots football. I know that
a lot of money goes from the Premier League now to
fund grassroots football, but that balance cannot be
right. I am asking you, do you agree with me that
balance is wrong?
Alex Horne: I am not sure I do. I think that the
Premier League, as a separate commercial entity
returning circa 10% of its revenue to the rest of
football, is not an inappropriate number. I’m sure you
could have a different number, but it’s a very generous
number for a commercial organisation.
More importantly for me is the second part of the
question around the overall cost control measures. I
think that’s an example where the clubs may well be
prepared to. It may be time to embrace overall cost
control measures, because the fact is that income
coming into the League does pass straight through the
League. The European nature of it, the competitive
nature of it says that the performers on the pitch
deserve to be remunerated for entertaining us all. The
supporters pay to see the football being played, so
players deserve to be paid commensurately with the
income into the game, but not necessarily significantly
over and above the income into the game.
David Bernstein: If a Premier League club subject
to Financial Fair Play, i.e. balancing its books—let’s
assume that for the moment—and over a period of
time, its income, let’s say, goes up from £300 million
to £500 million, and it is able to increase its wages to
players still at 50% of turnover, but to 50% of £500
million, is that a proper thing to do? Well, it is the
wages that attract the players. It is the players that
make the league. The Premier League is a success, in
a sense, because of the amount of money going to
players, and if the club is in balance and if these other
areas that we are talking about are dealt with, then I
think that is really, whatever one’s moral view on the
subject, a matter for the club as a self-standing
organisation to trade as it will, if the club is complying
with the financial regulations we’ve been talking
about.
Q488 Alan Keen: The question I am really leading
on to is: football is different from the rest of private
enterprise. Should we not be entitled to make sure that
the FA, when it started the pyramid—it is not quite at
the top of the pyramid, not within this country—
should be able to make sure that more money goes to
grassroots? If the TV income doubled again, the extra
wages to players would continue, as you have just
agreed. You could add another 50% on the players’
wages. Maybe Messi and a few of his colleagues
would come and we would impoverish the rest of
Europe. We would get them all here, which would be
bad again for the development of English footballers.
You know, that must be true.
I know it is extremely difficult for you two to agree
with what I am saying, and I am sure you do not
disagree with me. We can talk about the rights of the
free enterprise system, of clubs holding on to that
money, but football is different. I mean, this is what
we really have to face. We have the media sitting in
the back. The media needs to bring these issues
forward and highlight them for the rest of the football
family to discuss. I know it is difficult. I did not
expect you to give any answer other than you have
given.
David Bernstein: We have to be clear. Alex’s and my
agenda is to try and perhaps take the high ground
again on behalf of the FA and to reclaim some of the
areas and functions that perhaps have been allowed
to slip. Nevertheless, there are areas which are really
beyond and should be, I think, beyond the FA’s remit.
The actual mechanics of how a club operates, of how
it manages its wages policy, as long as it’s
complying—I keep saying the same thing,
complying—with the financial regulations that are and
maybe should be more extensively put in place, and
some of these things are, I believe, on the edge or
beyond our remit. There is a limit to what I think the
FA can be expected to tangibly do.
Q489 Alan Keen: What about quotas then for
League clubs? That would be one way of us not going
further and further so that clubs have no English
players left playing for them on a Saturday or
something.
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Ev 118 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr David Bernstein and Mr Alex Horne
David Bernstein: Yes, of course.
Alan Keen: You know, there are regulations that can
be brought in that can address this without having to
go completely against private enterprise, normal
company law, European law.
Alex Horne: If we are going to get into youth
development—looking at the Chair, I’m not sure long
we have—but if I try and give a succinct answer to
cover a couple of your points, one of the exciting
things about the Premier League proposals for elite
player development is that it will necessarily be
diverting and requiring investment into young homegrown playing talent. What we’re striving to achieve
around that turbo-charged academy system is a much
broader, deeper talent pool of young players coming
through the system from five years old.
You may have seen in the press recently that we are
rewriting how the game is played across the country.
We are seeking to play more developmental football
later on different sizes of pitches, so that the game is
much more about learning to play, being comfortable
on the ball than it is about necessarily points or
winning or tables. We are working very hard to fuel
the pipeline, if you like. The Premier League and the
Football League are working very hard to increase the
output of their academies, and that then benefits our
international team structure.
So we’re then working very hard at the other end of
that spectrum to make sure that we’re working with
the best young English players coming through the
academy system and converting them into teams who
can win at all levels. Our under-17s are current
European champions, our under-21s, although they
unfortunately lost last night, are number one in the
world and go to Denmark in the summer with the
prospect of doing very, very well.2 A number of our
development teams are performing well, but we need
to keep working on that and make sure we have a
pipeline of international players and international
teams who can succeed in future tournaments.
All of that is underpinned by another central FA
attribute, and that is the development of coaches. We
are setting about professionalising the coaching
industry, licensing coaches, continuous professional
development for coaches, more better-qualified
coaches with age-appropriate skills being available to
the game at all levels across the grassroots and into
the academies, and that’s our investment into the
structure.
Just to turn full circle, that’s the clubs’ and league’s
investment into the structure, which is so important
to long-term development of better home-grown, and
selfishly, better English players. I would rather see
that work, if I’m honest, than force a quota system.
The whole game is aligned behind that approach, and
that’s what we’re going to focus our time and energy
on.
Alan Keen: The Chair will not let me get further into
the argument, otherwise I would come back at you
straight away.
Chair: We need to move on.
2
Witness correction: England U-21s are number 1 in Europe.
There are no official world rankings.
Q490 Jim Sheridan: I am not asking you to
comment on this particular question, but just before on
what Alan was saying about money leaving football,
throughout this inquiry we have heard of genuine
concerns about the role of footballers’ agents in the
game and the money they take out of the game. It is
just to put on record that there are genuine concerns
about the role of football agents.
David Bernstein: Absolutely, understood.
Q491 Paul Farrelly: I want to move on to your
internal review. In your written evidence, you said you
would keep us updated with progress. Your written
evidence also said that David was due to receive that
review on 1 February. So will you tell us what it
recommended?
David Bernstein: Yes. May I precede that by quoting
something to you? I addressed the FA Council last
week on the question of independent directors, which
is a focal point for the moment on the internal review.
I would like to read a couple of paragraphs of what I
said, because I think it sort of sets the scene. I said,
“There was a widely held thesis that the FA is
gradually losing authority and that this is not just a
factor of a rapidly changing football landscape, but of
a corporate governance structure that has not adjusted
to take account of these changes. Independent
directors are not the only governance issue we should
be discussing, but nevertheless a very important first
step”. I just wanted to make it clear that that has been
put to the council. It was accepted, I think, by the
Council, and I think we are on the first stage of a
journey with this.
The actual results of the review, what they focused
on—and it may not sound particularly exciting to the
Committee—were basic governance issues. I do have
a list of them here: draft formal schedule of matters
reserved for the board; enhanced corporate
governance; sections of the annual report;
performance
appraisal
of
the
chairman—
unfortunately—to be introduced; annual report to
include a summary of the roll and membership of the
nomination committee; director development to be
considered, to include the appraisal of individual
directors as part of an overall performance. It is
certainly not for now, but you are most welcome to it,
that is a detailed paper that has been produced.
Now, what has not been addressed at this moment,
because I did not want to get ahead of ourselves, are
some of the other perhaps more fundamental questions
I know have been raised in other evidence and that
we are aware of. I think it is very important to try
and get the first steps through successfully, i.e. the
independent directors, both because I think it is a
really crucial issue and also in a way it tests the
system, and ours is quite a complicated system. I
mean, in order to get this adopted, I’ve had to put the
matter already to two board meetings in February and
March. It went to the Council for discussion in March.
I then have to do a road tour around shareholders
around the country. It then comes back to Council in
May and then it goes to the shareholders, I think in
May. So it is quite an extended process to get this
done, and I do not really want to get too involved in
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Culture, Media and Sport Committee: Evidence Ev 119
29 March 2011 Mr David Bernstein and Mr Alex Horne
other basic issues at the moment until we have this
hopefully put to bed.
Q492 Paul Farrelly: So are you hoping that after the
FA Cup final, before people go off for the summer
break, that you will get this proposal through?
David Bernstein: I will do everything I can to get it
done, yes.
Paul Farrelly: You said it did not sound terribly
exciting.
David Bernstein: Not those particular items, no.
Q493 Paul Farrelly: I think that is probably an
understatement. I mean, to what extent is your internal
review anything more than what you might call in the
rag trade a two new suits policy or a suits assessing
suits policy? What else is in there?
David Bernstein: As far as the governance review is
concerned, there is a lot of compliance type detail,
things that a major public corporation would do, and
the sort of thing I am used to from the commercial
world, proper compliance stuff; other areas
concerning the board and other related matters,
structural matters within the FA, how the committees
are organised, the role of the FRA and so on have not
been fully concluded yet. Frankly, I’m happy that they
haven’t. I think we need a bit more time and I’d like
to get this independent directors situation out of the
way first. I think there is a little bit of a danger here
that as a new chairman, all full of enthusiasm and so
on to get certain things done, I do not get too far ahead
of my own constituency. If we are going to get things
done effectively, I think we need to ensure that I’m
working with my colleagues and the board and
Council, and so on and keep them on board, clearly.
Q494 Paul Farrelly: I understand that, but I think
what people are looking for perhaps is a firm smack
of leadership. Let me just ask one question which has
been left in the air: regarding fans, you think fans
should know who owns their football clubs. Some
people within the FA know who is behind allegedly
the trusts at Leeds, but you have not said what you
are going to do to make your wishes and ambitions a
reality. Does your review address this particular point?
Alex Horne: The first step is David’s meeting with
the other chairmen of the other bodies and the chief
executives of the other bodies with myself, to sit down
and reset the architecture. Once we know who is
responsible for what, in my view, we should
understand our role within the overall hierarchy before
we go back and look at our corporate governance
again. Corporate governance is a constant thing on the
agenda. As David said, very rightly, the immediate
recommendation is around incremental independent
non-executives. I think we want to run that through in
parallel with our conversations around how we think
the overall architecture should be reset and then come
back to that. Once we have agreed our role and our
role in oversight and/or delegation, that will enable
us to look again at the right corporate structure for
the FA.
Q495 Paul Farrelly: That was not the question. My
question was what, if anything, in your internal review
is there to say, “This is what we want to do”? For
example, take the issue of transparency amongst the
constituent members of the Football Association what
is there saying, “and this is what we are
recommending to make it a reality”?
Alex Horne: Forgive me, Paul. I am not sure I
understand the question. The transparency of
directors—
Q496 Paul Farrelly: No, transparency of ownership.
David, do you perhaps understand better?
David Bernstein: Yes, I understand the question. I
think the slight difficulty here is I have been in
position for two months. I have made, I think, a lot of
progress in a very short period, and maybe my length
of period here and what you’d like to hear is not an
ideal mix. I am into the Club England chairmanship,
which I think was extremely important for a number
of reasons you might want to touch on. We have the
independent director thing moving and a lot of other
initiatives going, but we haven’t yet come to a
conclusion on some of these things. In a way, I’m
almost pleased that we haven’t. It would be premature
for me to come up with answers, with a wide range
of answers, so quickly.
So on some of the things you would probably like to
hear from me, I’m not quite there yet, and nor do I
want to be, because I think it would damage the first
very important step of independent directors. I do not
want to make independent directors sound like the beall and end-all, but I think it is important, I think it is
symbolically important for the FA to get this done and
I do not want to prejudice that.
Q497 Paul Farrelly: Can I ask you, David, then in
what sense do you think that to date the Football
Association has not behaved like a respected
governing body?
David Bernstein: I think probably what has happened
is that the FA is in some respects unfairly maligned. I
mean, let me say—it has not been said yet—that I
think the staff within the FA, a lot of the basic work
being done within the FA are absolutely fantastic. I
am new on the scene here. I am incredibly impressed
with the quality of a wide range of work and personnel
who are employed by the FA. The problem—and there
has been a problem—has been at the top of the
organisation. We have had too many changes: changes
of chief executives, changes of chairmen.
We have had clearly a poor performance in some
major areas, such as the World Cup bid, the World
Cup itself, the World Cup performance, and these are
high-profile, very important areas. The FA perhaps
lacks confidence because of those things. I think it’s
my job, working with Alex, to get the FA on the front
foot, to take the high ground in the way we’ve
described already.
I think there’s very important work to be done, but
I think it’s building on what is a very, very strong
organisation in many ways. I think because of the
problems at the top end, some of the issues, many of
the good things lower down in the organisation are
not properly recognised. I have already been around
the country quite extensively, to the Midlands, to
Middlesbrough, looking at youth developments,
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Ev 120 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr David Bernstein and Mr Alex Horne
looking at sites where Football Foundation money has
gone into. There is fantastic work being done. It’s
very, very impressive, and a lot of that is lost because
of some of these high-profile issues.
Q498 Paul Farrelly: I just have one final question
on your structures. The strong view that we have
heard from many people who have been in and out of
the FA’s doors is that the FA does not work because
it is too riddled with entrenched, vested interests. The
same might be said of the structure just below the FA
board, the Professional Game Board. Can you tell us
what the purpose of the professional game board is
and has your internal review recommended that there
are independent non-executives attached to that
committee as well?
Alex Horne: The Professional Game Board’s role, as
outlined in the Burns recommendations, is to oversee
matters relevant to the professional clubs, to the 92
professional clubs. Very specifically, that is where
we’re debating the youth development proposals at the
moment on behalf of the whole game. That is where
they discuss the distribution of the moneys, the
budget, the funding formula that we referenced earlier.
So it is a tight remit around the 92 clubs. It is made
up at the moment only of club representative directors.
Again, you may not like the answer, Paul, but I think
in our conversations with the leagues, as we agree
who is going to be responsible for what, one of the
answers will be, “What is the role of the Professional
Game Board? What role should it play on behalf on
football?” I have to say, sitting as an executive, there
is a lot of duplication of my own time and of roles
and responsibilities. There is a lot of overlap between
the professional game board and other committees of
the FA, the FA board, league boards and so on. One
of the key things we can do is unclutter all of this,
and be very transparent about the roles of each of
these bodies. What role should the professional game
board play in a reshaped architecture for football?
Again, once we agree that, the membership will be
clearer.
Q499 Dr Coffey: One of the perhaps worse examples
of lack of corporate governance seen in the FA in
recent times was that one person unilaterally was able
to renegotiate Fabio Capello’s contract just before the
World Cup. How was that possible?
Alex Horne: No one renegotiated his contract
unilaterally. The issue around the private contract
between an employee and the FA was that there was
a contract through to 2012 for four years. Within that
contract was a clause allowing either party to
terminate for an amount of liquidated damages. We
were coming under a lot of pressure in the run up to
the World Cup for certainty over whether Fabio was
staying or not. There was speculation about clubs
coming in for Fabio, and it was agreed with a few
individuals at the top of the organisation, the last
chairman being at the heart of it, that we would delete
mutually those two clauses. So effectively, we would
remove our ability to terminate Fabio’s contract with
liquidated damages and he would delete his ability to
walk away from our contract with liquidated damages.
So having qualified top of the group very comfortably,
facing that uncertainty going into the tournament, it
was exactly the right thing to do, and that decision
was made in April or May 2010.
Q500 Dr Coffey: I was under the impression it was
just one person who made that decision, so how many
people exactly were involved in that, because it seems
a significant change to the liability of the FA?
Alex Horne: Well, no.
Dr Coffey: Especially given the performance of the
team in the World Cup.
Alex Horne: Forgive me, it was not a change to the
liability of the FA on the basis that the liability
existed. The contract existed in the first place, so there
was no change to the liability of the FA. I’ll hold my
hand up on behalf of David Triesman and say that I
think, with hindsight, it was a whole board decision,
and should have gone to the whole board, but it did
not.
Dr Coffey: So it did not go to the whole board.
Alex Horne: It did not go through the whole board.
Q501 Dr Coffey: Could that ever happen again, that
same situation?
David Bernstein: I think if I am Chairman, it will not
happen again, no.
Q502 Dr Coffey: So will it happen again?
David Bernstein: Not while I am Chairman.
Q503 Dr Coffey: Does that rely on you as a
personality or does it rely on—?
David Bernstein: No, I think it’s as a proper
organisation. I think we have the remuneration
committee. Any contract of any size, even much
smaller than what we’re talking about here, or any
changes of significance should go through the
remuneration committee and then, if necessary, to the
board. I would ensure that proper governance is in
place for those things.
Q504 Dr Coffey: Lord Triesman has gone, but is
anybody else who was involved in making that
decision still involved in governance within the FA
today?
Alex Horne: Forgive me, because I do not know who
exactly was involved in it, so I am not sure I can be
very specific, but there will be a couple of board
members and a couple of executive members who
knew about it, yes.
Dr Coffey: I am confused, Alex, because you seem
to be clear it was not just one person, it was a few
people, and now you are not sure who did it, who
made the decision, apart from Lord Triesman.
Alex Horne: I am not comfortable sitting here and
naming four or five people. I don’t think that is fair
on those individuals, on the basis that the decision has
been reviewed internally and we have held our hands
up to a corporate governance mistake. I think the
overlapping roles—David is not here to answer the
question, and David was the senior member involved
as chairman of the association, and clearly felt he had
the authority to make that commitment. It was only
after he left that the board questioned it.
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Culture, Media and Sport Committee: Evidence Ev 121
29 March 2011 Mr David Bernstein and Mr Alex Horne
Dr Coffey: I accept you cannot answer on behalf of
David Triesman.
Q505 Damian Collins: Mr Bernstein, I appreciate
you have not been in post that long and you clearly
set out your task of trying to convince the FA Council
of the need for change.
David Bernstein: Yes.
Q506 Damian Collins: When Ian Watmore was
before us last week, he said that the FA will not
change without some sort of external pressure. I am
not going to ask you whether you agree with him or
not, but do you think that the FA Council shares the
sense that many people have shared with us through
this inquiry—probably people outside the FA share—
that the FA does need to change and that, within an
environment where you are already regulating and
controlling yourself, is the pace for change or the need
for change really taken seriously? Is it seen as a kind
of nice to have, something you could get around to?
If there was the threat that if change did not come,
change might be forced on the FA, do you think that
it would make it more likely the FA Council would
grip that?
David Bernstein: Difficult question: you are asking
me to sort of judge how a group of whatever it is, 110
people are going to react. I mean, may I say, just to
put it on record, that the Council members
individually are a fantastic group of people. They are
often demeaned. This blazers thing comes into play.
But I must have met with a quarter of them
individually now. They have come to see me. They
are people who have dedicated their lives to football,
people who give tremendous service, have tremendous
knowledge, and although I’m not 100% in agreement
with the total structure of our committee system
within the FA, nevertheless, the committees do a
fantastic job of detailed review and investigation. So
I think there is a lot of merit to the body; let me say
that straight away.
They are fairly conservative; the Council is a fairly
conservative body, which one might understand from
the make-up. We will have to see. I felt the reaction
to my initial presentation, the one I just read, was
quite positive. I am hoping we will get the majorities
we need. The council works on a 51% majority and
then the shareholders work, on many issues, on a 75%
majority, so there are sort of two levels of approval
required for these things.
Q507 Damian Collins: When we look at other
industries that self-regulate, where that works well, I
think, is where there is almost a clear understanding
that, if self-regulation failed, another sort of regulation
will come in its place.
David Bernstein: Yes, the Council does not respond
well to threats. They are very competitive people.
They come from a sporting background and so on,
and so they need handling in a sensible, civilised sort
of way, but again, I think with my football
background, it does help a lot in football to have been
involved in football. I think my football background,
I hope, will be a positive influence, but we will see.
Alex Horne: I think we have a number of examples
where the structure has embraced independence. Our
commissions all have independent members on them
now, which was not the case years ago, two or three
years ago. The FRA, as I have referenced, has four
independent members and the national game and
professional game members working in that body
recognise the value of the expertise and experience
that those independents can bring, so I think there are
advocates for change in the shareholders.
Q508 Paul Farrelly: Going back to your evidence,
you say that the FA recognises it is important to learn
from the best practice governance arrangements, both
across football and wider across other sporting bodies.
Could I just ask you two things you have learned so
far, and from where, just to pick one each?
Alex Horne: If I may go first, David, the independent
director recommendation is absolutely mirroring best
practice and common practice now in every other
sporting body. So we understand that there are
independent directors on all the major—and many
other—sports’ governing body boards. For example,
that
is
substantial
evidence
behind
our
recommendation for independents.
David Bernstein: Yes, I think the proper application
of wider corporate governance, you have touched on
the remuneration committee issues, for example. I
think we have some of these things in place. I think
there is a little bit of a danger in that, historically, the
FA has sometimes, because of the pressures for a
speed of decision necessary, that maybe some of the
controls have been innocently circumnavigated. I
think it is very important, and I think the example
that you have been discussing with Fabio Capello’s
contract was maybe a good one, that we ensure that
we fully comply with our own procedures, even when
we are under pressure. One cannot overestimate the
pressures that arise with football issues surrounding
England. You want to see the media over the last few
days about various fairly peripheral issues, I
personally think. The pressures are very intense. It is
very important the system stands up to those
pressures.
Paul
Farrelly:
So
no
more
innocent
circumnavigation.
David Bernstein: Yes.
Q509 Chair: Can I finally turn to the Football
Regulatory Authority, which is responsible for
disciplinary policy? It draws on members of the FA to
adjudicate individual disciplinary cases. It was
suggested to us that those should be done externally
and it is not appropriate for the FA to do so. How do
you respond to that?
Alex Horne: Can I just explain the distinction,
because the FRA is the rule-making body? It sets the
policy. That is the body with four national game
representatives,
four
professional
game
representatives and four independents on it. They do
not appoint the commissions. That is a completely
separate body, completely independent.
Chair: But the people who judge disciplinary cases
come from the FA.
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Ev 122 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr David Bernstein and Mr Alex Horne
Alex Horne: No, they come from—the commissions
are made up of, in the first instance body, two FA
people and one person from a football panel. So there
is a panel of individuals nominated from across the
game, ex-referees, ex-players and so on, who will sit
in hearing on each of the commissions; one football
panel person plus two Council members on every
commission.
This is very much a manager’s decision and I think
the team he will put out tonight may lack one or two
of the glamour names, but will be a very strong team,
indeed, and a team with players who I believe he
really wants to trial, and really see how they perform
on a very big occasion in front of a capacity crowd,
to see how they will hopefully perform in competitive
matches later on.
Q510 Chair: Do you not accept that it should be
done externally, completely?
Alex Horne: No, I do not. I think that history on the
whole would show you that the commissions made
sensible decisions, and the adding in of football
people has definitely helped with making consistent,
appropriate decisions. So they are adding expertise
into consistency. This has been done well, but I think
the addition of football people has improved the
process. If I may say, the second body, the appeals
body, is then further independent. It has two
independents, the independent chair and one FA
person. Occasionally, these things are three, four. The
constitution of these commissions is very much
dependent on the case matter in front of them as well.
So if there are doping cases or child abuse cases, then
again, the balance of the commissions will change to
make sure we have the right, appropriate
representatives on it.
Q512 Chair: So is the team that plays tonight
entirely the first choice of the manager?
David Bernstein: In all the circumstances, yes, no one
has forced him to send players back. It is his decision
to do everything that he has done with regard to the
squad, absolutely.
Chair: The reluctance of the Premier League clubs to
release players for a match like tonight—
David Bernstein: No, sorry, we had all the players
that we wanted and the manager has decided to send,
I think, five of them, back to their clubs for various
reasons, as I have just tried to explain. I am in
complete support of the manager in doing that.
Q511 Chair: My last question: the FA draws parts of
its income from the England team. Tonight, fans will
have spent quite a lot of money to come and watch
England playing. Do you think they are being shortchanged, because they are not going to see people like
Rooney and Lampard on the pitch tonight?
David Bernstein: No, I do not. The manager—and the
manager has to have the say in these matters—has a
balancing act. He picked a very strong squad for the
two matches. Every member of the squad, I suggest,
is a top class player. He has to balance, as we had
with the World Cup, fatigue issues, other competitions
that some of these players are playing in, relationships
with the club managers, which is very important. We
are looking for an improved balance of give and take
with the clubs. It requires both not just giving and not
just taking with the club managers to ensure that we
get that right players, certainly for the competitive
matches.
Q513 Chair: One of the criticisms of the rather
disappointing performance of the England team to
date is that some of the star players do not get as much
opportunity to play together for the team, as they
might do.
David Bernstein: Possibly—there is no question
about the tensions we talked about earlier between
success with the Premier League, the Champions
League, international football, the effects on the FA
Cup, which we have not touched on today. There are
a great range of tensions there, and running the
England team is no easy job. Just for the record—I
will put it down here—of the 18 competitive matches
that Fabio Capello has managed England for, we have
won 13, drawn 3 and lost 2, one of which was a dead
rubber match. Unfortunately, the other match we lost
was a very, very important one in the World Cup, but
his record overall is actually outstanding. I know that
has been blurred by the very, very poor World Cup
performance, but generally, his qualification record
previously was good, and so far we are top of the
group table for the Euro championships and hopefully,
we will stay there.
Chair: I thank the two of you very much.
Examination of Witnesses
Witnesses: Mr Roger Burden, Chairman, national game board, the Football Association, Ms Kelly Simmons,
Head of national game, the Football Association, gave evidence.
Chair: We are now going to turn our attention to the
national game. I welcome Roger Burden and Kelly
Simmons.
Q514 Jim Sheridan: Beneath the FA board, the
policy responsibilities are divided between, as I
understand it, the national game board and the
professional game board. How successful has this
division of responsibilities been?
Roger Burden: I think in the last four years it has
been particularly successful. I say the last four years
because that is since the Lord Burns review, when
both the professional game and the national game
were given quite clear delegated authority about
responsibilities—you were discussing the PGB
earlier—and with that authority came the split of the
surplus too, which we call the funding formula, where
it is 50:50 between us. So the relationships have been
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Culture, Media and Sport Committee: Evidence Ev 123
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
really good the last four years. I have no issues at all.
I am surprised at some of the criticisms I have heard.
not roll anybody over at the FA board. It has not been
an issue for us.
Q515 Jim Sheridan: From whom?
Roger Burden: From some of the people who have
presented in front of you.
Q520 Chair: You channel quite a lot of money down
into grassroots football, primarily through county FAs.
We have had suggestions that the county FAs are not
entirely accountable for how that money is spent. Can
you say what audit procedure there is that you use to
make sure that the money goes to where it is
supposed to?
Roger Burden: Yes, I can give a couple of top level
views and then Kelly can give you some detail. Most
of the money we give counties—and it is something in
the order of £10 million a year, I think—is for salaries,
development staff salaries, referee development, child
welfare officers, as well as a chief executive. Every
county needs them. So that is very easily auditable,
because we only give the money based on the
payment of salaries. From the chairman of the national
game board’s point of view, we do have an internal
auditor in the FA and he has been out to counties,
reported back to me and through to the national game
board and Kelly with regard to the controls that
operate in the counties, and he has been entirely
satisfied. Frankly, it is not difficult, because it is all
based on salaries, if the people are not there, and they
are not earning the money, they do not get the grant.
Chair: It is not entirely salaries.
Roger Burden: No, it is not entirely salaries, the
majority is salaries. There is also some revenue
funding, and Kelly can talk about that.
Kelly Simmons: There is a blend. In terms of the
national game budget, some goes to the county
football associations in terms of workforce, but also
revenue grants, which I will come on to. Obviously,
there is investment into the Football Foundation.
There are league grants. There are grants for clubs.
There is the skills coaching, coach development.
There is a whole range of funding. So I would not
want it to be thought that it just goes into county
football associations. You know, they are our key
delivery agency in delivering national game strategy,
and provide and oversee the administration and
development of 130,000 teams playing in 1,200
leagues across the country every week of the year.
The national game strategy, really, sitting under that
are county football association strategies in line with
that national game strategy. To get that money, we
assess their plans and they have to set targets on how
they are going to grow the game, raise standards,
increase coaches, grow referees, and so on, so a range
of key performance indicators. We track that through
a score card process every quarter. We have regional
managers that work with those county associations as
partners and we are tracking their plans and the return
on the investment that we are making in those
counties, and working with them to share good
practice, to make sure that we get that money to work
as well as it possibly can.
Then on top of that, as Roger mentioned, there was a
board audit committee that has gone in and looked at
that funding. In terms of the workforce, there is a clear
set of conditions, how the counties must recruit,
deploy and develop the workforce, to make sure they
are providing good service to develop the game. I
think there are a number of accountabilities in there.
Q516 Jim Sheridan: Kelly, do you wish to
comment?
Kelly Simmons: I think, from the executive side, the
focus on working with a board that is completely
focused and committed to driving the growth and
development of the national game, and having a clear
strategy and a long-term budget and investment into
that has really paid dividends. I think you will see
from our submission, some of the results we have had
in terms of growing the game, growing and improving
the quality of coaches and referees, investing in
facilities. The whole range of work we have done, I
think, has been very much because we have had that
real focus and leadership from people who are experts
around the board, in the area of the national game. I
think it has been a good thing for the organisation.
Q517 Jim Sheridan: Can you see any benefits in
appointing FA executives or non-executives to the
national game board?
Roger Burden: To the national game board? We have
the general secretary comes in, we have Jonathan Hall
and we have Kelly coming in. They are not members
of the national game board, but they speak when they
have something to say. I have never thought that; 15
or 16 of us around the table, I think that is more
than enough.
Q518 Jim Sheridan: What is the purpose of it, if
they are coming to the national game board?
Roger Burden: You mean the national game and the
national game board?
Jim Sheridan: What is the purpose of Kelly coming
into the meetings with the members?
Roger Burden: They are the executives. It is just like
any other board, really, where the board is looking to
the executive for the initiatives, and we present what
we think is the appropriate support and challenge to
the executives. They come with the budgets. They
come with ideas and reports against progress. We have
quite a comprehensive strategy with key indicators
which we like to hit, and again, that was mentioned
this morning. It operates, I think, the way you would
expect a board to operate, with executives reporting
in.
Q519 Jim Sheridan: On the criticisms that you think
have been unjust, would you like to give us a flavour
of what the criticisms are that you do not agree with?
Roger Burden: Yes. I have heard—not followed every
word of it, but I have heard—that some members of
the professional game board have been criticised for
being overbearing and some because they have vested
interests so are not putting the fair view to the board.
I do not agree with that. I do not see that. It surprises
me that people are surprised that the chairman of the
Premier League is not a pussycat. He is a resilient
man; you would expect him to be that, but he does
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Ev 124 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
Q521 Chair: If there were allegations of
inappropriate awards being made by a county FA, who
would investigate that?
Kelly Simmons: Awards in which sense?
Chair: Grants being made.
Kelly Simmons: Our money goes primarily into
workforce and some programme money, but the main
grants would be through the Football Foundation. The
strength of the Football Foundation is you have a
separate body that is assessing the grants that are
being worked up at a local level to the county football
associations and the partners. In other words, if it was
a Football Foundation grant, that would go back into
the Football Foundation in terms of query. If there was
a concern in terms of something the county was doing,
that would come back to the executive, and if there
was a concern that we could not fix, obviously, I
would work with Roger and the board.
Q522 Damian Collins: I want to talk about youth
development. Why has it taken so long to get the
National Football Centre plan up and running, and
with a delivery date? It has been the longest gestation
probably of any public project in recent memory.
Roger Burden: Yes, that is a good question. The very
first board meeting I attended, Howard Wilkinson
presented for the National Football Centre. I think that
was probably nine years ago. And at the same
meeting, there was a meeting about Wembley too, so
at a stroke the board was being asked to look at
something like £150 million, and there is the answer.
We did not have it. The National Football Centre has
been put off, not because any of us did not think it
was a good idea, purely on the basis of funding. When
it eventually came through and we were satisfied that
we could fund it—and the national game is putting
£6 million into it, incidentally, as is the professional
game—we agreed as soon as we were comfortable
that we could pay for it.
Q523 Damian Collins: Ian Watmore, I think, gave
us the impression that he found the National Football
Centre lying dirty and tattered, in rags in the gutter
somewhere and picked it up and put it back on the
agenda; that it had been an unloved and forgotten part
of the FA’s programme. Is that fair? Obviously, I do
not suppose you will say that is a fair description, but
there seemed to be a lack of impetus for quite a long
time, and that was not just about money, but about
priorities.
Roger Burden: Yes, I think the priorities thing is fair,
but money is at the heart of it, because, shortly before
Ian joined us, we had reviews on the National Football
Centre and it just was not affordable. It did tend to
come up and down on the priorities, depending on a
certain amount of pressure from the then-chief
executive, and whether or not the chief executive of
the day really felt that this was a viable moment to
put it forward.
Q524 Damian Collins: I appreciate you said money
was a part of it, but it was not just money. What else
was it that caused it to go up and down the list of
priorities?
Roger Burden: I do not think the National Football
Centre ever went out of favour as an idea or concept.
All of us were happy with it, but with Wembley and
the television money going down, we could not afford
it. It was as simple as that. At least in my view, we
could not afford it. I voted against it when we were
asked for £40 million, because I did not think the FA
had £40 million.
Q525 Damian Collins: The reason I ask is that there
has been criticism that we have a problem of lack of
qualified coaches, and the National Football Centre
plays a key role in that. We have less than 10% of the
level of fully qualified coaches that you might see in
other comparable European football countries. Why
do you think that has happened, and who is ultimately
to blame for that?
Roger Burden: I am not sure why it has happened
and I do not know if anybody is to blame for it. I
think the important thing is now that we have got to
grips with it. The World Cup was a bit of a focus for
us. Kelly has various figures that she can give you.
Coaching is a whole game issue; it is not just national
game. We are encouraging all our teams now to have
qualified coaches, at least at the first level. All the
children’s teams is what we want, and we are really
starting from now, and I do not think there is any point
in looking back to see why we are where we are. The
important thing is that we are looking forward and
Kelly can tell you some of the things that we are
doing.
Kelly Simmons: Yes, we have been working really
hard. We started from a very low base. In 2000, when
the FA did the first football development strategy, less
than 5% of those coaching grassroots football, youth
football, had any qualification whatsoever. We are
now up to 72% of all junior football—mini-soccer and
junior football—is FA chartered standard, which
means that they have a minimum qualification. We
are just about to announce our 500th community club,
multi-team girls and boys, youth to adult, minimum
level 2. We are working hard on getting the Tesco
skills programme out there so that children get
additional,
top-up,
age-appropriate
specialist
coaching. I think you will see that in action later on.
We are investing through the national game board in
regional coach development managers who are
working with improving the skills and knowledge of
the coaches working in the grassroots game. Regional
5 to 11 specialists really focus on the new ageappropriate agenda in the philosophy that the FA has
published around coaching and working with young
players. We are putting a lot of effort and focus in. I
think we are starting from a very low base in terms of
previous history.
Q526 Damian Collins: Other witnesses have
commented that in some ways what we are seeing
now is the coming to fruition of recommendations that
were made in the Lewis report five years ago. There
has been criticism of the FA with Lord Mawhinney,
for example, on this point saying this is an example
of the failure of the governance structures and the
leadership of the FA, that these issues have been left
to drift for too long, and while the right thing is being
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Culture, Media and Sport Committee: Evidence Ev 125
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
done now, it should have been done some years ago.
Do you think that is a fair comment?
Roger Burden: I think it probably is fair, because the
figures prove that we do not have enough coaches
compared to competitor countries—I will call them
that—in Europe, in the competitions. I think it is fair,
but we are doing something about it. We have not
just started in this past year. National game has been
encouraged by Sir Trevor Brooking in investing in
local coaches for some years now, as Kelly has
mentioned.
Kelly Simmons: We are training about 45,000 coaches
a year, so we have significant numbers coming at the
base. The focus will be that St George’s Park will be
a major asset in making sure that more of those local
coaches can get to the top. It is not just the A licence
and the Pro licence, but specialising in working with
young players, which has been a real gap.
Q527 Paul Farrelly: What percentage of the
Football Association’s total income is spent on
coaching and youth development?
Kelly Simmons: Coaching, I believe, it is £8 million
on coach education. Youth development, through the
PGB—it is not our own—I believe £7 million goes
through the Football League Trust into centres of
excellence and academies on the boys’ side. On the
girls’ side, it is between £2 million or £3 million on
the girls’ centres of excellence, and about half a
million on the talent pathway for players with
disabilities.
Q528 Paul Farrelly: So, just under £20 million. How
does that figure as a percentage? I have not got the
annual report accounts in front of me.
Roger Burden: Of income, surplus, we are looking at
£80 million. In terms of surplus, we have a surplus of
about £80 million, which is split between national
game board and professional game board, but there is
also other income coming into the FA, and we do not
have those figures in front of us. We only have our
own figures.
Q529 Paul Farrelly: I am just trying to get a feel,
because you mentioned other countries, how do we
rank as a nation?
Kelly Simmons: Significantly higher; I am on the
UEFA grassroots panel and work with a number of
my equivalent colleagues across Europe in some of
the big countries, and the Football Association invests
significantly more in children’s football, grassroots
football and coaching.
Paul Farrelly: As a percentage of its overall income?
Kelly Simmons: I am sorry. I meant total. Yes, cash
total, I meant.
Q530 Paul Farrelly: That is apples and pears, is it
not, depending on the country’s size? Can you give us
a feeling, do you have a feeling for how the FA ranks
percentage-wise against Spain, France, Germany?
Kelly Simmons: You would have to go back and look
at their turnover and their investment in coaching. My
sense would be that we are pretty high, I think, in
terms of that, and that is over recent years: as the FA’s
turnover has significantly increased, we have been
able to invest more back into the game. You have seen
we have significant numbers of coaches in level 1,
level 2 starting to come through that coaching
pathway. I think now, with St George’s Park and with
that focused effort, we will see us closing the gap on
the top level coaching qualifications.
In terms of the national game, we need a blend of
funding. We need to fund coaches. It is absolutely
critical, but we need facilities; we need referees; we
need leagues and competitions; we need clubs. It is
one piece of the whole pie, if you like, of football
development we need to invest in. We are investing
in skills programmes, coach education, coach
development, regional coaching infrastructure. So
there is a range of investment in there that we are
trying to move those coaches through.
Q531 Paul Farrelly: If we can write to you
afterwards, it would be useful.
Kelly Simmons: Yes, of course.
Roger Burden: The figures must be available. We just
do not have them.
Q532 Paul Farrelly: This is ultimately about sharing
out money. Do you think there is more the
professional game could and should do, be it the
Premiership or the Football League, to help improve
the coaching and youth development, outside of their
own academies? Is there a case to be made, if it is not
in their interest but in the national interest, that they
could contribute and should contribute more?
Roger Burden: You mean financially?
Paul Farrelly: Yes.
Roger Burden: I had not really thought that there was
until I was listening to the debate this morning.
Personally, and from the national game board’s point
of view, we have been very happy about the way the
money is split. They have been really supportive of
the things we have wanted to do with our money.
Obviously, if there is more money around, I would
hope that they would see their way to help the national
game. Although I do not have any concerns or
criticisms, we always want more, and in the case of
the national game , we have a lot of mouths to feed
in order to do what we want to do and increase
participation. But I do not have any concerns about
the level of support we are getting from the
professional game.
Q533 Paul Farrelly: Final question on this topic: we
have been to Germany and taken some evidence of
their response to Euro 2000, their dismal performance,
and their youth development, which we saw coming
through in South Africa. We have learned from them
that they have a contracting system where the children
at the age of 15 to 18 can be contracted, which gives
some protection for proper recompense, as against the
poaching that will inevitably happen. Do you think
that current arrangements between the Premier League
and Football League clubs and proposals for changes
to the academy system are right, or should there be
anything else in place that protects the smaller clubs
and gives them better recompense?
Roger Burden: It is not really our field, in terms of
the smaller clubs, because I know you are looking at
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Ev 126 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
the smaller Football League clubs, but what I have
seen recently with the way the Premier League and
the Football League have been talking to us and to
our people, I thought it was a step in the right
direction. There is going to be a change and you are
probably already seeing some of that, some of the
arrangements.
Paul Farrelly: I am not talking from the point of view
of your own niche but I am talking to you as a
representative of the governing body of the national
game .
Roger Burden: Yes, okay. I am satisfied. I think it is
right. I think the way the programme for children
coming through the game and the opportunities that
exist are right. That is one of the things we want to
achieve. We want to get children playing and we want
to make sure they have the skills coaching so that, if
they are good enough, there is an opportunity and we
want to make sure they do have the opportunities to
get into the professional game if they are good enough
and they want to. I think those opportunities are
there now.
Kelly Simmons: The academies and centres of
excellence for boys doesn’t sit within the national
game. In terms of the youth review that Alex touched
on earlier, I see it as our role is absolutely vital in
trying to drive through and work with the Leagues
and clubs to make the changes that are required to
make sure that all children have the best introduction
to football. We are looking at: at what point do
children stop playing mini-soccer and move into the
adult game; whether nine versus nine is a better
transition; at what point you bring in league tables to
try to take away some of the competitiveness and
make sure that all children get to play and try different
positions, and it is the right kind of environment,
which Respect is really trying to drive, to make sure
that the environment on the sideline is good and
conducive in terms of player development.
I see that as being our role, alongside bringing as
many players into the game as possible, which I think
we are doing through the growth figures. We have had
over 5,000 new teams since we launched the strategy
for children, so widening the base and making sure
that we continue to do that work around coach
education. Then we hand them on, obviously, into the
academies, the talented ones.
Q534 Dr Coffey: I want to ask one supplementary
question, Chair, on that particular point before moving
on to structure. Do you think the national game was a
bit slow in recognising that primary schools were no
longer particularly teaching football any more? School
sports dropped significantly in the 1980s.
Kelly Simmons: It is very hard, isn’t it? You look at
the scale of primary schools in this country and the
resources that we would have had in the FA several
years ago to try to tackle that. We work very hard,
and have been working over a long term to make sure
that, where football is not played in primary schools,
we have a healthy English Schools FA that provides
out of school competitions and we are working very
hard in terms of our junior club development. I think
we have made some great strides with that. I think
we mentioned earlier 72% of those clubs now reach
our kitemark.
I think the biggest issue for football is not so much
that football is not played in primary schools; it is the
physical literacy of the children coming out of
primary schools, which I think affects all sport. It is
really important that football and the governing bodies
work with the Government and with education to try
to address that. That is what the skills coaching
programme is that you will see later. It is not just
about football skills; it is about trying to improve
children’s movement and physical literacy so that,
when they come out of that sort of 11 age group and
pick their sport maybe that they want to specialise in,
they have the foundations. What we are finding, and I
saw it when I was coaching in schools, girls and boys
just do not have that movement and co-ordination to
enjoy any sport and have a lifelong love of it and be
good at it. So I think physical literacy is a bigger issue
in that sense.
Q535 Dr Coffey: Moving on to the FA structures, Mr
Burden, why did national game representatives oppose
the full implementation of the Burns report? I am not
saying they were wrong to, but why did they do it?
Roger Burden: There were issues in there that we
were not comfortable with. There was not much that
we opposed. I think Lord Burns did suggest—
Q536 Dr Coffey: Can you recall what you did
oppose, specifically?
Roger Burden: Yes. We did oppose the two
independent directors. We were not convinced that
that was necessary, but we did support the idea of an
independent chairman. So it was a compromise
internally. You may not be aware but, as I think the
chairman said, you do need a 75% majority in Council
in shareholders to get things through. It was our sense
that we would not get that through with two
independent directors. Colleagues were reluctant. At
that time, the national game board and the
professional game board held equal votes within the
main board. We had six and the professional game
board had six and the chairman and chief executive
did not have a vote, which puts us in quite a good
position, we would think. As corporate governance, it
is not a great position and that is why Lord Burns was
encouraging us to give the chairman a vote and give
the chief executive a vote. For corporate governance
reasons, I happen to agree with that.
So it seemed sensible that one of the ways we could
achieve what Lord Burns was after, which was to
break this sort of six-six position, was to have an
independent chairman. That seemed a sensible
compromise, which as we went around the country
talking to colleagues we thought they would support,
and it did give us an independent chairman and it has
given the chief executive, general secretary now, a
vote. The professional game board and ourselves both
gave up a member of the board, so we went down to
five each, and you have probably seen that, plus the
two. I think for corporate governance reasons that was
a good thing to do and I think that was a reasonable
compromise.
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Culture, Media and Sport Committee: Evidence Ev 127
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
Q537 Dr Coffey: We heard from David Bernstein
earlier that he thought he had a good hearing. You are
obviously a leading player in the national game. Do
you think you will see any further changes and if so
what would you like to see changed on the FA board
and Council?
Roger Burden: My experience of being on council for
many years and working with the committees is that
they are, as you have heard, sensible football people
and they want to do what is best for the FA. So in the
board, when the chairman put the idea to us, I was one
of the ones that said, “You need to consult because, if
the grounds are good, and the signs are the grounds
for this are good, then Council and shareholders will
go with you, but what they will not do after just a few
weeks in the post is suddenly switch to something that
they remember just four years ago only just got
through the shareholders. So we need to tread
carefully.” You heard the chairman say that is exactly
what he wants to do. There is no doubt in my mind, if
a strong case for more independent directors is made,
Council and shareholders will support it.
Q538 Dr Coffey: Will you be supporting it?
Roger Burden: If the case is made, yes.
Dr Coffey: So you are not convinced yet?
Roger Burden: No.
Q539 Dr Coffey: The Committee has already heard
from Lord Burns, Lord Triesman and others that
national game representatives are conservative and
have acted as a brake on structural reform. Are there
any changes you would like to see to the FA Council
to try and not necessarily be quite so conservative but
open to new ideas, perhaps term limits, not almost
have a place for life? I know you have to be elected,
but there is no limit to how many times you can be
re-elected to Council.
Roger Burden: That is true. We do have an age limit,
though, and I supported that. That was challenged.
There is an age limit now; you have to retire from
council at 75. You have to come off the board at 70,
which I think is good corporate governance. So there
is an age limit; it is not a place for life. Interestingly,
there is a position, after you have served the FA for 21
years, you become a life member. Only at the January
council we were successful in establishing that even
life members have to retire at 75, so there is no longer
a place for life. Some are already on there and they
can go beyond 75, but for the vast majority of us we
will be kicked off at 75, even if we are elected every
year. My own position is that I represent
Gloucestershire on the Council; I have to be elected
within Gloucestershire every year and all of us from
the national game have to stand for re-election to the
board every three years, which again I think follows
good governance policy.
Q540 Dr Coffey: So you would not want to see any
changes to perhaps trying to encourage fresh blood in
at the highest levels of our game?
Roger Burden: It is really difficult. Part of Lord
Burns’ report, which we did support, was that we
should be more open in Council and make sure people
were properly representative: we increased the
women’s representation, we introduced a referees’
representative, players, managers and there is a
disability representative. So we did become more
open and there are over 100 of us and I would need
to be convinced that that is not enough, that we need
more. I do not think we need any more in Council.
Q541 Dr Coffey: You were acting chairman for
about seven months.
Roger Burden: Nine months.
Dr Coffey: Nine months, sorry. There is something in
the papers today about a report you wrote when the
inquiry started off, which was working together with
the Premier League and the Football League for a coordinated response to kill off the nonsense about
infighting that politicians and the media seem keen to
invent. I was a little surprised by that, only because
the Committee has not come to that view. It is people
who have worked with the national council, like Lord
Triesman and others, who very strongly suggest that
there are internal tensions. So why do you think it was
sensible to put your thoughts in writing?
Roger Burden: Because I do not see that in the
boardroom. Some of the disputes that we have heard
from Lord Triesman, and I think Ian too mentioned it,
I have not seen in the boardroom.
Q542 Dr Coffey: Have you seen them in the
corridors outside the boardroom?
Roger Burden: Yes, but what is wrong with that? Ian
is a good example where he resigned in frustration
and others have been accused of disagreeing with him,
but the place to bring these presentations, chief
executive, is in the boardroom. He put up his 100-day
idea, and I liked nearly all of it—not all of it, but
nearly all of it. I am sure we would have made 80%
or 90% of it, but he resigned so we did not have a
chance to have that challenge in the boardroom. If
some of my colleagues in the professional game may
not have not been supportive of it, I would have heard
their arguments. I liked what Ian put but we never had
that opportunity, and Lord Triesman may have been
in the same position where outside the boardroom he
had some disagreements. He should have brought
them inside the boardroom and there he may have
found he got some support.
Q543 Jim Sheridan: Could I ask you basically what
you see as the main challenges facing the English
national game? As a Scot, I am keen to find out what
those challenges are and see how best we can make
them even more challenging.
Roger Burden: Thank you very much. Kelly has
touched on them. We are here to increase participation
in football. We want to see as many people playing
football and going to watch football as we can,
preferably playing because then, if they are today’s
player, they might be tomorrow’s administrator or
tomorrow’s referee, like me. I was a failed player so
I went into refereeing and administration. What we
want to do is give everybody that opportunity to
participate. That is our challenge.
Within that, of course, you then have the challenges
that Kelly has touched on in terms of making sure
we have good facilities, making sure that children in
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Ev 128 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
particular have a safe environment in which they can
play, and “safe” means they have properly checked
and trained people looking after them. It is our belief,
as we have said that, if they do get properly coached
by coaches that have been trained, it will improve
their skills and they will enjoy it. They may not go on
to be elite players, but hopefully they will play
football until their maybe late 30s, maybe even 40s
now with veterans league. I was sitting at the back
and I heard somebody was playing football. I could
only suspect it was veterans league football, but
forgive me.
Jim Sheridan: What made you think that?
Roger Burden: It is really once you are in your early
30s, you are into the veterans league.
Jim Sheridan: And they don’t have any agents either.
Kelly Simmons: I think we are really clear what the
challenges are because one of the strengths, I believe,
of the national game strategy is that, before we
produced it, we had a major research and consultation
into the national game, involving over 20,000
stakeholders: players, coaches, referees. They were
clear what the challenges are for them and where they
wanted the FA to invest its money to tackle some of
those challenges. Behaviour came out very strongly.
The Respect campaign was a response to that. 40% of
those this year surveyed believe that Respect so far
has improved their experience of the game. We know
that 2.5 million people, despite 7 million playing, still
want to play the game, either play more or play, and
we have been working very hard to create both junior
football and the 5,000 teams I mentioned earlier that
we have grown since the launch of the strategy.
On the point you touched on earlier with Alex, it is
about trying to create more flexible football for adults
and tap into the changing lifestyles and the way
people want to consume their football and responding
to that with the new partnership with Mars and the
work that we are trying to do with Sport England to
turn that round. Facilities is a big one, obviously, and
we can never have enough resources to tackle the
demand on pitches and facilities. But since the
strategy, working in partnership with the foundation
and other partners, we have invested over £200
million into new or improved facilities.
So we know those are the kinds of challenges that we
are working really hard to address and we feel we
have made some inroads. Obviously, there is a lot
more to do. We are just out now on the extension of
the national game strategy to 2015. There is a survey
online currently at the moment. Over 10,000 people
involved in the game have done it, so we will be
getting a really clear steer about how we have
performed, how they think we have improved what
they have set out and they have asked us to do, and
where they think the priorities are going forward.
Q544 Jim Sheridan: Finally, you seem to indicate
that you have a good working, constructive
relationship with the professional game, but just on
the question of resources and powers, hypothetically,
if that relationship was not there, do you have the
relative powers and resources that you would need?
Roger Burden: Powers, yes, because the split of cash
is in the articles. We have heard that, haven’t we, with
the 50:50 split of cash? That gives us the power. We
have 50% of the surplus and the authority is delegated
from the board to the national game board. Obviously,
we have to report up to the main board. If our
professional game colleagues wanted to be difficult
they could protest at the main board. They haven’t
done but, if they did, there are only five of them and
there are five of us and we then have the chairman and
the general secretary. Heaven forbid it would come to
that. It never has, but I do think we have the power.
Do we have the resources? It comes back to the
money.
Q545 Jim Sheridan: Has it never happened then?
Even out in the corridors of power it has never
happened?
Roger Burden: No, not between us and the
professional game. They have always been incredibly
supportive. Kelly was telling me at her level it is the
same.
Kelly Simmons: The board unanimously supported
the national game strategy and the investment into it.
I came along to the board and presented, along with
support from Roger, and there was complete support
for the strategy. We have worked very closely with
the Premier League through the Football Foundation,
where I think they are shortly due to announce they
have invested in projects totalling nearly £1 billion.
So that is the kind of relationship we have with the
Government and the Premier League. At local level,
there is some fantastic work going on between the
county associations and Premier League and Football
League clubs and they have been working on driving
the Football for All agenda. We have just recently
announced that through the work we have done with
the clubs there are over 1,000 teams of people with a
disability. The new women’s super league, semi-pro
league launching in April, five of those clubs are
supported by their men’s Premier League club. So I
think there are good relationships all the way through.
Q546 Damian Collins: I wanted to go back to the
Burns report and the issue of the two independent
directors. From what you said in response to my
colleagues, it sounds like the Council considered that
having two independent directors on the board, your
fear was they would be more likely to side with the
professional game. If that is people’s view, four years
may have elapsed, but it is a numbers game. On Mr
Sheridan’s question of power and control, those
numbers will not change and I do not believe it will
be eloquent words that will convince you to change
your position. It sounds like you want to cut a deal
with the chairman of the FA if he wants to get his
change through.
Roger Burden: No, you misunderstood me. I
understand about independent directors. I am nonexecutive director of the FA, as are nine other people.
It is quite a lot of non-executive directors. There is a
lot of challenge within the boardroom and we have
an independent chairman with the experience of the
professional game, and indeed grassroots. So there is
an excellent mix there.
This was the first time this had happened when this
had been offered to us and previously we were six-all.
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Culture, Media and Sport Committee: Evidence Ev 129
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
There was concern that somebody who was
independent of the game may find himself easily
seduced by the professional game. He would much
rather accept an invitation to go to watch Arsenal than
he would to come down to the King George V in
Cheltenham. So there was this concern and I think we
have overcome that slightly. I think a lot of that has
gone, and Lord Triesman helped that because Lord
Triesman had a grassroots background. There was a
concern about what true independence means. I think
we all can see the strengths of true independence
bringing some real external thinking to a board. Every
board benefits from that, but that is where our
concerns were four years ago: would he remain
independent for long?
Q547 Damian Collins: Are people still concerned at
how easily independent members of the board may be
seduced by the odd corporate freebie?
Roger Burden: No, I am talking four or five years
ago. The new idea of “Can we have two independent
directors?” is a relatively new idea again, because we
thought we were doing okay.
Q548 Damian Collins: So your concern is that the
independent directors might mean that the
professional game ends up having more of a say is not
found any more?
Roger Burden: No longer, no, that is no longer the
case and personally I do not have that concern now. I
have met a lot of people who I think are certainly of
the stature that they would not allow themselves to be
seduced. I think that was an unfounded concern that
we did have four or five years ago, which I do not
believe will sit out there now.
Q549 Damian Collins: From what you said, it
sounds like if colleagues share your views then Mr
Bernstein may be successful in getting his two
independent directors?
Roger Burden: Yes, I think the Chair has to put the
case to colleagues; it is a strong case. It is not a strong
case to say, “Everybody else will go away and they
will be quiet if we do two independent directors”, or
I suspect that is possibly the case. We will have less
criticism. It is one case, but I would like to understand
the way the board would be strengthened by
independent directors and my colleagues. What are
the reasons, what will they bring to us? I know some
of the answers incidentally.
Q550 Damian Collins: What do you think they are?
Roger Burden: I think they can bring specialist skills
that we do not have on the board, but I think that the
chief executive of Manchester United brings particular
skills to us that an independent director cannot bring,
so we have to be careful that we have the right mix.
Q551 Paul Farrelly: Mr Burden, you have been
involved in running building societies?
Roger Burden: Only one.
Paul Farrelly: The picture that we have had painted
to us by a number of people and I think you have
rather reinforced today is that there are five
professionals from Gloucester on the board who have
all the money. Then there are five well-meaning
people from Cheltenham who are on the board; they
do not like to rock the boat because they are rather
grateful for the money they are given. A day or so
before every board meeting, the five blokes from
Gloucester all meet up to decide that what goes on in
Gloucester has nothing to do with the people from
Cheltenham and certainly nothing to do with that
chairman and chief executive who come from neither.
The well-meaning people from Cheltenham do not
disagree with that. That is not a recipe, is it, for a
successful, agile, responsive organisation like a
building society that needs to move with the times?
Roger Burden: No, it’s not what I said.
Paul Farrelly: That is the picture that has been
created.
Roger Burden: I’m sorry you got that impression, but
it is not what I said. I was trying to respond to why
we got stuck four or five years ago and I definitely
did say that is not the view today, we have moved on.
I think if you look at the board and the debate and
board agendas—I do not know if we are going to get
a chance to see that—I think anyway it’s a properly
run constituted board where it has the right degree of
challenge, where we do not all vote en bloc, and I
think that is the way boards should be. I’m sorry you
got that impression but it’s not what I said.
Q552 Alan Keen: Is Cheltenham & Gloucester still
a mutual?
Roger Burden: No, no, no, C&G was bought by
Lloyds Bank some 10 or 12 years ago. I cannot
remember when. I was there. I was at C&G. It is
nothing to do with me now; I’m out of C&G. I retired.
Q553 Alan Keen: Was it a mutual before that?
Roger Burden: Yes, it was a mutual, yes.
Q554 Alan Keen: Would you agree that mutuals
have been more responsible through the economic
crisis than the—
Chair: Alan, I think that we can refrain from—
Roger Burden: I am happy to talk about that outside.
Alan Keen: No, it is to do with supporters’
ownership.
Roger Burden: I am not going to answer it, Chair,
because I am a director of a mutual building society
today. It is not Cheltenham & Gloucester but it
wouldn’t be right for me to answer it. I’m happy to
have a quiet word over a cup of coffee, but not here.
Jim Sheridan: Out in the corridor.
Roger Burden: Why not, yes.
Q555 Alan Keen: It was to do with supporters’
ownership, of course, but can I move on. You
mentioned veterans’ football; I understand that
Germany has veterans’ football organised at quite a
high age-level. Can I ask you why it has never been
looked at by the FA because there are two benefits
from veterans’ football: one is the obvious health one,
but the other is less easily recognised by people.
Veterans have money to spare compared with younger
people and, if you get veterans organised to play they
get them into the clubs themselves, the grassroots
clubs, they can give a lot to it whereas at the moment
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Ev 130 Culture, Media and Sport Committee: Evidence
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
they are probably sitting in front of the telly watching
football. Why has the FA not been involved in
organising veterans football?
Kerry Simmons: It has in the sense that we invest in
the county FAs to develop football right across from
mini-soccer through to adult football. They have
targets for adult male as well as adult female. The
male ones have been challenging, as we’ve seen a
decline in 11-a-side which we’ve halted now and a
big growth in 5-a-side, for the reasons we touched on
earlier. A couple of focus areas that a number of
counties have done is to look at vets’ football and
local vets’ leagues and keep people active in the
game, but there is a balanced work programme so a
big focus for us at the moment is drop-out at the
younger age. As with all sports we are losing a large
number of players in that sort of 14 to 16 age band.
We’re trying to bring children into the game, make
sure they don’t drop out, provide them with the right
range of flexible opportunities to play as an adult, be
it 11-a-side, small-sided or the Just Play type of
concept we talked about earlier and keep them in.
It is right, we could do more in terms of veterans’
football, but certainly a lot of counties and leagues
have done a lot to keep people in the game and put
over 35 leagues in place.
Roger Burden: My own county started a veterans’
league this season from seeing the same guys playing
unaffiliated football. Our development manager went
out there and spoke to people and we have a league
and now we’ve double-figure teams in it; it’s a few
hundred chaps playing football and I think it’s
growing.
Alan Keen: After the kids have gone to bed, you
would have to use the small pitches, still play with
large balls but smaller pitches, if you don’t mind.
Sorry, Chair.
Roger Burden: I do see it as a growing area of
football, you’re right.
Q556 Chair: Can I ask you a final question, Mr
Burden? As you said, you were acting chairman of the
FA for a time and you contemplated applying to—
Roger Burden: I did apply.
Chair: One of the reasons you gave for withdrawing
your application was that you said that liaison with
FIFA was an important part of the job and you weren’t
prepared to deal with people that you did not trust.
Would you like just to expand on that?
Roger Burden: Yes, it all came from the World Cup
bid where the day I walked out of Wembley, having
accepted the role as acting chairman, I received a call
from one of the World Cup teams to ask me if I would
go to South Africa and support some of the work they
were doing during the World Cup, which I did, and I
put off my holiday to go. I went twice to South Africa
because the World Cup bid team wanted me to and I
shook hands with important people, in FIFA and
others, as I was asked to do. I met several of the FIFA
executive committee, both in this country and in
Switzerland. I treated them with respect which I
thought they deserved and I felt they were treating me
with respect. I think they were taking me for a fool
but, at the time, I thought they were treating me with
respect and I was happy to do all that for the English
bid. Then of course on the day we were faced with
coming second; it did not concern me, I thought the
Russian bid was a good one; they were always a good
competitor, I’ve got no issue with them winning. It
was the way we lost that I have the issue with and we
came a very poor fourth with only one vote on top of
our own representative, as I expect the Committee is
well aware.
It was against that background, as I saw it. First of
all, the background in which our bid was recognised
as being the best by most objective judgements—
indeed, some of FIFA’s own judgments—and they set
down the criteria on which judgments were made. In
our group we were at the top, level top. Yet, we only
got one vote. It felt to me as though they were not
being fair and they were not being objective and we
had put a lot of resource into this; not just money,
people, and I’ll talk about those. That was one thing.
I thought, “Well, who are these people, that they’ve
put us through this and then they’ve just gone and
done something else?” I did not like that and I did not
like the fact that they had promised—I think we were
up to five, it might have been six, but certainly five—
Prince William that they would support us and they
did not. We only got one of those; I think most of
them subsequently rang our chief executive to say that
they were the one that voted for us. If we had hung
on a bit longer we might even have won the vote by
the end of that week. But that’s not what I’m used to.
These are people at the top of the game with whom,
as I recognised in my letter, I understand the FA has
to have a relationship with them and I wasn’t prepared
to do that.
I’ve worked with people that I’m not sure whether I
can trust—we have all done that in life and business—
but this was the governing body. This was an
important set of people. I just could not see myself at
having to negotiate with them, having to agree with
them and then walking away saying, “Well, their word
just is not worth it; I don’t know if we’ve got a deal
or not.” It is something that I’m not used to; I wasn’t
prepared to put up with; and I thought it was best if I
stood down rather than refuse to meet them or be rude
and sarcastic, which I can do. I’m quite good at that.
That wouldn’t be right for the chairman of the
Football Association and I withdrew. I had applied
and I had a first interview but I did not attend it; I
withdrew before I got to the first interview but those
are my reasons and I’ve not regretted it.
Q557 Chair: You say that you think that our bid at
least deserved that second place and that we had
pledges from considerably more than the one person
who did eventually vote for it with us. Why do you
think that those others did not support us?
Roger Burden: I genuinely do not know. On the
objective assessment, I would have expected
substantial support and on the personal commitment I
would have expected at least five and I have
absolutely no idea what criteria those who voted used
because it was not what they set down. I just do not
know.
Q558 Chair: You must have thought about this.
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Culture, Media and Sport Committee: Evidence Ev 131
29 March 2011 Mr Roger Burden and Ms Kelly Simmons
Roger Burden: Yes, I have and I have my own views
and they are personal ones and I think, if I understand,
you will have heard stories. I’ve heard stories. All I
know is that they didn’t follow their criteria. I
mentioned the people. I attended what we hoped
would be the celebration party, which turned out to be
the wake, working with the World Cup bid team,
which was not just the two or three that most people
see; there’s a lot of staff on the World Cup bid team,
who had given a year to two years of their lives
because they believed that the England bid was going
to be the best and they believed that the criteria that
they had been asked to follow would be followed by
those voting. That was an emotional moment, to see
those people having to deal with the fact that we only
got one vote also brought that failure home to me. I
find it difficult to explain what was in the minds of
the people who voted.
Q559 Chair: Without naming individuals, you’ve
said you had your own views, would you like to
expand as to what those are?
Roger Burden: No, no, I would not. Those views are
clearly that, for some reason, they chose not to follow
the criteria and I genuinely do not know why they did
that. This is not a Russia thing, because we knew
Russia had a good bid for all the right reasons. But to
get fewer votes than Holland was confusing and,
indeed, Holland got fewer votes when they went on;
that some were just voting to keep us out, by the look
of it. It did not say anything about that in the book.
There is no point in me in giving you my view. All I
know is what I’ve told you, that we had the best bid,
by most measures, and some members committed to
the prince that they would support us and it did not
happen.
Q560 Jim Sheridan: Did those corridor meetings
not work?
Roger Burden: Some did I expect. There must have
been some meetings in the corridors by some that got
more votes than us that worked.
Chair: I think that is all we have. Thank you very
much both of you.
Examination of Witness
Witness: Stewart Regan, Chief Executive, the Scottish Football Association, gave evidence.
Chair: Good morning. For the final part of our
session, can I welcome Stewart Regan, the chief
executive of the Scottish Football Association and
also thank you for your patience in waiting to get to
this point. It seems appropriate to ask Jim Sheridan
to begin.
Q561 Jim Sheridan: Thanks for coming along,
Stewart. I think that it is well recognised that this
Select Committee inquiry has principally focused on
the English League and the Premier League, but it
does touch on very important issues relative to
Scotland in terms of governance, ownership, the role
of supporters et cetera, so we felt it was important that
we get a Scottish perspective on just exactly how the
game is being played in Scotland. We had the former
First Minister, Henry McLeish, down some weeks ago
and you know Henry has produced a report. Could
you give us an analysis or a perception of how you
feel about Henry’s report?
Stewart Regan: Henry carried out a report in two
parts focusing on five key areas. Those areas were
performance,
facilities,
regional
structures,
governance and league competitions. There were 103
recommendations in all. The board have considered
them. We’ve prioritised them and we are
implementing two key areas as we speak, one relating
to governance and one relating to performance.
From a governance perspective, the proposal is
primarily to reduce the main board from eleven down
to seven; to make it less of a representative board and
more of a strategic board, focusing on strategy finance
in major game decisions and sitting below the main
board to split the game into two, effectively a
professional game board and a non-professional game
board. That would allow both sides of the game to
effectively have delegated powers from the main
board which would allow them to run the game and
involve the expertise in the areas of the game that best
suits the individuals involved.
We had a series of recommendations about Council
and the Council, from a structural point of view and a
constitutional point of view, does not have any voting
powers within the Scottish FA. However, we listened
and heard Henry’s recommendations as far as how
Council could be used, and our proposal is to create
Council into almost a House of Lords model for
inclusion of football writers, supporters, referees
associations, players, managers, disabled, and
women’s game and so on, so we have a much more
all-embracing, inclusive view of football in Scotland.
That will allow us to have a debating forum that
would give us a voice from the total Scottish football
landscape and decide whether that voice, particularly
if it is positive, requires issues to be converted into
policy. Two weeks ago, the board approved our
governance proposals. They are being converted into
resolutions as we speak and will go before our AGM
in Scotland on 7 June.
Q562 Jim Sheridan: Did I hear that they are talking
about reducing the board from eleven to seven? How
will you achieve that? What are the criteria for that?
Stewart Regan: At the moment, the board consists
of representatives from the game rather than elected
individuals, so we have a number of individuals
around the board table who are there because of their
involvement or expertise in particular side of the
game, whether it is schools, football or youth football.
Our view is that a main board needs to be
competence-based and able to deal with strategic and
financial matters.
The main board will involve the senior officials of the
Scottish FA. The terminology for these in Scotland is
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Ev 132 Culture, Media and Sport Committee: Evidence
29 March 2011 Stewart Regan
“president”, and then there is a first and second vice
president. They are people who effectively come
through Scottish Football, through the Council; they
have held senior positions in the game, either at club
level or association level. There would be the Chief
Executive, i.e. myself. There will be four automatic
places on the board. There would then be one seat for
the professional game board and one seat for the nonprofessional game board. Those two individuals
would be elected by their respective boards, and then
one independent non-executive director, whom would
be selected based on competence criteria, i.e. if we
feel we need a legal input, we would appoint a legal
individual; it may be HR; it may be strategy. That
depends on the competence of the board at the time
we need to make that decision.
In four years’ time, we will remove, subject to our
member clubs’ agreement at the AGM, the second
vice president position and replace that with a second
independent non-executive director, thus making the
board much more in tune with normal blue chip
companies and normal corporate codes of governance.
Q563 Jim Sheridan: Apart from the two elected
people, will the rest of the board be appointed?
Stewart Regan: That is correct.
Q564 Jim Sheridan: One of the recommendations
that Henry McLeish suggested was the reintegration
of the Premier League and the Football League.
Would you agree with that?
Stewart Regan: I think that is a matter for the Premier
League and the Football League in terms of what the
structure looks like. We have discussed the matter and
we feel that having one league to deal with in Scotland
makes much sense. Scotland is a country of only 5
million people; it is the same size as Yorkshire, where
I was chief executive previously at Yorkshire County
Cricket Club. With 5 million people and all the
professional football clubs that exist, it is very
complex and complicated in terms of getting things
done. It would be much simpler to have one league,
and equally, from a performance point of view, the
relationship between the governing body and the
league, we feel, would be much smoother and
progress could be much swifter.
Q565 Jim Sheridan: Are you also aware of the
discussions that are going on about the size of the
league?
Stewart Regan: That is correct.
Q566 Jim Sheridan: Certainly, if newspaper reports
are to be believed and various surveys have been
carried out, the supporting fans really do not want a
10-team league but the authorities seem intent on
imposing a 10-team league. Is that the case?
Stewart Regan: I think the league reconstruction, as I
said before, is a matter for the leagues themselves.
They are in discussion as we speak. It is not as simple
as simply looking at one stakeholder view, i.e. the
fans’ view, if you like. We have certainly, from what
I gather, taken fans’ views into account, but the
principle of a 10-team league is built on the long-term
survival of Scottish football.
In comparison to football in England, there is not the
same amount of money flowing through the game and,
as you know, football in Scotland is dominated by
Celtic and Rangers, particularly in the Premier
League, just in terms of fan base and resources.
Money needs to flow down through the game so that
the landing is softened if a team is relegated from the
Premier League to the First Division, because the drop
in income is potentially cataclysmic for a club that
falls out of the Premier League. Therefore, the
intention is to try to provide some funding that can
flow down through the game from the Premier League
into the First Division, and in order to do that, you
need to create that income from somewhere. The
proposal is on the table to reduce the size of the
Premier League from 12 teams down to 10, which
would create two shares of income that could be
divided across the Football League and thus have a
much more attractive First Division in Scotland.
There are also performance criteria to be put in place.
Following Henry McLeish’s report, we have recently
commissioned a performance strategy using Alistair
Gray from a company called Renaissance, who have
done a lot of work with sport right across the world
and right across a number of different sports. The
performance strategy is built on four guiding
principles. One is to create 10,000 hours of contact
time with the ball for younger league players coming
up through the system, which actually links to the
provision of sport in schools, which we probably will
not have time to get into, but it is something we feel
particularly strongly about at the Scottish FA. The
second principle is around providing “best versus
best”: the opportunity for the best players to play
against the best players. The third principle is around
coaching, and the fourth is around something called
The New Scotland Way, which is our performance
system and the infrastructure that we put in place.
I was interested earlier to hear one of the comments
about preventing foreign players coming in and
dominating the national team. In Scotland, we are also
concerned about that, and we are looking at putting in
place performance-related fee permits for our clubs
to incentivise them to actually play young Scottishqualified players in the first team, to actually bring
them through and provide the “best versus best”
opportunities. So, to address your question as far as
the restructure of the League, yes, on the face of it, it
does mean a reduction in the number of teams, but
both from a financial and a performance point of view,
we believe it is absolutely the right thing to do.
Clearly, there are differences of opinion even within
our own board, but it is one of those matters that are
very subjective. People either agree with it or they do
not, but when you look at it from different
perspectives, there is a lot of common sense to the
proposal.
Jim Sheridan: So finance has been the dominant
factor, then, in making the decision or the proposals.
Stewart Regan: No, that is not what I said. What I
said was that finance and performance have been
looked at. Performance, and in particular the
development of Scottish-qualified, home-grown talent,
is a key criteria. If you look at recent articles from
Craig Levein, the national team manager, you will see
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Culture, Media and Sport Committee: Evidence Ev 133
29 March 2011 Stewart Regan
that he personally is very supportive of that restructure
because it gives the young players the chance to play
against the best players in a very much stronger 10team, top tier of football in Scotland.
Q567 Jim Sheridan: If it goes to a 10-team Premier
League, how many times will Celtic and Rangers play
each other?
Stewart Regan: That is clearly for the Scottish
Premier League to decide. This season already they
are playing each other seven times because of the
nature of the cups that they have been drawn against
each other and the progress that they have made. The
number of times Celtic and Rangers play each other
is actually a key factor in the broadcasting contract in
Scotland. Obviously, any structure that is put forward
has to look at that particular clash as a key contributor.
I don’t know where that will end up, but it will
certainly feature strongly in any proposal.
Q568 Jim Sheridan: Have there been any
discussions about, putting Cup games aside, how
many times in the league Celtic and Rangers will
play?
Stewart Regan: Yes, there will have been discussions.
As I said, it is the League—
Q569 Jim Sheridan: Do you have any idea how
many times it will be?
Stewart Regan: I could not say off hand, because I
have not been involved in the detail of fixture
planning. What would need to be discussed,
particularly with the Leagues themselves, is any
fixture scheduling that they have put in place.
Jim Sheridan: There is a distinct danger there of
becoming repetitive and boring, and the end result will
be that fans will not come and watch it.
Stewart Regan: I think, if you talk to the fans of
Celtic and Rangers, they would probably disagree.
They are the biggest-attended matches in Scotland;
they are the matches that grab the public interest and
television interest around the world. When Celtic and
Rangers play fans of other Scottish Premier League
clubs and also in Cup matches against Scottish
Football League clubs, they are particularly attractive
and generate revenue for the clubs and provide
economic impact for the local communities where the
teams play.
Q570 Jim Sheridan: Henry also suggested the
regionalisation of the lower leagues. How do you
think that will work out? How will it help the lower
leagues?
Stewart Regan: It has been discussed with the
Scottish Football League. The principle really comes
down to looking at whether or not a pyramid system
can be put into Scotland. At the moment, at the
bottom of the Football League, there is no opportunity
for any team to come up from amateur football or
non-professional football into the Football League. If
you look at the performance strategy, which provides
the opportunity for clubs to play against the very best
clubs, we feel at the Scottish FA that there needs to
be an incentive for clubs that want to invest in their
infrastructure and want to develop their standards to
aspire to become professional and, therefore, we feel
that the door needs to be opened up for clubs to come
through the ranks.
However, because of the size of Scotland, to create
another division and have clubs travelling from Wick
or Elgin right the way down to Dumfries or Berwick
just doesn’t make commercial sense, so there are a
number of options, one of which is regionalisation.
When you look at it purely from a financial or
commercial perspective, there is a lot of sense in it.
The clubs themselves, however, see that as potentially
challenging what they have currently, which is to be
part of the national League, to be a national,
professional team, and any suggesting of regionalising
is met with the view that it would be a step backwards.
That one is still very much a work in progress. That
one, again, is for the Scottish Football League at look
at the way forward.
Q571 Jim Sheridan: In terms of the revenue from,
particularly, television, how will that flow down to the
lower League clubs?
Stewart Regan: There are two aspects, really. There
is the television revenue that comes in through the
Leagues themselves, and the Leagues make a
distribution to their clubs based on a particular
formula. Obviously, that would be something for you
to discuss with the Leagues, if you feel it appropriate.
I can only talk for the television deal for the Scottish
FA.
We provide a number of distributions based on things
like the Scottish Cup, based on a distribution award at
the end of every year to clubs, and what we are
looking at doing as part of the governance review is
refocusing how we reward money. What we are keen
to do is reward clubs for delivering behaviours or
initiatives that are going to contribute to the
achievement of our strategy. We want to move from
being seen as a grant-giving governing body to a body
that actually measures outcomes, and measures
outcomes that contribute to the strategy, particularly
the performance strategy and the participation
strategy, which are the two key pillars that we are
working on. We are looking at the sort of outcomes
that we can reward, for example, playing young
Scottish-qualified players in the first team, developing
a number of coaches in order to provide the necessary
coaching support for young kids, and also to
encourage participation, which means having a
volunteer strategy and having an officials and coaches
strategy. At the moment, we are probably not as good
as we could be or should be in how we distribute the
money, but we have recognised that and we are
looking to change how we reward clubs in the future.
Q572 Jim Sheridan: Regardless of the attractions of
the Old Firm, there is no way they are going to
compete financially with Manchester United or
Liverpool, et cetera, so given the limited resources in
terms of Scottish football, do you think that salary
capping would be an appropriate way to go forward?
Stewart Regan: I think it is an interesting debate, and
it is one that I was involved in when I was at the
Football League. I think you have to look at the
market in which clubs play. If you are in the top tier
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Ev 134 Culture, Media and Sport Committee: Evidence
29 March 2011 Stewart Regan
of football, you actually view yourself as playing on
a world market, and if you have restrictions imposed
upon you, you then see yourself as being unable to
compete at the highest levels. To put a cap on a team,
which then has to compete against the Barcelonas,
Real Madrids and Inter Milans, which do not have
caps, it is potentially restrictive, and that is why I
think that at the top end of football, it is not something
that is easy to achieve. However, at the lower ends of
the game, I do feel that it is possible, and certainly, I
was part of the team that looked at implementing this
in the Football League, particularly in League One
and League Two, when I was on the management
team at the Football League then. I think it depends
on which team you are talking about and how you
view the market in which you compete.
Q573 Jim Sheridan: Obviously, there is a
competitive imbalance in the Scottish game, and it is
very predictable. It is either Rangers or Celtic, or
Celtic or Rangers that is going to win the League.
Does that affect the game in Scotland?
Stewart Regan: I think that has been in place for
many, many years and I would argue that, if you look
at most categories of business, you will find a
consolidation taking place to two or three major
players in every category, whether it is petrol stations,
banks or supermarkets. Football is no different. It is
consolidation down to a small number of big brands
that have the global power and presence in order to
dominate their particular market. I think what is really
healthy in England is how the Premier League has
seen a widening at the top now to maybe four or five
clubs, and I think it is important for Scottish football
that we seek ways of making the top tier more
competitive. Certainly, Hearts this season have given
the top two a good run for their money and it would
be very healthy for the game to see stronger clubs.
That is why I think the reconstruction of the League
and the distribution of income could help that and
potentially develop stronger teams for the future.
Q574 Jim Sheridan: There were expectations upon
your good self, when you were appointed, that you
would try to change things so that there would not be
this predictability and there would be some sort of
effect of competition, but you seem to be suggesting
is that it has been like that for years, so we need to
keep it that way.
Stewart Regan: No, I think you missed the point. I
think what I said was that it is not a good thing for
the game, but Rome wasn’t built in a day. I have been
in the post for six months. That has been in place for
100 years. I think it will take a little longer than this
financial year for me to change it. What we are
looking at doing is putting in place initiatives to
provide income flowing down through the game so
that we can have stronger teams at the top end of the
Premier League.
Q575 Jim Sheridan: Can I ask you just to consider
the current financial regulations? This morning, you
will know that Rangers are now effectively being run
by the bank, and there are all sorts of speculation
about who should own the club or who is buying the
club and so forth. Do you have any views on these
things and how the financial regulation should be
operating in Scotland?
Stewart Regan: It is not for me to comment on
Rangers’ individual circumstances. That is a matter
for the club and the Scottish Premier League. We at
the Scottish FA have no direct involvement in the dayto-day running and the day-to-day financial matters.
We are very keen to make sure that we have a strong
League or Leagues and that we have clubs that can
survive financially, and anything we can do to help
that, we would support. The idea of things like fit and
proper persons tests is something that we have within
our current articles. We have introduced club licensing
and we audit all clubs regularly to make sure that we
feel that they are being run efficiently and effectively
and have standards in place that satisfy supporters, the
league and the association.
In terms of other financial regulations, there is nothing
at the moment that I am aware of that we are doing
or putting in place to change it. It is working
reasonably well at the moment. There are always
things we could do differently and better, but at the
moment, there are no immediate plans to change that.
Q576 Jim Sheridan: Do you think that there should
be a role for the FA in terms of looking at clubs’
finances, or scrutinising them or monitoring them?
Stewart Regan: The Scottish FA is the ultimate
governing body in Scotland and we have almost an
overarching responsibility to protect the long term
good of the game so, yes, I think that we should take
an interest in these matters, but we have delegated
responsibility on a day-to-day basis to the leagues to
effectively run their own business, and we would only
get involved if there were a major appeal or a major
issue. For example, we became involved when
Dundee recently went into administration and were in
financial difficulties, so we are the ultimate right of
appeal, but the day-to-day matters are handled by the
leagues themselves because they are the bodies of
which the clubs are members.
Q577 Damian Collins: I was going to ask about
Dundee. It seems a good point to follow up on in
terms of questioning. Is Dundee symptomatic of a
bigger problem in the Scottish game of clubs simply
living beyond their means?
Stewart Regan: I think there is an issue with rising
levels of debt in Scotland and across the game
generally. I think my colleague from the FA down
here, Alex Horne, made the point earlier that there is
only a small number of clubs making a profit. In
Scotland, we have exactly the same issue. The way
that clubs tend to deal with it in Scotland is to try to
operate to a much tighter budget. What you have to
understand is that in Scotland, the financial numbers
that you are talking about are substantially less. Even
at the top end of the game, the clubs are not getting
anywhere near the money that clubs in England get,
and that is largely because of the size of the
television deals.
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Culture, Media and Sport Committee: Evidence Ev 135
29 March 2011 Stewart Regan
We have some very good examples in Scotland where
clubs run to a tight budget, where they have salary
controls in place, and where they operate within a
budget and stick to that. We have other examples
where clubs come in and potentially spend more
money than they should be spending, particularly on
things like player wages, but I do not think Scotland
is unique in that. If you look across the world of
football, and perhaps other sports as well—cricket, as
an example from where I was before, is facing a
similar issue—and as television money flows into the
game, there is a desire to have more of it and to chase
the dream and potentially get into European and world
competitions. I think you are always going to have
that, and it comes down to governance. It comes down
to having good management and strong leadership on
the boards, so I think there is a problem in Scotland
at certain club levels, but it is no different to anywhere
else and we are trying to encourage clubs to live
within their means.
Q578 Damian Collins: Just taking what happened
with Dundee, do you think there should be a review
of the audit? You said that you audit the clubs. Do
you think that the criteria that the clubs are audited
against should be reviewed in light of the problems
that Dundee has had?
Stewart Regan: It is a difficult one, because at what
point do you step in and decide that there is a
problem? Clubs can change their performance and
shape very quickly if a new director or a new
chairman or whatever comes in and has a different
policy. You can move from operating within your
means to operating outside your means very quickly
and it is at what point you step in. We have to
differentiate the rules of the league bodies from the
rules of the governing body that effectively is running
the game, as opposed to the league, which is
overseeing the performance and the management of
the clubs. Our view is that it is the league’s
responsibility to police and manage their own clubs,
and there are numerous ways of doing that, whether it
is fit and proper persons tests, salary caps and
effectively taking a much keener interest in things like
profit-loss accounts and logging audited accounts at
the end of the year. The governing body, the Scottish
FA, effectively sits over the top of all of those, and
we would only get involved at the last resort.
Q579 Damian Collins: Just to follow, lastly, Jim’s
questions about Celtic and Rangers, do you think, at
the other end of the scale, that Celtic and Rangers
struggle to compete consistently at the high level in
competitions like the Champions League because
there is not enough money for them to draw from the
Scottish Premier League?
Stewart Regan: I think if you asked the clubs, fans
and a number of the stakeholders in Scotland, they
would probably agree with the comment that the gap
is widening between the top end of the Scottish
Premier League and the top end of the English
Premier League, but again, that is happening all across
Europe in particular, simply because down in England
they have a very good television deal that has been
expertly negotiated and money has come into the
game. They have created a very strong brand and they
have grown it around the world, so naturally that
money has come in and clubs have taken advantage
of that and built their own club brands.
In Scotland, we have not had that luxury. We have a
much smaller League with fewer clubs competing at
the top end, so I do feel the gap has widened. That
said, particularly the Old Firm have competed very
well in the competitions that they have participated in,
and clearly, this season, Rangers have made progress
in the Europa League until recently, despite having
limited resources.
Q580 Damian Collins: To adapt a question I asked
Martin O’Neill last week, do you think you will ever
see a club like Aberdeen winning major European
honours again?
Stewart Regan: That is a difficult one, because I do
not have a crystal ball and I would not like to predict
or otherwise. I think the challenge is much greater
now for a club, particularly a club that has not won
anything recently and does not have the resources or
the infrastructure to risk up through the ranks, but I
think football is about being able to offer the
opportunity to live that dream and the opportunity to
go from, as I said, parkland to professional stadium,
which is why we think the pyramid system is
important. We have to open up football and have a
pathway that goes right the way through so that clubs
can aspire to be successful. If you had a club like
Aberdeen or Kilmarnock or whatever that is taken
over by a Roman Abramovich character, then who
knows where that club may get to in the future? We
have seen what has happened to the success of the
likes of Manchester City and Chelsea in England in
recent times, when they have had huge investments
and financial backing. That could happen in Scotland,
and it would be great for the game if it did.
Q581 Dr Coffey: Just turning away from football for
a while, and going on your previous experience as
chief executive of York Country Cricket Club, are
there any good examples of governance that the SFA
and FA could learn from the ECB, whether that is
actual governance in decision-making or youth
development?
Stewart Regan: Absolutely, and we are already
starting to see examples of that with some of the
initiatives we are putting in place in Scotland. A great
example of that is the principle of performance-related
fee payments, as I referred to earlier. This is
something that the England and Wales Cricket Board
have been pushing now for several years, and that is
setting out a series of criteria that are important to the
game of cricket in England and Wales, asking clubs
to either opt in or opt out of delivering those criteria.
If you opt in and deliver them, you get paid. If you
don’t deliver them, you don’t get paid, and it is almost
creating incentives rather than punishments.
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Ev 136 Culture, Media and Sport Committee: Evidence
29 March 2011 Stewart Regan
On how we manage the handout of cash and the
distribution of cash through the game, I for one am in
favour of distributing it based on the achievement of
performance targets. One good example of that, as I
said before, is playing Scottish-qualified players in
club first teams to give them first-team opportunities
rather than signing foreigners or journeyman players
that can come in and perhaps do a job for a short
period of time. I think that makes opportunities open
for all clubs to benefit and not a just a small number
of clubs at the top end of the game.
I also think that cricket has managed the independent
non-executive director route very well. The England
and Wales Cricket Board has a strong diversity
agenda. They have representation on the main board
from a number of minority groups, and I feel that is
something we can learn from and something that we
would like to develop over time in Scotland.
Q582 Jim Sheridan: In the short period of time that
you have been there, you have probably seen the
poison of sectarianism in the Scottish game and, to be
fair to both clubs, they have tried their hardest—and
in some ways, succeeded in trying—to end
sectarianism, but that poison, that sickness, is still
there. It would be one half of the city supporting the
SFA and the other half supporting the city against the
SFA. How do you see things developing in the future?
What is your relationship, for instance, with the
Scottish Premier League these days?
Stewart Regan: My relationship with the Premier
League is excellent and, having listened to the debate
this morning, what is interesting is that there is a very
strong relationship and a willingness to work together
between the Scottish Premier League, the Scottish
Football League and my own body, the Scottish
Football Association. I think Henry McLeish’s report,
in many ways, has acted as a catalyst for change and
we are all working together to put the various changes
through this year.
You are right; there are some challenges in Scotland
that are pretty unique and I think I have faced most
of them in my first six months. The whole sectarian
issue is one that reared its head again over the last
couple of weeks. Tomorrow we are actually meeting
with the Old Firm, the police and members of the
Scottish Government to discuss what can be done. It
is pretty unique to the west of Scotland, although I
know the issue is wider than that. It cannot rely on
one body to address it; I think it needs a whole
concerted effort on behalf of everybody and I think it
requires the need to start at school level and look at
education. Going back to this lady’s point about
learning from other sports, the other thing that cricket
did really well was the link with bodies like health
and education and government to use sport to address
a number of key issues. On sectarianism, racism in
football and some of those kinds of areas, I am really
keen to look at what we can do in Scotland, but it is
a big issue. It is one that has been around, again, for
100 years or more, and we are not going to solve it
overnight, I don’t think.
Q583 Jim Sheridan: Yes, I think most people accept
that. During this inquiry, we have emphasised the
importance of grassroots football, and you mentioned
schools as well. For me, there is nothing more
exciting, from a schoolboy’s or schoolgirl’s
perspective, than playing football at their national
stadium, whether it is at school level or amateur level.
Yet, the SFA—I think it is the SFA—for some reason
have refused permission for the Scottish schools to
play their cup final there, and likewise for the Scottish
Amateur League. Could you explain why that is the
case?
Stewart Regan: Absolutely: the decision was taken by
the Hampden Park Stadium Board, which I sit on.
What many of you will not realise is that Hampden
Park is also the home for Queen’s Park Football Club,
and they play on it and play a full season of fixtures
there. In addition to that, we stage cup finals, cup
semi-finals, international matches, and we also have a
series of concerts there during the course of the year.
We take criticism regularly on the condition of the
pitch because of the amount of fixtures and amount of
use that the pitch is getting. Equally, the Hampden
Park board has commercial targets that it has to
achieve in order to operate as a profit-making body,
so the board decided that playing a match for a few
hundred people in a 56,000-capacity stadium was not
viable any longer both from a usage and financial
point of view. That decision was relayed to both the
Scottish schools and the Scottish amateurs, and
alternative dates were sought for this year, the last
year, to try to offer support and find alternative
venues, but the decisions have been communicated
and we are still in dialogue with both bodies on that.
Q584 Jim Sheridan: Correct me if I am wrong, but
grassroots football is not there for viability. It is there
to encourage people to participate in the game. And
while you make provisions for international games,
cup finals and professional games—and taxpayers’
money has been used to build Hampden in the first
place—here the people at the bottom of the pile are
saying, “We would like an opportunity to play at our
national stadium two games: schoolboys and Scottish
amateurs”, and they are the only ones who have been
punished while the professional game put their money
in there and get their own way.
Stewart Regan: I do not think it is about punishing
anybody. As I said before, it is about looking at what
goes on at Hampden Park and how many fixtures are
actually playing there during the course of a season
with a club team using it as their home ground. That
is very different to a national stadium like Wembley
or a stadium like the Millennium Stadium where there
is no club team playing there week in, week out. We
have to look at the quality of the surface, which is key
for the professional competitions and the international
team. We have offered to support the schools and
amateurs by trying to find alternative routes, but if I
were a schoolboy footballer coming through, I would
be really excited about playing at any professional
stadium, irrespective of the national stadium. The
chance to play at a major ground is equally attractive,
and that is why we feel that there are viable
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Culture, Media and Sport Committee: Evidence Ev 137
29 March 2011 Stewart Regan
alternatives to playing at a stadium that is getting an
awful lot of hammering from people using the pitch.
Jim Sheridan: Just for the record, the last time I was
in Wembley was watching the Scottish v. England
schoolboys international, played at Wembley, so I
would hope you would reconsider your position.
Q585 Chair: I think that is probably all we have for
you, so I would like to thank you very much for
coming.
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Ev 138 Culture, Media and Sport Committee: Evidence
Tuesday 5 April 2011
Members present:
Mr John Whittingdale (Chair)
Ms Louise Bagshawe
Dr Thérèse Coffey
Damian Collins
Philip Davies
Paul Farrelly
Mr Adrian Sanders
Jim Sheridan
________________
Examination of Witnesses
Witnesses: Sir Dave Richards, Chairman, the Premier League, and Richard Scudamore, Chief Executive, the
Premier League, gave evidence.
Chair: Good morning. This is a further session of
the Committee’s inquiry into football governance. I
welcome for the first part of this morning’s session
the Chairman of the Premier League, Sir Dave
Richards, and the Chief Executive, Richard
Scudamore. Adrian Sanders will begin.
Q586 Mr Sanders: Good morning.
Sir Dave Richards: Good morning.
Richard Scudamore: Good morning.
Mr Sanders: Do you accept that the Football
Association is the governing body of the English
game?
Sir Dave Richards: Yes.
Q587 Mr Sanders: Unquestionably?
Sir Dave Richards: It is the governance of the game.
Q588 Mr Sanders: Would English football benefit
from having a stronger Football Association as well
as a strong Premier League, and will you support FA
Chairman David Bernstein’s efforts to achieve this?
Sir Dave Richards: We have always supported the FA
in every way we could. The FA is an association of
people, but it needs to keep the balance among those
people who are associated with it. As regards
supporting David Bernstein, yes, we will support
David Bernstein in what he is trying to do.
Richard Scudamore: Can I maybe add some detail to
what Sir Dave has said? The FA is the governing body
of football in this country. Under the FIFA statutes,
that is the way it must be and has to be. We are a
league and therefore we come under the auspices of
the FA and the FA sanctions our rulebook every year.
That rulebook is effectively the contract between our
member clubs and therefore we do support that. We
have a history, certainly in our time at the Premier
League, of supporting the reforms of the FA whenever
they have come along. Sir Dave was instrumental in
moving the board to six and six—national game/
professional game—in 1999. That was four
representatives from the Premier League, two from
the Football League and six from the national game.
Those reforms were brought in around then.
We also were and are on record as being the only
people who came out and unconditionally accepted
the Burns report. When Lord Terry Burns did his
report on the governance of the FA, out it came and
we supported it. Even though there were elements of
it that we would not have, perhaps, as individual items
have supported, we absolutely supported it. So we
have a history of progressive modernisation of
governance and we would be more than happy, as I
say, to support proportionate proposals.
But Dave does hit upon the fundamental point that the
Football Association is an association of interests, and
that is its genesis. Its genesis goes way, way back to
the mid-19th century: J.S. Mill—I am sure you are all
familiar with him—freedom of conscience and
opinion, freedom of association, freedom of getting
involved in pastimes and interests that interest you.
So, 1859. The FA itself was being formed around
about 1863 and this is what we are—we are an
association of interests. It might be difficult, it might
be tough, but that is what we are. That is where we
are today and I would defend the FA. No matter what
other issues we may discuss today or at any point, I
would absolutely defend the FA’s right to associate as
an interested group—those who are interested in
football and those who actually run football to form
as an association.
Q589 Mr Sanders: That is an encouraging answer,
because the FA has told us that it wants to rethink the
architecture at the top of the game. Do you therefore
agree that the respective roles of the FA and the
Premier League need to be looked at and, if so, how
should the division of responsibilities change?
Richard Scudamore: Well, there is a concept of
constant improvement. We have never, ever rested on
our laurels and therefore, in a sense, we are looking
at all things all the time. We have strategic reviews;
we have regular dialogue. I think people
misunderstand a lot of the relationship between us.
We have such regular dialogue. Every two weeks the
executives of all three football bodies—Football
League, Premier League and FA—get together. We
exchange and work together on most initiatives. Yes,
if there is ever a discussion around moving the game
on—progressing the game—we want to be active
participants in that because we think we have a role
to play, but we are not resistant to change, as I said.
Any review that comes along we will take our full part
in. I go back to Burns. Burns, as I say, was absolutely
endorsed by us. We were the first to do that and I
think we were the only body to do it.
Q590 Damian Collins: Sir Dave Richards, do you
think, thinking purely of the England national team,
there will be an advantage to having a winter break in
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Culture, Media and Sport Committee: Evidence Ev 139
5 April 2011 Sir Dave Richards and Richard Scudamore
the season or fewer premiership games played in the
season as part of a reduction in the number of
domestic matches?
Sir Dave Richards: It goes a lot deeper than that.
Obviously we want to do the very best we can for the
English game, being the England team. We want to
do the best. We have been discussing ways forward
on how we could introduce a winter break by possibly
looking at the FA Cup, looking at the league, and
Richard and the executives of the FA have been
looking at that to try to find a proper synergy where
it actually works.
Richard Scudamore: Damian, your question hits
upon a number of things—helping the England team
and, effectively, fixture congestion. I have to say that
in my time here we have had four goes at this, looking
at the fixture calendar. It is very difficult because if
you go back, from the formation of the Premier
League, remember English football was historically
22 teams in the top division and each team playing 42
matches. That is not now the situation. We are now
down to 20. If you remember in the season prior to
the Premier League’s formation the FA Cup was openended and, therefore, the replays went on ad infinitum
or ad nauseam, depending on your particular view of
each particular match. Now, winning the FA Cup is
six matches plus replays, but at least only one replay
and it doesn’t go on for ever. The Football League
Cup used to be eight rounds plus replays to win it,
and that has been reduced to seven finite rounds with
every game played to a finish.
When you are looking at fixture congestion, which
really is your question, I think, I am afraid we have
to look at our friends at UEFA and FIFA as more the
culprits than ourselves. UEFA used to have—in the
season we started in, 1992–93—13 match dates they
required. Now they need 21 match dates to fulfil their
fixtures. FIFA traditionally were about nine or 10
international dates, which is now averaging 12. The
difficulty is somebody has to give something up. We
put on 380 events and those events are watched
around the world. They are extremely popular. Those
380, if you took two teams out, don’t go down by a
few; you go down to 306 events. There is no way that
you would do that in terms of public interest, in terms
of fan interest, in terms of the expense of other
competitions.
If you want me to talk about other competitions—the
Football League Cup, for example, or the FA Cup—
we have never advocated the radical altering of those
competitions because they are hugely, hugely
important to the solidarity of football in this country.
The FA Cup is worth about £100 million value.
Basically, if you mess with that competition, that
reduces. Of that £100 million, £75 million is for the
benefit of the FA and redistribution. The calendar is
extremely difficult. We have always said if it could be
practically done we would advocate some sort of
winter break, but we have failed because it is just hard
to come up with a practical suggestion.
Q591 Damian Collins: Thank you for a very full
answer, and you are right, the general congestion of
the calendar was part of my question. I did mention
the English national team and neither of you
mentioned the English national team in the answer to
the question. Sir Dave, do you think all this
complexity and all this work that might be undertaken
in reducing congestion in the fixture list, if that could
be achieved, would be to the benefit of the English
national team?
Sir Dave Richards: I think it is an old answer to give
you. The winter break would help providing we didn’t
put extra games in on friendlies. That is always the
danger, but more and more, our Chief Executive and
the executives of the Football League and the FA are
looking at these scenarios all the time, and looking at
not just what is best for the Premier League, but how
we can develop better youngsters and better playing
of the England team.
Richard Scudamore: Can I go back to the winter
break—
Q592 Damian Collins: If I may, Mr Scudamore, I
would like to follow up on the question before you
come in. In what you are saying in your answer, do
you accept that there is an issue that people in football
have to address, which is that England players are
tired at the end of the season because they play too
much football and we should look at how they can
prepare for major championships by easing some of
that burden on them?
Sir Dave Richards: You say, how can we prepare for
major championships? I can tell you the preparation
for the World Cup was incredible. The training, the
high altitude training, the training in South Africa—
you couldn’t have done any more. It is not about just
saying, “We want to find a little bit more space for the
English team to play.” It is about how we can bring
the whole game to a higher level to win competitions.
Richard Scudamore: Can I just answer specifically
about the winter break? We have no body of absolute
evidence that a break around about December/January
time, whenever you might choose to do it, would
make a physical difference come May/June. That is
one of the problems. We have opinion. There is a body
of opinion on this subject, but there is no empirical
evidence that says take your break then—clearly, any
break any time. Then there are some doctors who talk
about having to get back to match fitness after that
short a space of time. It is all quite difficult and we
certainly don’t yet have a body of evidence that says,
“A break now leads to success in June and July.”
There are many other factors, which I am sure you
will want to ask us about.
Q593 Damian Collins: Of course. There is another
part to my question. The reason I am particularly
directing it to you, Sir Dave, and the reason I am
particularly asking about the England national team,
is whether you think you are conflicted as Chairman
of the Premier League and sitting on the FA board,
because the FA is responsible for the national team
and you have responsibility both to the Premier
League and to the national game. Certainly, your
answer betrays the complexity and the torment that
you might find within yourself, but I am not sure
whether the England national team is uppermost in
your thoughts.
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Ev 140 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
Sir Dave Richards: I can tell you that when I go on
any tournaments or help in organising any
tournaments, my uppermost thought is how we can do
it best. Not the team, but how we can deliver the
facilities, the training time, the transport, the hotel, the
food, because that was part of my job. My job was
not to decide how the team trained, when it trained,
what the tactics were. That is the manager’s job, but
it is our job to give him the time to facilitate all those
things. People talk about conflict. I don’t really
understand how you get to that because it is an
association of people. People say, “Well, you were
Chairman of Team England during the World Cup.” It
is just a name of a person who had the responsibility
if anything went wrong. Whether a player got injured,
whether it was the medical staff, whether it was part
of the staff that had to be flown home, they were
responsibilities that I had, but not the team and the
way it played and the way it trained. That was the
manager’s job.
Q594 Damian Collins: But if the England team
manager said to you, “I think the players are too tired.
We need to reduce congestion in the game,” and the
FA board agreed, there was consensus among FA
people that was the right thing to do and we should
look at that, would your first reaction be, “Let us go
away and see how the Premier League can make a
contribution to that along with other competitions.”?
Sir Dave Richards: No, it wouldn’t.
Q595 Damian Collins: Do you not think that does
slightly conflict you? You said no, it wouldn’t; that is
not how you would respond. Do you not think that
gives you a slight conflict being Chairman of the
Premier League and being on the FA?
Sir Dave Richards: If you just give me some time to
answer you, I will try and answer you the best way I
can. If you say that fixture congestion is too much, we
have to go right back and start looking at how fixtures
are made at UEFA, FIFA, the FA and the Premier
League. The Premier League has tried over many
years to make the calendar fit to suit everybody’s
purpose. It has tried extremely hard. The manager has
never, in all my years—I have been on the FA since
1994—said to me, “The players are too tired, they
have over-trained,” because it is his job to decide that.
The board and everyone else do not have any input
into that. It is purely what the manager decides.
Richard Scudamore: In a sense, Mr Collins, the issue
has moved on because I think you would admit, Dave,
you were the reluctant sole representative with that
title during South Africa, because Lord Triesman had
left the organisation, and the minute David Bernstein
arrived you handed over that title or that pass had
gone. Some may call it a hospital pass, who knows?
But it has been handed on to David Bernstein and that
is right in some ways. In some ways we are talking
about an issue that has passed.
Q596 Damian Collins: I am not doubting these are
very difficult issues or saying that there are easy
solutions to them. A lot of our inquiries have looked
at the FA board and the way it is made up, the people
who are on it, the way they make their decisions. Is
there an inherent conflict of interest in your role, Sir
Dave, and would it be better, as has been
recommended to us by Ian Watmore, that the FA has
a wholly independent board and, therefore, these
conflicts don’t arise?
Sir Dave Richards: We would like to discuss that
further, but can I say to you the FA needs the whole
of the balance from the Premier League, the Football
League, the national game, the Conference. It needs
that because each person brings something a bit
special to it, where we have accountants, club
chairmen, club chief executives, professional game
chairmen, professional game representatives and
secretaries from the national game, because it creates
that balance inside the FA of what is really needed.
What we are not saying is that it doesn’t need some
independence.
Q597 Damian Collins: But you would not go so far
as having a wholly independent board or a majority
independent board?
Sir Dave Richards: I think it would be a retrograde
step if you did that.
Q598 Damian Collins: One final question: given you
think there should be a role for independents on the
FA board, should there be a role for independent
directors on your board, like most successful
companies have independent directors?
Sir Dave Richards: We are governed by shareholders.
Richard Scudamore: That is the point. You cannot
conflate our board with anything like a business board.
Effectively, if you go back to Cadbury or you go to
the Combined Code, it quite clearly says that
independents are there to represent the shareholders’
interests. All our shareholders get to make every
material decision that goes on. All our 20 shareholders
meet at least five times a year, usually six, and we
have ad hoc meetings if an issue arises. I think the
maximum we have had is 12 meetings in a year during
certain times when the European Commission issue
was around. Basically, our constitution, deliberately
written by Rick Parry and our forefathers, enabled the
shareholders to vote on every material issue. Anything
that exposes the shareholders to either a £200,000
liability or an income, a contract that generates
£200,000 or we spend £200,000—we had one only
last week—all the shareholders have to approve that.
Therefore, effectively, our shareholder meetings are
the board meetings. Once a year we agree on a
rulebook and then, yes, we have summary ability to
apply that rulebook during the year where we use
extensive external legal advice, so you can’t conflate
it.
When I came back to the Football Association,
though, the reality is that since the mid-19th century,
as I said before, these associations have been formed
and it is an association of interests. On the idea that
you would have a wholly independent board,
independent of whom? Representing whom? The
whole point is with the FA, it might make it more
difficult, but the essence of the FA has to be a
representative body where representatives of the game
come together in an association to try and do what is
in the best interests of the whole game. I would defend
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Culture, Media and Sport Committee: Evidence Ev 141
5 April 2011 Sir Dave Richards and Richard Scudamore
the FA to the ends of the earth, really, to make sure
that it was allowed to associate as an association of
interests.
Q599 Damian Collins: You both are in favour of
having independent representation on the FA board,
but you wouldn’t countenance it for the Premier
League, even if that might bring an outside view,
some other expertise?
Richard Scudamore: Just so as we are clear, a
personal view: I don’t think independents necessarily
are necessary on the FA board because it is an
association of interests. However, if that is what Mr
Bernstein, as the FA Chairman, wishes to promote, I
think we would support that, as we did with Burns. I
did say we didn’t like everything in Burns, but Burns
basically said, “We think you should have
independents here.” It said an awful lot of other things
as well, which I said to you. In the round, we think
Burns, therefore, was worth adopting.
Q600 Paul Farrelly: Mr Scudamore, have you not
just said of the FA, “We are an association of
interests.”? In 2008, responding to a speech given by
the now departed Lord Triesman, you said, “We are
like competitors. We compete for sponsorship and for
television rights and we are in the same space.” How
do representatives of the Premier League manage
those competitive interests while at the same time, as
you say, recognising the FA as the authority and the
governing body of the game?
Richard Scudamore: Of course, in one sense I can’t
deny we do compete, but there is a difference between
competing and it necessarily being conflicting. Of
course, when it comes to our broadcasting rights, for
example, we don’t compete directly in the sense of we
are out to market together and we are out to market at
the same time and we are taking each other’s
revenues. In fact, we Chinese wall that entire
discussion. We are regulated—heavily regulated—in
that sense.
But, yes, there is an element on the commercial side
where there are properties that we each have, but it is
not a zero-sum game here. When you go back to the
way the game has grown, the game has grown
immeasurably in interest. If you look at all the data
since the Premier League was formed, 1992–93 to
today, our revenues have grown; I can’t deny that. Our
television viewing has grown; can’t deny that. But so
have attendances grown. Attendances have grown at
the Football League; attendances have grown certainly
at England matches; television rights have grown at
the Football League; television rights have grown at
the FA. The whole economic interest in English
football has all grown. It is not a zero-sum game. The
game has generated huge amounts of interest and we
have not just become of national interest. As you
know, we have become of global interest.
You raise an interesting point, though, as to where the
properties of the FA sit in terms of the governance
structure because, in effect, like us they are
competition owners, just like UEFA are competition
owners. That is a very separate issue from the
governance in terms of disciplinary matters and
regulatory matters, and it is also a very different issue
in terms of running the England team. It is a different
issue in terms of running Wembley. Of course, that
has always been the situation where these interests
come together and it is perfectly possible. We, even
within our Premier League environment, have to
manage and reconcile individual clubs’ commercial
aspirations with our own collective Premier League
aspirations. The clubs to date, over the 20 years since
the Premier League has been in existence, have had
this interesting dynamic where they have stayed very
solid with the collective on television rights; on other
commercial matters, they are out there looking for the
same sponsors and competing. It doesn’t mean to say
you can’t reconcile that, you can’t manage that. There
is space for all of us and I don’t see it is an inherent
difficulty in running the organisation.
Q601 Paul Farrelly: Is it unequivocally a good thing
that the likes of Newcastle Town from
Newcastle-under-Lyme get the opportunity through
the FA Cup to play the Manchester Uniteds?
Richard Scudamore: Absolutely is.
Q602 Paul Farrelly: Is that unequivocally good for
the game?
Richard Scudamore: Absolutely unequivocally
good, yes.
Q603 Paul Farrelly: Sir Dave, I put a passage in a
book to Lord Triesman, so it is only fair I put the
same passage to you. This goes back to the time of
Adam Crozier, before his resignation. The author of
the book, David Conn—it is The Beautiful Game?—
said of the events at that time, when you were
questioning the potential participation of the clubs and
the future of the FA Cup, “I have it from three
members of the FA’s main board that Dave Richards
was constantly threatening to withdraw the
premiership clubs from the FA Cup or saying that
clubs would withdraw if he didn’t get his way on an
issue, usually over money. The sources complained
that they would not debate with Richards in any detail.
He would fly off, be dismissive or issue a threat. I put
this question, whether he threatened that the
premiership clubs would withdraw from the FA Cup,
to Richards through the Premier League press office
because he never talks publicly. He was walking past
and I asked him and he said, ‘Bollocks’.” That was
the passage I put to Lord Triesman in the context of
the picture he was painting of the behaviour of the
professional game. Could I give you a fair opportunity
to respond to that in more than one word?
Sir Dave Richards: Yes, certainly.
Richard Scudamore: Be careful which word you use.
Sir Dave Richards: At the FA Cup Committee, we
had lots and lots of debates about what was the best
way forward. I had a particular friend on the FA Cup
Committee in Barry Taylor and we had this rivalry
about what is best for English football in the FA Cup.
One day we were discussing replays and he said, “No,
no”—he has always been a great advocate of having
to keep replays, which sometimes we look at and we
think, “That’s odd,” but that is the way it is and we
accept that. It got on to, should clubs be seeded?
Should clubs be seeded so that they could pick out of
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Ev 142 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
the box that club against that club? I said, “If you do
that I will take it back to the Premier League and I
know some of them will not do that and they won’t
play.” That is the kind of statement that was made.
When Mr Conn rang and put that statement to our
press officer, Phil French, I did use those words. I did
say to him it was that word. Yes, sir, I did.
Q604 Paul Farrelly: That is a lovely response and a
lovely anecdote, but it doesn’t respond to the central
question, which is the portrait that is painted of the
behaviour of the professional league representatives
on the FA board. Let me give you another instance. If
you recognise the FA as the authority in the governing
body, why did you not allow the Football Association,
either in the same terms as Lord Triesman wanted or
in different amended terms, to make any submission
to Andy Burnham’s questions, rather than simply
referring to the submissions made by the Premier
League and the Football League?
Sir Dave Richards: Sir, may I give you the actual
story? Andy Burnham came out to the FA and asked
for a submission on the governance of the game. A
dialogue was started with the Premier League, the
Football League and the FA. Originally, it was going
to be one submission from all parties, but after a
lengthy discussion between the three executives they
decided the best way was to co-ordinate a reply from
all three parties, and they did that. They worked on it
for weeks and weeks. There was consultation between
the three leagues and between the board, saying, “Do
we believe that is right? No, we should take it back
and look at it because that doesn’t fit with that.”
Eventually, the submissions were made to the DCMS.
Lord Triesman came to a board meeting after the
submissions were made and agreed with the
executives of the three different bodies, came to the
board with some papers and said, “This is the FA’s
response to the DCMS.” It had already gone in.
Nobody had seen those papers. There had been no
consultation. The deadline had passed, and not just
me, but everybody on the board, was astonished at the
way that came about. Lord Triesman started to discuss
the changes and the board said, “We have submitted
the information that we want. We won’t allow that
to go forward.” Now, that was not just me as one
independent person; it was 10 people. It is a matter of
record in the minutes, sir.
Richard Scudamore: Can I add some facts to that,
because I think it is important? You certainly, in your
jobs as Members of Parliament, will recognise the
need for proper consultation. When Andy Burnham’s
letter arrived in the autumn of that year, we went on
an extensive consultation. We held club meetings—in
small groups, wasn’t it? It is hard work when you
have to meet every club on every topic, and we met
them at every club. We had full club consultation. It
was on our shareholders’ agenda for two of our
meetings. We produced four drafts of our submission,
which the clubs fully approved the final draft. We also
consulted with our FA executive colleagues and our
Football League colleagues. Within the time frame
agreed, by 31 March, in went our submissions. It was
May before Lord Triesman, without any consultation,
wrote his own paper and sprung it on us—remember,
we discussed our paper with the FA, because the FA
attends our shareholders’ meetings and everything
else. All of a sudden, Lord Triesman’s paper was late
and it had no consultation process. As I say, it is a
matter of history and conjecture as to whether the
individual ideas within that paper had merit; in fact,
most of them—I think probably 75% to 80%—were
already covered by way of topic in our papers and
have subsequently been acted upon by both ourselves
and the FA. But it is just no way to run an association
of interests, without consultation.
Q605 Paul Farrelly: I want to ask one final question
of Sir Dave. This is a curiosity question, but it is asked
by quite a number of people. You are the Chairman
of the Premier League, but you are not the chairman
of a Premier League club. Has the Premier League
ever considered having one of its own as Chairman,
possibly on a rotation basis?
Sir Dave Richards: I used to be a chairman of a club.
When I first was asked to do this job I was a chairman
of a club. The Premier League shareholders—Mr
Parry will be able to fill you in—decided that they
had to have someone independent of a club. I was
elected and I left the club.
Richard Scudamore: Our rulebook, our constitution
and our articles are very clear that the board is wholly
independent of any club interest. From the time the
season starts right through to the time the season ends
we have to apply that rulebook in a very independent
way.
Q606 Paul Farrelly: But that is not good enough for
the FA to be independent?
Richard Scudamore: No, we are independent of the
shareholders.
Q607 Paul Farrelly: No, but the same model is not
good enough for the FA?
Richard Scudamore: Well, it is an association of
interests. We are a limited company. They are an
association of interests. As I say, we have no
pathological objection to independence, but total
independence doesn’t work.
Q608 Chair: Sir Dave, you have been a member of
the FA board for 16 years, I think?
Sir Dave Richards: Yes, sir.
Q609 Chair: It has been suggested that part of the
problem is that the FA board is a narrow group of
various interests and both the board, and even more
so the Council, are hardly representative of either the
modern game or modern Britain. Is that something
that causes you any concern?
Sir Dave Richards: We have always looked at the
representation of the board and every single person is
elected. They are elected members of the board. They
are elected by councillors, leagues and the Premier
League. We have always wondered about inclusion
and what it really needs, but we have always followed
the Chairman of the FA, who has been the natural
leader, and followed his wishes. When Burns came
along, we were quite up for all the changes that Lord
Burns put in because we thought it became very
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5 April 2011 Sir Dave Richards and Richard Scudamore
inclusive and it was good for the game. Unfortunately,
it didn’t get through in its entirety. It was piecemealed
to give the FA what they wanted at that time. So, are
we up for inclusion? We are always looking at the
way things ought to be brought forward.
Q610 Chair: But you say you always followed the
Chairman of the FA, who takes the lead, and yet one
of the people who made this point most strongly was
Lord Triesman, who was Chairman of the FA. He
suggested that he was blocked, principally by you.
Sir Dave Richards: You know, the statement that Lord
Triesman made really saddened me and made me feel
a little bit dejected, because on the statement that he
made that I blocked him, first, I have never blocked
anyone. It is a free and democratic board at the FA
and to think that the Premier League Chairman could
block nine others is ridiculous.
Secondly, Lord Triesman suggested that I bullied
people. Well, that really hurt me because for 12 years
I have been one of the chairmen at the NSPCC, which
raised quarter of a billion pounds for children—for
bullied and abused children. Lord David knew that
and he knew how passionate I was about protecting
all these different styles of things. It makes me wonder
why he said such a thing because I thought I was
reasonably close to Lord T because we travelled quite
extensively together. I helped him very much. When
he wanted to be introduced to people and wanted to
be taken into different places, I went with him. I was
always very supportive to him. Why would he ever
think that I blocked him? Sir, there may have been
differences of opinion with me and Lord David, but I
never brought them into the boardroom.
Richard Scudamore: Chairman, can I just add
something? I don’t know Lord Triesman as familiarly
as Sir Dave does—I certainly wouldn’t call him Lord
T—but the reality is that Lord Triesman, at no point
in his tenure, brought Burns back to the table because
had he done that we would have absolutely supported
that initiative, and I think that is very important.
I would point you back to Roger Burden’s evidence
last week. He very eloquently, I think, on behalf of
the FA board, talked about his view of how the FA
board functioned, his view that he was not bullied or
they were not bullied. Ian Watmore also clearly
wouldn’t recognise that when he was asked. Roger
Burden quite articulately talked about how the FA
board, in his view, worked. We, the Premier League,
now have three representatives on the board and there
is no way we have a majority position on that board,
as the professional game does not. I think you need to
listen to the evidence from others as well, and I know
you will do that.
Q611 Chair: Can I just be clear? Sir Dave, you are
saying on Lord Triesman’s efforts to broaden
representation, both on the board and on the FA
Council, you were absolutely four square behind him
in that?
Sir Dave Richards: Lord Triesman only ever once
spoke about it and it was in the original document. He
had ample opportunity to bring Lord Burns’s proposal
back as Chairman and start to work in the FA board
to get where he wanted to be. He had ample
opportunity, but he never did that.
Q612 Chair: Were you disappointed? Were you
encouraging him to do so?
Sir Dave Richards: Look, I never encouraged him;
I never discouraged him. The only thing that I did
discourage him from doing was becoming Executive
Chairman of the FA, which probably was one of the
main agreements we couldn’t reach. He wanted to be
Executive Chairman of the FA and that was a very
difficult scenario. We did disagree and we did consult
with the other board members about it. But regarding
progress at the FA, no, sir, he cannot say that.
Richard Scudamore: I think Sir Dave raises an
interesting point that most of this discussion we have
been having around Lord Triesman, his submissions
and certainly around the Andy Burnham letter was
done at a time when, effectively, there was not a Chief
Executive of the FA. They had announced Brian
Barwick’s departure in August of that year, the
evening of a friendly against Czechoslovakia and he
gave notice that he was leaving. Not wishing to
personalise it to Brian, there was an element of lameduck nature of his tenure at that time, and again I
think Lord Triesman did attempt to become Executive
Chairman on a number of occasions, but the board
resisted that particular move.
Q613 Jim Sheridan: Sir Dave, I can almost feel a
lump in my throat when you talk about the sincerity
and passion you feel about being hurt by Lord
Triesman. Could I just clarify that the only reason that
his submission was rejected was because it was time
barred?
Sir Dave Richards: No, sir, it wasn’t a question of
being time barred; it was a question that Lord
Triesman brought a document to the board that had
never even—
Q614 Jim Sheridan: Too late?
Sir Dave Richards: No, sir, it wasn’t a question; it
had never been discussed. It had never been discussed
at all.
Richard Scudamore: The facts on that particular
document are that the entire board—the national game
as much as the professional game—said that that was
an inappropriate document for the FA to submit. What
was submitted was a smaller, shorter letter that did get
the approval of the entire FA board, which is good
governance.
Q615 Jim Sheridan: But the evidence that Lord
Triesman gave us is the document that he brought
forward there wasn’t a page turned; it wasn’t even
looked at. I think you said, Richard, that it was time
barred. It was too late; the date was passed. Is that
the case?
Sir Dave Richards: The submission had been made.
The submissions had been made to Government and
all agreed.
Q616 Jim Sheridan: No, I am talking about Lord
Triesman’s submission.
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Ev 144 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
Richard Scudamore: Let us get the facts absolutely
right. The Football League’s and the Premier League’s
submission had been made within the time that Andy
Burnham had set. We had promised him 31 March. I
think it was May before Lord Triesman’s paper was
produced, almost with literally no warning. It was
professional game board one day, main board the next.
The main board of the FA at that time said, “There is
no consultation on this paper. We don’t wish you to
submit this paper.” So, a letter was written, as I
understand it, to Andy Burnham, which was for Andy
Burnham either to accept or not accept into his
evidence. That was up to him. He can write a letter to
the Secretary of State if he chooses, but on this issue
of time barring, I was making the point that it was
late in terms of the deadline we were all set. The
Football League and the Premier League were
working with the FA—with the Executive—on these
submissions, and it was a surprise to everyone when
this suddenly arrived at the very last minute.
Q617 Jim Sheridan: What I am trying to establish
is, did someone tell Lord Triesman that there was a
cut-off date at the end of March?
Richard Scudamore: Well, he would have known; he
had exactly the same letter from Andy Burnham that
we had asking to make submissions. His public policy
advisers would have known. They would all have
known. We all knew we were working to a 31 March
deadline, which is why we spent October and
November consulting all the clubs, convening
regional club meetings in small groups and going back
to two board meetings, because we had to get this
done by 31 March, which is the way we, the Premier
League, operate. I can only give you by contrast the
fact that the genesis of the Lord Triesman paper was
a very different genesis.
Q618 Jim Sheridan: Therefore, Lord Triesman must
have ignored this letter and carried on regardless?
Richard Scudamore: I think you would have to ask
him that.
Q619 Dr Coffey: Could you just confirm how long
you had sight of the proposals of Lord Triesman? I
have heard from other sources it was about 48 hours
before you were asked to approve this. Is that true?
Richard Scudamore: I think it was a professional
game board meeting where we suddenly saw it. I think
it was a Wednesday before a Thursday. It was
somewhere between 24 and 48, depending on where
it was, yes. But remember, I have no role in this other
than I attend the professional game board, where I
think we saw it first, and it was the next day that the
main FA board saw it for the first time.
Q620 Dr Coffey: So a very limited amount of time
for such a substantial paper?
Richard Scudamore: That is it, and there was no
consultation.
Q621 Dr Coffey: I want to revisit something I
brought up last week with the FA about what I thought
was a terrible example of governance, which was the
renegotiation of the contract of the England manager.
I think you were Chairman of Club England at the
time, Sir Dave?
Sir Dave Richards: No.
Q622 Dr Coffey: Okay, but you were involved on
the board. Could you shed a bit more light on your
role or on what happened?
Sir Dave Richards: Yes, I certainly can. Fabio
Capello’s contract had a clause in it and Mr Capello
spoke to Lord Triesman, because Lord Triesman was
the Chairman of England at the time.
Richard Scudamore: Team England.
Sir Dave Richards: Yes, Team England. It was on 22
April that I was summoned to a meeting with Fabio
Capello’s son; Adrian Bevington, the company
lawyer; Lord Triesman and me to talk about the
Capello Index, because Mr Capello had brought out
an index on performance of players, which was
against his contract and he could not do it. He had to
seek permission of the FA and he had been talking to
the Chairman prior to that. He requested a meeting
and we went to that meeting. During that meeting, Mr
Capello’s son brought up the question of the clause
being taken out of his contract. He said Lord Triesman
agreed that the mutual break clause could be deleted
in line with his previous assurance to Fabio Capello
and that he wanted him to stay until 2012. That was
the very first time we had heard of that, but it was
pre-agreed with the Chairman and Mr Capello that
that would happen. Unfortunately, I had to pick the
pieces up with that, and the press being what they are,
I took the brunt of it.
Q623 Dr Coffey: I think at the time you may have
taken a little bit of the credit for it in securing Fabio.
Sir Dave Richards: No, I didn’t take any—
Dr Coffey: But I recognise the brunt of it. Do you
think it would have been appropriate for you, Sir
Dave, to have said, “We can’t make this decision here
and now, it needs to go to the whole board.”?
Sir Dave Richards: I wouldn’t make decisions like
that. You can ask all my colleagues on the board. I
have always been one to consult: the Premier League
board, the Football Foundation board, the European
Leagues board, the International. I am a consultative
person. I will not make a decision just like that which
affects the kind of issues that these involve.
Q624 Ms Bagshawe: Can we talk a little bit about
Portsmouth? What more could the Premier League
have done to have prevented Portsmouth from going
into administration?
Richard Scudamore: On the genesis of the Premier
League, if you go back, the rulebook has evolved. The
rulebook was 142 rules when it was first crafted; it is
now 814 rules. Given the revenues and given the way
clubs have been run, and basically the way English
football has been since 1888 in many ways, there were
things in the rulebook, certainly, that we never
envisaged we ought to see at Premier League level.
With the income that we were generating centrally,
with the way the clubs generally have been run and
the professionalisation of the clubs, certainly over 20
years and the time I have been involved, it was hard
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Culture, Media and Sport Committee: Evidence Ev 145
5 April 2011 Sir Dave Richards and Richard Scudamore
to see, I have to say, how a club at the highest level
could get itself into those particular difficulties.
We slightly foresaw it maybe some five or six years
ago when we introduced the sporting sanction rules
that basically said it is unacceptable for a football club
to go into administration, because clearly there is a
not perfect, but an almost perfect, correlation between
the amount you spend and your performance. That has
been the same since time began. We absolutely put
those rules in, as did the Football League, in saying,
if you overstretch yourself, if you spend more money
than you can afford, if you get yourself into financial
difficulty, we are going to impose a sporting sanction
because it is not right with your playing peers that you
should enjoy the same status as you did before. Ours
is a nine-point sanction. So we made that step.
We had also, through the licensing systems and
various other systems, improved our financial
regulatory position quite considerably, but I have to
admit to this group that we didn’t foresee a club with
that amount of revenue being able to get itself into the
sort of difficulties that Portsmouth got into. In fact,
we were a train in motion. If you read our submission
to Andy Burnham, if you read what we had already
embarked upon, we brought forward to the summer
meeting of 2009 considerable changes in our financial
regulations, the irony being probably that one of the
only clubs to vote against some of them were
Portsmouth. They were members at the time.
We then went on to strengthen those rules further in
September and then we went on to strengthen them
still further post the Portsmouth situation. We
strengthened them further again at the summer
meeting of 2010. Yes, I am admitting we could have
done more, but on good governance, you can’t have a
rulebook that entirely envisages every situation, just
like you don’t have laws in this country that envisage
every unknown situation. Should we have foreseen it?
Perhaps yes, but having seen what happened at
Portsmouth we acted very quickly, very swiftly, and
we think the rulebook now is very robust. Certainly,
the experience of this summer with club takeovers and
acquisitions, we have been put in a much, much better
position in being able to regulate our way through
that.
Q625 Ms Bagshawe: On learning the lessons,
Portsmouth obviously went through many ownership
changes before it went into administration. There has
been some speculation in the press, Sir Dave, that you
approved successive ownership changes. Do you think
that the fit and proper persons test was properly
applied? In the case of Mr Ali Al-Faraj there has been
some suggestion in the press that not only was he not
a fit and proper person, but he wasn’t even a person
at all and didn’t in fact exist. Do you recognise these
criticisms?
Richard Scudamore: I recognise that he has been
referred to as “Mr Al-Mirage” on more than one
occasion. The reality is that we went through all the
tests that one would need to go through to get a
passport in this country, and we had his passport. We
had documentation; we had written documentation.
Yes, we didn’t meet him face to face, which is why
our rules have changed. Now we insist on an absolute
meeting. We insist on meeting face to face. The rules
have changed. But yes, we did not meet that particular
person and that is why that rule has changed. We
believe he did exist, though, but I can’t say I have
seen him.
Sir Dave Richards: Can I make it quite plain I never
approved anyone? We have a system within the
league. It is very tight. It goes through lawyers and
different systems so no one individual could approve
it. There was one occasion I was in Rome for a
Champions League game and a gentleman asked to
see me. He was an Arab gentleman and he asked to
see me to explain the fit and proper persons test. He
was the gentleman that was trying to buy it. I went to
see him. I was there no longer than 20 minutes. I
explained to him it was all about documentation and
coming to the Premier League and presenting who he
was and what his funds were and where the funds
were from, and I left. I had never met the gentleman
before and I have never met him since.
Richard Scudamore: It is an important topic, a
serious topic, and, Chairman, I sent you a letter last
week that detailed quite a lot of what happens in our
now strengthened owners and directors tests. I think
it would also be useful if I sent you separately a
supplementary piece of information, which is when
anybody wants to look at acquiring a Premier League
club or an interest in a Premier League club there is
now a very detailed checklist and set of checks that
we make and evidence that is required. I think I will
send you this as supplementary to the letter I sent you
last week, because we don’t underestimate how
important this topic is.
Chair: That would be helpful.
Q626 Ms Bagshawe: I take it on board, Mr
Scudamore, that you have just said that you recognise
there were some failures and you have strengthened
your governance on that issue because of those
failures. Can I put it to you that you have just said
that the Premier League was taken by surprise that a
club at Portsmouth’s level could get itself into such
trouble? Given that the club was failing and being
taken over again and again, I take the point that the
fit and proper persons test has now been strengthened,
but at the time, as these successive changes were
going through, and with the Premier League clearly
having been caught on the hop, did it not occur to you
that, even under the old rules, you should be applying
the then existing fit and proper persons tests more
rigorously than they seem to have been applied at
that time?
Richard Scudamore: Except for the fact that the fit
and proper persons tests were about establishing,
effectively, criminality and unsuitability because of
that criminality. Therefore, we were unable to
establish that any criminal act or any breaches of the
absolute rule had been undertaken. Remember, it was
the same time we were introducing the financial rules,
which are about sustainability, and they are different
things, but they are wrapped up in the same thing.
Q627 Jim Sheridan: Before I move on to the next
question, can I put on record my surprise that in
relation to the Andy Burnham submission, as we are
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Ev 146 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
now calling it, in the run-up to 31 March there wasn’t
a submission that came in from the Chairman of the
FA yet no one bothered to ask the question why is
there not a submission from the Chairman of the FA.
However, I think you are quite right—that is a
question for Lord T.
You have a number of jobs in football. I am just
reading here that you are Chairman of the Premier
League. You are also on the board of the FA, you are
Chairman of the European Professional League and
you represent English football on UEFA’s Strategy
Council. That is a very long list of jobs and it would
suggest that you are a very influential and powerful
person. Do you think that you having all these posts
and also the fact that you are paid by the Premier
League means that you can ensure that there is no
conflict of interest when you apply your director and
ownership tests for prospective new owners?
Sir Dave Richards: Can I say to you I have been on
the board of the FA for 16 years. In 16 years we have
had, to my knowledge, only four votes. One of those
votes was concerning the Premier League. We stood
up, the three Premier League representatives, and said,
“We have a conflict of interest. We can’t take part in
this. We will leave the room.” We were told not to
leave the room, but we would abstain from the vote.
We didn’t influence it; we didn’t have anything.
The positions that I hold in UEFA and European
Leagues are elected positions. I didn’t go looking for
them. We are a member of the European Leagues and
one might say that the Premier League is a successful
vehicle and that people want to be associated with it
and they want to know how it works. When they
elected me Chairman, it was, “Please work with us to
show us how to become as successful as the Premier
League.” If you look at the progress the European
Leagues have made, it has been very substantial,
because we have 30 leagues, 980 clubs, some of them
very tiny, that are all part of our system. We work with
UEFA on solidarity payments bringing more solidarity
money into the smaller leagues. That is the way it
works. It is not a question of whether I am powerful
or not. It is the Premier League. It is the Premier
League and its brand that attracts people to want to be
associated with it.
Richard Scudamore: Mr Sheridan, the reality is Sir
Dave is elected by our clubs to represent us at the FA.
He is elected by the European Leagues to be
Chairman of that, and it is because he is Chairman of
the Premier League that they respect our league, they
respect what this league has achieved over the last 20
years. Many of the leagues in Europe wish to emulate
and copy elements of what we do and I think, as I say,
it is the fact of the position that Sir Dave holds that
he gets those elected positions. You will recognise the
power of the electorate in returning people to office.
Sir Dave Richards: Can I say I was elected to the
Strategy Council of UEFA? Mr Platini I have worked
with for a number of years. When you ask him how
Sir Dave is, he always says, “Sir Dave has great input
and he is good at what he does.” He quoted that in
the paper and said how well he got on with me.
Q628 Jim Sheridan: As politicians, we know how
elections work and we know how you get elected to
powerful positions. Indeed, some of our previous
witnesses suggested that most of these discussions
took place in the corridors, not at the main meetings.
Sir Dave Richards: No, sir, they didn’t because the
European one—
Q629 Jim Sheridan: You remind me of the election
of the Speaker where he is dragged out from the
crowd.
Richard Scudamore: By the scruff of the neck.
Jim Sheridan: “I don’t want to do it but—”
Sir Dave Richards: No, I would willingly do what the
European Leagues ask. I have a term of three years,
and that is the term. On the Strategy Council, I have
a term of one year and that is it.
Q630 Jim Sheridan: You have mentioned other
European leagues. We recently visited Germany and
saw how the licence system works in Germany, quite
proficient in terms of looking at clubs’ finances in
particular. Do you see a role for similar in England?
Sir Dave Richards: That is Mr Scudamore’s because
it is an executive matter.
Richard Scudamore: Of course, the reality is we have
a licensing system. We have a very much more robust
licensing system now than we did two or three years
ago. Our rulebook is effectively the licensing system
for clubs within our league. I go back to those 814
rules. That is a licence; it is a contract between the
member clubs as to how they are going to conduct
themselves with each other. Unless you meet those
rules, effectively you are not licensed.
Then, of course, we have UEFA licensing, which has
been introduced and we have been instrumental in the
introduction of UEFA licensing, working with our
colleagues. It is an extremely good example of how
you work with the Football Association. On the brunt
of the work, you heard from the Football Association
and Alex Horne last week talked about how the
executives of the Premier League and the FA work
together on UEFA licensing. For example, this year,
19 out of our 20 clubs have applied for a UEFA
licence. Therefore, you have a licensing system. You
have the law of the land, which you are collectively
responsible for delivering to us. You have our own
rulebook. You have the Football Association’s
rulebook, which then requires our rulebook to be
sanctioned, and you have a UEFA licensing system
for the majority of our clubs. Some of our financial
rules are tougher than UEFA’s. In effect, you have
a licensing system in this country and we recognise
that concept.
Q631 Jim Sheridan: Both of you have expressed a
desire to work with the new Chairman of the FA. If
he comes forward and wants to change the rulebook
that you refer to, will you co-operate with him,
particularly on the question of licensing, or is the
rulebook there for ever?
Richard Scudamore: We will co-operate in any
discussion about improving English football. I can’t
tell you here and now that I will agree with everything
that he—
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5 April 2011 Sir Dave Richards and Richard Scudamore
Q632 Jim Sheridan: So you are not ruling out the
possibility of a licence system?
Richard Scudamore: We would be foolish—well, we
have a licensing system and the licensing system
works very well right now. In fact, nobody would
argue that the UEFA licensing system, as we have
incorporated nearly all of it into our own rulebook to
cover every club, isn’t actually applied. In fact, the
only such element of that UEFA licensing system,
which is not even in place yet, is the break-even
concept. It is the only bit that isn’t covered also in our
rulebook. Effectively, we have a licensing system.
Q633 Jim Sheridan: The answer I am trying to get
is the Chairman, in his evidence, was open minded
about the licensing system similar to the one in
Germany, but you seem to have a closed mind about
it.
Richard Scudamore: Mr Chairman, we are open
minded about anything that improves the governance
of our clubs and English football. We will discuss
anything.
Q634 Jim Sheridan: Including licensing?
Richard Scudamore: But we have a licensing system.
Improving that licensing—
Q635 Jim Sheridan: No, I am talking about a
licensing system—
Richard Scudamore: Improving that licensing
system, of course we will listen.
Q636 Paul Farrelly: Just very quickly regarding the
new rules, transparency and honesty are key to their
effectiveness. In June 2009 in your evidence, you cite
the rule that you brought in that said that, “Clubs must
disclose not only to the Premier League but also
publicly who owns interests of 10% or more in the
club.” Does that mean beneficial interests?
Richard Scudamore: Yes. It does, yes.
Q637 Paul Farrelly: It has to mean beneficial
interests?
Richard Scudamore: Yes, it does.
Sir Dave Richards: Yes.
Q638 Paul Farrelly: When does that bite? Let us
take Leeds. Leeds may get into the top two in the
Championship or they may very well be involved in
the play-offs. At what point do you tell Leeds, “If you
wish to be a member of the Premier League you must
comply with this rule.”?
Richard Scudamore: 9 or 10 June, whenever our
AGM bites.
Q639 Paul Farrelly: 9 or 10 June?
Richard Scudamore: Yes. Our AGM is yet to be
fixed. It will be on 9 June or 10 June. From that point
they will be given their share certificate in the Premier
League. At that point the Premier League rulebook
bites. From my understanding of the way our rules
are written, we absolutely will require disclosure from
Leeds United that is over and beyond that which the
Football League requires.
Q640 Paul Farrelly: Why didn’t your rules bite
beforehand?
Richard Scudamore: Because they are not our
member club.
Q641 Paul Farrelly: No, but they are in a position
where they want to be a candidate member.
Richard Scudamore: No, because they are not bound
by our rules until the annual general meeting when
they become a shareholder.
Q642 Paul Farrelly: So it is quite possible that if
they were one of the top three and, say, came to the
play-offs, if they didn’t abide by that rule for it to be
publicly seen, it might be the loser of the play-off final
that might become a member of the Premier League?
Richard Scudamore: I think you are, as a lot of
people do, leaping to the end of our disciplinary
process. What would happen is obviously if we
deemed them to be in breach of rule, a commission
would have to be formed and that commission would
independently decide on what the appropriate sanction
would be to Leeds United. You are already rather
leaping to the expulsion sanction, which again I would
caution you against doing. Certainly, in our view, as
drafted, our rules would require better disclosure of
Leeds United’s ownership situation than is currently
the case.
Q643 Mr Sanders: Can you see any benefits in the
governing body of the English game assuming
responsibility, or at least a stronger supervisory role,
for the financial regulation of Premier League clubs
and also their ownership?
Richard Scudamore: I think you have to judge us by
our journey and the evidence before you. We have
moved our rulebook appropriately. We have moved
our rulebook proportionately and at a speed that can
be done only when you are able to gain consensus
from what is sometimes quite a difficult group to gain
consensus from. That comes from an awful lot of hard
work, an awful lot of consultation.
I think we will live by our track record of having
evolved the rulebook from those 142 rules to 814. The
rulebook, can it be improved? Of course. We are
always improving it. We are sitting down now on the
next cycle of rule improvements to discuss what can
be done to improve it. But as I say, we are working
with the Football Association, and I think David
Bernstein last week was very clear when he said the
best point of regulation is down at the league level
where the members are. Whether we like it or not, the
members of the Premier League will take being
moved along the regulatory curve more readily from
their own executive and their own board than they
will necessarily from people one stage removed.
Therefore, if self-regulation is the right way to go, it
is much more powerful when our 14 clubs have put
their hands up round the table to say yes to
regulatory change.
I would ask you to look at the evidence of the
evolution of our rulebook. We have a track record of
moving the rulebook on and I think the best people to
do that are us. Are we resistant to other people coming
up with ideas, other people coming up with
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Ev 148 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
suggestions, whether it be media pressure or public
pressure? Of course, as with you, opinions are formed
from many different sources. We have to sit here and
try and act as custodians of this game. We have a
conservative constitution quite deliberately. You can’t
have a small minority interest group come along and
set us off course, but when you get that 14-club
majority it is a very strong majority and it is a very
strong method of governance and I would commend
it to you. As I say, we at operating level have a very
good relationship with the Football Association. We
are always prepared to discuss things and I think the
way it works now is good. The idea that somehow we
need somebody external to come along and suddenly
impose things upon us is not necessarily the way
forward to make progress.
Q644 Mr Sanders: But there is a problem here, isn’t
there? In answer to Paul Farrelly’s question in relation
to Leeds, if you have at the moment a rulebook that
says you have to have a proper test and obviously full
disclosure of who owns a club, you ought to be able
to say at this juncture that that club would not be
accepted in the Premier League unless it was prepared
to disclose.
Richard Scudamore: Let’s be very candid. There is
an issue here because our rules are the same as the
Football League rules on this topic. The Football
League brought their rules into alignment with ours
last summer, but this is the first time the rules have
been introduced. As I say, there is an issue in one
sense between the Premier League rules and the
Football League rules. I can only give you my honest
evidence that says the Football League may have one
view of how to interpret that rule and what that rule
means. We have, I think, a more stern or harsh view
of what that rule means. Let’s go back to the essence
of the rule. The essence of the rule was our clubs
absolutely agreed unanimously that we should tell the
public who owns a club. That is the essence of the
rule and, therefore, anything that falls short of that we
think is inadequate. I think my point, Mr Sanders, is
in all that we had to get done last summer the Football
League took a view about Leeds United that it is
entitled to take because it is their rulebook they are
applying. The fact that we might have taken a
different view is an issue that needs to be resolved if
Leeds get in.
Q645 Mr Sanders: Presumably this must be a real
warning to Crawley Town that they should not be
allowed into the Football League because their
ownership has not been declared.
Richard Scudamore: Again, I ask that you address
those issues to the Football League.
Q646 Mr Sanders: Yes, indeed, but to be consistent,
that would have to apply.
Richard Scudamore: I can’t disagree.
Q647 Mr Sanders: I think the problem here is that
there is a bit of inconsistency in not being able to state
your rulebook in relation to Leeds at this point.
Richard Scudamore: Except that the people in both
leagues—I commend these people to you, both Andy
Williamson at the Football League, who has been
there almost since time began, and Mike Foster, my
General Secretary, who has been there since the very
start and did 17 years at the Football League before
that—are the people who have more knowledge, and
more intimate knowledge, of the rules and the way
these rules apply. It is about applying these rules at
the point of most knowledge. I think it has worked
pretty well up until now.
Q648 Mr Sanders: I think the public view is they
want to see consistency, and in sport fair play is
everything and, therefore, if it is seen as one rule for
one club, it hurts the whole game.
Richard Scudamore: I can’t disagree with you, and
what is also interesting is last summer we had some
discussions with the Football League making exactly
this point. Many of those clubs are ex-Premier League
clubs. They are of a size, nature and infrastructure that
they look like Premier League clubs; it is just their
league status that says they are not. Therefore, we
said, “Wouldn’t it be a good idea if there was a rule
alignment exercise?”, which is when all these rules—
the financial rules, the disclosure rules and ownership
rules—are all aligned. Leagues One and Two, to their
credit, said, “Well, hold on a minute. We don’t want
to be left out of this, because why should we, even
though in infrastructure we might be smaller. We
aspire to be Championship clubs one day.” The
Football League voted in those rules of alignment.
Therefore, I think what we are seeing is just a very
early ironing out that needs to be done. I agree with
the point.
Q649 Paul Farrelly: Very briefly, Mr Scudamore, in
your answer to me about Leeds, I don’t think anybody
listening to this Committee will go away without the
question as to whether your rule on disclosure will
really bite or whether, at the end of the day, it will be
as effective as a chocolate fireguard.
Richard Scudamore: Well, in fairness, we can only
deal with that at the point when Leeds United are
promoted. They may not be. We can only deal with
that at the time of our annual general meeting, when
they come under our jurisdiction. We will have to
stand the test of time on that.
Q650 Dr Coffey: Sir Dave, you are elected by the
Premier League to be on the FA board, but that
doesn’t mean you only speak for the Premier League;
you speak for all clubs. Is there a reason why you
don’t make the suggestion that this applies to every
single football club in the land?
Sir Dave Richards: We do speak for every football
club. You have a gentleman on after us, and he will
be able to tell you how much we have spoken for the
Conference and the way we have tried to assist and
the way we are trying to assist to bring them into the
pyramid in a proper way. I do speak up for those
things.
Richard Scudamore: But I think there’s an irony in
this line of questioning—
Q651 Dr Coffey: What I am trying to say is we don’t
have that many opportunities to speak to individual
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Culture, Media and Sport Committee: Evidence Ev 149
5 April 2011 Sir Dave Richards and Richard Scudamore
board members. Has this ever been discussed—the
fact of the excellent rule that you have in the Premier
League of making sure ownership is disclosed? Why
have you not perhaps suggested that for every single
football club?
Sir Dave Richards: We have tried. We have been
talking to the FA in the last year about aligning all
the rules.
Richard Scudamore: Just so that you are clear, we
think we all have the same rule; it is just that the
Football League has chosen to apply the rule in the
chaos that is the summer between one season ending
and one season starting, when all the rules get
changed. In the chaos of that, the Football League, for
its own reasons, has chosen not to apply the rule as
robustly as we think we will be applying it. But the
irony of this conversation, where you might be
suggesting that the Premier League should be
imposing its power in telling other leagues what rules
they should have and how they should apply them, is
not lost. The reality is the Football League has some
different rules that are more appropriate for that level
of football, which is absolutely right. In the
subsidiarity, the Football League must be in some
cases able to do that. On issues such as this, of course
there is merit in having common rules, because if it is
a rule that is good for football, it should be in
rulebooks.
Q652 Damian Collins: I would like to begin another
topic, but just to finish on this, it seems to me you
may have clarity on what your rules say, but it is not
necessarily clear on how they are enforced, and on
something like this we have a very specific example
in Leeds United, who may be promoted. They may be
in a situation that, following your independent
commission in the summer, they are told that they
can’t compete in the Premier League. You have not
ruled that out; you urged us not to go down that path,
but you said that remains a sanction that you may
enforce. That would be enforced maybe days before
the start of the Premiership season. Would it not be
possible for you to give some sort of ruling based on
the situation that Leeds is in at the moment?
Richard Scudamore: No, because at the end of the
day—well, clearly, the headline will be generated
from this session about Leeds’ inability to play in the
Premier League next season. As with all miscreant
behaviour, everybody assumes the ultimate sanction
will apply and that expulsion and points deduction and
all these other things will fly. The reality is that such
is the attraction of playing in the Premier League, it
is not unknown for people to relent in order to comply
with our rules. Therefore, the most likely thing to
happen when clubs get promoted—we have rules
about press facilities, we have rules about the match,
we have rules because of our international nature and
the access that is required to our grounds, we have
lots of rules that clubs have to comply with—is that
we start to talk to clubs, send them formal
documentation.
In January, we write to the top 12 teams in the
Championship, talking about a whole raft of rules that
they have to comply with in an operational sense
when they get promoted. I am not going to get
dragged into—you will understand why—the “what
ifs”. We will be doing whatever we can, as we always
do in any situation. We would much rather our clubs,
our member clubs, stayed within the rules than
stepped outside them so they have to go to sanction.
We will be putting on whatever pressure. If it arises
that Leeds United, on sporting merit, deserve to be in
our league, we will be doing all we can to persuade
them to stay within the rules.
Q653 Damian Collins: I appreciate that. What I was
asking—I think probably colleagues have been asking
it—is whether you could say, “This rule is so serious
that if breached it could lead to a club being excluded
from the league,” or whether it is more of an age
where it is more likely there will be some sort of
sporting or financial sanction applied.
Richard Scudamore: Again, we are not involved in
the sanctioning. I think, without rehearsing this, we
would deem it more serious than could be dealt with
under our summary powers. We only have summary
powers to fine a club up to £25,000. After that, it
goes to an independent commission; that independent
commission will decide. That independent
commission has the range of sanctions available to it,
from a small fine up to expulsion. It will be for that
commission to decide.
Q654 Damian Collins: A different area of rules:
financial fair play. You will be familiar, I am sure,
with the fact that this is an issue that we have
discussed, and I suppose it goes back to the spirit of
what the rules are and how they are enforced. You
said UEFA’s financial fair play rules are an area of
UEFA practice that has not been incorporated into
what you referred to as the Premier League’s licensing
system. David Bernstein said in our previous session,
“I would like to see financial fair play potentially
extended across the Premier League and into the
Football League as well.” When we discussed with
some of the Premier League chief executives and
chairmen a few weeks ago, they also said they would
look favourably towards that. What is your view?
Richard Scudamore: We have had full consultation
on this. Prior to the rule changes of last year, we went
again round the houses on a full club discussion. We
went round again last autumn—September, October,
November, individual club discussions. In the main,
they are supportive. In fact, we are entirely supportive
of this break-even concept, but given that 19 of our
clubs have applied for the licence anyway this year,
they all have to comply with it if they wish to continue
to do that. The only thing the clubs have said is, “Yes,
it is a good idea, but before we decide to change our
rules for it to apply to everybody, can we not see a
little bit how it might work, and is it not sensible just
to see if it actually works?” There are some doubts
still about what it will achieve, because one of the
things it may achieve is that you lock in the natural
order where only those that have extremely big
revenues, of course, can have extremely big expenses.
The one thing about our league this season is the joy
of seeing everybody who has come up competing. In
fact, at no point has a team who has been promoted
ended up being in the bottom three this season, so
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Ev 150 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
you have a situation where, looking at our league this
season, the competitiveness within it is because teams
have come up and had a go. One of our issues is, is it
so wrong that Mr Al-Fayed or Steve Gibson at
Middlesbrough, when he was with us, or Ellis Short
at Sunderland or Dave Whelan at Wigan—these
people who have benefactor funding—should come
along and try and get their club into the next level,
into the next echelon, which will bring itself bigger
revenues, which will then enable them to stay within
the fair play boundaries a bit more? So, we have
shaped UEFA financial fair play criteria. The leeway
that clubs have with the €45 million losses—the way
the rules are now implemented—is, we think,
proportionate for those who are in the European
competition.
I think our clubs are not objecting to it. They think it
might be a good idea and they agree with break-even,
but to launch full scale into applying it everywhere at
every level to stop the local businessman made good
investing in his local team really affects the essence
of English football. If you go back to 1888, that is
how we started, what it is about, and I would caution
against us suddenly saying, “Yes, that’s a great idea.
Let’s put it in everywhere,” because I think the further
you go down the pyramid, it gets harder. Having said
that, cost control, cost containment, break-even—
can’t argue, and would never argue, that that is not a
good concept.
club slightly better to get them into that thing? Our
nervousness about it—we are not objecting to it. I
don’t want it to sound like I am. We think it is a good
concept, but there is just one, if you like, caution or
cautionary note that we are expounding, which is why
would you stop those clubs breaking into that group?
Q657 Damian Collins: I fully understand that, but
you said you think on balance it probably will come
in. Do you think that will because the weight of clubs
seeking to comply with it will be such that they will
endeavour to?
Richard Scudamore: Well, effectively, when you
have 19 applying for the licence, we will have it. It
works the other way, doesn’t it? We don’t see any
need to extend it right the way down through the
system, because we want other clubs to be able to
break into that group.
Q658 Damian Collins: I wanted to touch on
something that was in your written submission that
relates to some of the financial sanctions you already
have in regards to HMRC payments. You said that,
“Where the board reasonably believes that a club is
behind in its HMRC liabilities, it may impose a
transfer embargo and/or require the club to adhere to
an agreed budget.” Have you ever been in a dialogue
with a club that means you might be required to
enforce those rules?
Richard Scudamore: No. This was a post-Portsmouth
rule and, quite frankly, we don’t see why in the first
instance HMRC should treat clubs any more tolerantly
than they do small businesses that they expect to pay
straightaway. We would expect them to do that in the
first instance. We now have a reporting mechanism
where, effectively, no clubs are allowed to have any
HMRC debt. Since the rule has been in, we have never
seen it, no.
Q655 Damian Collins: Are you not concerned that
you could end up with a league where half the teams
in the league are voluntarily complying with it,
because they want to compete in UEFA competitions,
and the other half aren’t?
Richard Scudamore: But if that means that the other
half are able to get themselves into the European
qualifying positions by way of improving their
sporting position, they will have to comply with it. So
there is no team. Look at now: all 19 have applied,
even those that aren’t anywhere near the qualifying
positions. There are a number of clubs who could win
a UEFA Cup place on the basis of fair play. There is
no club in our league that has ruled itself out from
European competition, and I can’t imagine a club
qualifying for Europe and not wishing to play in
European competition, because that is essentially what
our league is, and every club is out there striving to
deliver for its fan base in European competition.
Q659 Damian Collins: There was a press report that
suggested, following a parliamentary question, that
about £14 million was owed by Premier League clubs
to the taxman. Have you discussed that with any of
the clubs?
Richard Scudamore: No. Well, it is not that at all.
That is nearly all Portsmouth from the Portsmouth
creditors.
Damian Collins: So it is not new liability, you say?
Richard Scudamore: No.
Q656 Damian Collins: But it sounds like it is going
to come in by the back door, so why don’t you find a
way of implementing it properly?
Richard Scudamore: It is just a question of what. I
keep saying, on balance I think it will come in. It is
just, why would you straitjacket some of your clubs?
This is not going to bite or affect many of clubs who
have huge revenues, such as the Manchester Uniteds
of this world. The idea that they can’t live within their
means—they have £300 million in income, can spend
£300 million and still stay within the rules. When you
have smaller clubs that are aspirational—coming up
from the Championship, for example—why shouldn’t
those clubs, if they have the owners who have those
funds available, be able to invest them to make their
Q660 Damian Collins: In terms of the sanctions that
are imposed, the idea struck me of a transfer embargo
on clubs—if clubs have HMRC debt they are probably
in quite a bad financial state anyway. Do you think
those sorts of financial sanction are effective? Should
you consider using sporting sanctions against clubs
that are clearly in quite serious financial breach?
Richard Scudamore: Well, there is what the rulebook
says, and there is also what our ability as the board to
get clubs to behave in a certain way also does. Of
course, we have significant funding that we give to
the clubs in two main tranches—once in August, once
in January—then we have a monthly stabilised cash
flow, which again is not insignificant. I am absolutely
sure that before we would need to go to the rulebook,
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Culture, Media and Sport Committee: Evidence Ev 151
5 April 2011 Sir Dave Richards and Richard Scudamore
we would use our good offices to use some of those
funds that are not legally the clubs’ until they have
fulfilled our rulebook. But we would certainly, I
would think, look to be using those funds to make
sure HMRC is—
Q661 Damian Collins: Do you mean you would give
HMRC the money that would otherwise go to the club
at each point?
Richard Scudamore: Well, certainly we would
encourage the clubs to allow us to do that, yes, to
avoid them getting into that situation.
Q662 Damian Collins: Is that something you have
discussed?
Richard Scudamore: That is exactly how we have
applied the rules in the past, yes—the ability to
deduct.
Q663 Damian Collins: Yes. Obviously you have
oversight to a club’s ability to meet their football
obligations and liabilities, and we have discussed—as
I am sure you will be aware—at great length the
football creditors rule. When we discussed that with
David Gill and the other club representatives, they felt
that the football creditors rule had served its purpose.
In previous sessions, Lord Mawhinney explained how
he had tried to get the Football League to get rid of
it, and the current Chairman of the League said that
he couldn’t find a moral argument for keeping it, but
was going to keep it anyway. What is your view?
Richard Scudamore: This is a very interesting one,
and it is interesting that the people who run the FA,
Mr Bernstein and Mr Horne, the current Chairman of
the Football League, and his Chief Operating Officer,
Andy Williamson—those of us who run
competitions—will defend it, and we will defend it on
the basis of the chaos that ensues if you don’t have it.
We are a closed system. We trade on a closed basis
between each other. If a business fails, the real
sanction should be expulsion.
The problem with expulsion is it damages far more
than the club involved. For example, had Portsmouth
gone straight into expulsion in the January/February
of last year, every single point that they had gained
would have been taken off the clubs that had already
beaten them. More importantly, anybody they had
beaten would suddenly, effectively, have a three-point
advantage. So it is absolutely essential that the clubs
are forced to play each other and to play out their
fixture list, and therefore it is essential that football
creditors are paid. Another thing on this: there is no
moral basis for saying that the St John’s
ambulancemen or the local businesses shouldn’t be
paid. Of course they should, and that is our starting
position—there should be no bad debt.
You have more say in the insolvency laws in this
country than I have and if you wish to change the
insolvency laws to allow charities or small business
with a certain turnover threshold to become preferred
creditors or preferential creditors, I would certainly
support that. But on balance, it is the best of a bad
situation. Because we are a closed system, chaos
would ensue if people’s playing records were
eradicated. If expulsion is the only option, we think it
is a bad option. Therefore, the football administrators,
to protect the integrity of the league, would support
the football creditors rule. I understand that the
integrity of our league takes precedence over the small
business creditor, which is unfortunate, but I am not
ever excusing people not paying their debts.
Q664 Damian Collins: I think there is another
element to this, and this was a point that David Gill
made when he gave evidence to us. He agreed with
the idea that if the football creditors rule did not exist
clubs would have to be more open and transparent in
their financial dealings with each other, because there
would be greater risk, and transfers and payments
between clubs, which are a very big part of clubs’
expenditure in putting their teams together, may have
a helpful and deflationary impact. I think Lord
Mawhinney also talked about the integrity of the
competition and whether you can protect the integrity
of the competition if clubs are using their liabilities to
other suppliers to fund their football activities.
Richard Scudamore: David Gill is probably the best
chief executive in football. He runs a club, but he is
in a fortunate position where he runs a club with the
ability to trade almost on a cash basis with others.
There is the idea that across professional football all
92 clubs should go into a full due diligence situation
in terms of this. Given we have this system, remember
in our particular case we generate significant central
revenues. Those contracts are entered into only with
the Premier League, not individual member clubs. We
have significant funds such that when this situation
comes along, as it did in Portsmouth, we are able to
keep, for example, Watford in business, effectively.
Watford were owed money by Portsmouth. We were
able to satisfy other foreign clubs that were owed
money by Portsmouth, which has given us great
standing across European football, because I think we
are the only league that has ever done that, and has
satisfied club debts. So I think it is easy for
Manchester United to say, “Everybody should do due
diligence,” because they are in a situation where not
many people are buying players from them, and when
they are buying players themselves it is a very
different position. As I say, he comes at it from a club
perspective. I sit in front of you as a league organiser
with a slightly different view.
Q665 Damian Collins: What you seem to be saying
is it is all right for clubs that do not have big cash
flows to engage in financial transactions with other
clubs knowing that they may not be able to meet those
liabilities, but if they can’t they have their VAT
account or other unpaid bills they could pay it from.
Richard Scudamore: You go to what is the essence
of the game. I would advise caution—steering clear
of over-regulating or over-prescribing something that
might circumvent the essence of the game. The
essence of the game since it started—the thing that
gets fans most interested—is the buying and selling
of players, the trading of players, on the transfer
deadline. You have seen the media hype around
transfer deadline. We know more about what is going
on from the media hype sometimes than we do from
the contract registration documents that are coming
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Ev 152 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
into our office. The essence of the game throughout
my 14 years in the executive capacity of professional
football, whenever you get to a room or the premeeting coffee discussions, is players and player
movements: who is buying whom, who is selling
whom, what is happening? The idea that you would
somehow put this administrative blockage of a due
diligence process in front of every single trade, club
to club on transfer deadline and everything else, is a
place we wouldn’t want to go.
Q666 Ms Bagshawe: Surely greater transparency
would prevent that. You just gave the example of
Watford being protected. Watford wouldn’t have
allowed Portsmouth to run up such debts with it if it
had clear sight of its balance sheet, and without the
football creditors rule that would have been the case.
Richard Scudamore: Okay. We have transparency,
don’t we? You have seen the Deloitte report. There is
no other country that can produce the Deloitte annual
report of football finance on the same basis, because
certainly in US sports you won’t see that level of
transparency. We are all required by regulation. We
are UK-registered companies. That means that
everything has to be filed with Companies House. Of
course, it would be good practice for a club to
establish with another club whether they can pay, and
that is why a lot of deals do and don’t go through.
That is done now. I don’t think, though, it is the
solution to obfuscating the football creditors rule. As
I say, I am not here defending many aspects of the
consequences of the football creditors rule, but on
balance I think the Football League, the FA and I
agree that, of the options available, it is better to have
the rule than not have the rule.
Damian Collins: It does seem a pretty sad state of
affairs if the—
Chair: We need to move on.
Jim Sheridan: In my experience, and in the
experience of other elected colleagues in this place,
abiding by the rules is not always the best form of
defence.
Q667 Paul Farrelly: I will be brief on this section,
which leads nicely on from your discussion of how
important it is to have integrity and stability when you
are running competitions. When we talked about local
benefactors buying into clubs, would you prefer them
to put in equity rather than take on debt?
Richard Scudamore: I think in a hierarchical
situation, yes. That is, you would prefer them just to
put in equity, yes, as opposed to debt.
Q668 Paul Farrelly: The oft-mentioned Lord
Triesman made a contribution in a speech on debt.
Why did you and the Premier League take such
exception to what he had to say?
Richard Scudamore: Again, you have to put it in the
context of the timing. We were having what we
thought was a very good dialogue with Lord Triesman
and with Andy Burnham, the Secretary of State, all
through that summer. We started the dialogue in July;
we continued it in August. We were all entitled to a
holiday and off we went. We came back and that
dialogue stopped, and almost the next thing we had
was these unilateral speeches—both by Andy
Burnham and by Lord Triesman—about the state of
English football. If there was any affrontedness, and I
don’t deny there was some, it was a sort of break with
the discussions that we were having. Having said
that—
Q669 Paul Farrelly: So your reaction, you were
described as “tired and emotional”.
Richard Scudamore: No, I don’t think it was tired
and emotional at all. We were rather sanguine about
it. It was others. Clearly, the media enjoyed the theatre
of Lord Triesman at a speech called Leaders in
Football—interestingly named—and the issue is
around the fact that clearly we are proud of English
football. I think this comes through. We are proud of
what the Premier League has achieved. We are very
proud of what the Football League has achieved. We
are proud of where the FA sits in relation to other
football associations around the world, where the
England team sits. It is the one team—probably
England and Brazil—that attracts more international
interest than any other team, so when you are very
proud of something, my view in terms of when you
are trying to move the agenda on is that you should
perhaps not criticise it quite as directly. On good
leaders, I think there is an art of leadership. The first
art is to get people to follow. Therefore, if you are
going to display real leadership—you will have seen
this in your world—you have to get people either to
follow, vote for you or at least engender some support,
and I think it is interesting tactics people have
deployed in trying to get that support, but it is not one
of the ways we would have chosen to do it.
Q670 Paul Farrelly: From your answer about
preferring equity to debt, who wouldn’t?
Richard Scudamore: Yes, exactly.
Paul Farrelly: I take it you would agree with Sir
Martin Broughton, nobody’s fool as we have seen
over many years, the Liverpool Chairman, when he
said, “If you are leveraged”—by which he means
highly leveraged—“that’s bad for a football club.” Is
that a statement of fact that you would agree with?
Richard Scudamore: Let me take it one stage further.
If it was too highly leveraged, yes; if it was leveraged,
not as good; if there was no leverage at all, obviously
better. Therefore, we are into the proportionality of
debt, and I think that is something that our new rules
will bite on, because when you have to put your future
financial information in, when you have to put your
business plans in—we didn’t have these rules four
years ago—but now our rules are tighter on this than
the UEFA licensing and the UEFA rules, because the
UEFA rules don’t per se deal with debt, but ours will
deal with debt, and the appropriateness and level of
debt. So, yes, clearly it goes without saying it is about
the amount of debt and the question, is the club at
risk? Our role is to make sure that clubs are
sustainable, that they stay in business, and we don’t
have a role that says each club must be able to win
the Champions League. That is beyond our power,
beyond our reasonable control, but certainly in terms
of sustainability that is the issue, and, yes, clearly
there is a number at which proportionately debt has to
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5 April 2011 Sir Dave Richards and Richard Scudamore
be a risk and that would be covered, I think, by our
new rules.
Q671 Paul Farrelly: The final question, as time is
moving on, relates to your position when it comes to
any financial regulation UEFA is involved with. You
have made strides with your own rulebook, so is there
no role for the Football Association in any financial
regulation?
Richard Scudamore: Of course there is a role for the
Football Association, because they have an
overarching role in the way it works. But UEFA
themselves are only competition owners; that is what
they are. They organise their own competitions and
they say to the clubs that want to play in those
competitions, “If you want to play, these are the
rules.” It is the same for us. If there is a lacuna in the
rules or if there is a gap in the rules, yes, we would
be open to that dialogue. We would also be open to
the dialogue as to who applies those rules. We are not
against that at all.
Q672 Paul Farrelly: Very quickly: has the Football
Association any greater role in financial regulation
beyond what you are already doing than just
approving the rules of the FA Premier League?
Sir Dave Richards: The executives of the Premier
League and the Football Association meet every
second Friday to discuss all the implications of this,
and they come up with scenarios—whether it is
financial or about players. They discuss this every
second week. They bring it back to their bodies. Their
bodies then agree the formula and it goes to the board.
So if the FA wants to talk more about finance, it has
ample opportunity to do it at the Friday FMT with the
senior executives.
Richard Scudamore: Just so you are all clear, though,
and maybe I have not made it clear, the FA are the
people who are ultimately the licensor of the UEFA
licence, so the work, much of the data gathering and
much of the evidence is gathered by the Premier
League Executive. That is all presented to FA, but the
ultimate people who decide on the UEFA licences are
the FA. They have an integral role in the financial
regulation of football.
Q673 Ms Bagshawe: I know there are pressures on
time, so would you comment on two questions at
once. This is related to debt in the English model of
football. Obviously, there is a growing differential
between the revenue gap between the Premier League
and the Football League. First, do you think this
encourages clubs to overspend, to gamble on success,
whether that be staying up in the Premier League or
joining the Premier League and entering the
Champions League? As a corollary question, we have
heard evidence to the Committee that the parachute
payments if you are relegated, which now last for four
years, are distorting competition in the Championship.
Do you think that the Premier League has a role to
play in cost control?
Richard Scudamore: Clearly, that is why we are
advocates of the concept of break-even, and repeating
the financial fair play concept of break-even is
unarguable. In terms of a gamble, of course football is
an optimistic, upwardly mobile, aspirational business.
Ms Bagshawe: Nothing wrong with that.
Richard Scudamore: There is nothing wrong with
that. It is entrepreneurial, and Mr Cameron would be
proud, and would have been in all his speeches in the
last three weeks, including in Cardiff at your spring
conference. That is exactly what football is. It is about
the aspirational, the entrepreneurial, and saying, “We
think we can invest our money and we think we can
improve our lot.” So yes, of course, the best thing and
worst thing about the Premier League is how
successful it has been. It has been a success in terms
of its attendance growth—60% since we started—our
viewing and our audience growth, as well as our
revenue growth. That success has meant more and
more clubs want to be part of us. The Championship
clubs all want to be in it, despite the fact that when
they are not in it they like to criticise us, but they all
want to be in it, and that is the reality of English
football.
Clearly, we are not sitting here advocating that people
overstretch themselves to the point of putting them at
risk, which is why we have talked probably more than
we should about all the rules that are now in place to
stop that happening. When it comes to the parachute
payments, they are, again, in a sense a necessary
mechanism. They have been in it since the start,
because when clubs get promoted we want them to
compete. We don’t want clubs to come up, bag the
money, take it as profits and just go back down again,
because it is a sporting competition.
We can talk about money and finances and everything
else, but the integrity of the league this season is more
in evidence than ever. The clubs who have come up
have competed: Newcastle have competed. Blackpool
have had a fantastic run, considering the economics
mean they shouldn’t have won anything like the
number of points that they have, if you believe the
pre-season pundits. West Brom have suddenly got
themselves into not a comfortable position, but a
decent position this weekend. So you want your clubs
to come up and compete. That means you want them
to spend money, invest. We require them to invest
heavily in infrastructure. No matter what happens to
Blackpool this season, they will have a better
infrastructure as a club, a better stadium and better
facilities, because they have invested that money in
making their club better; they have community
schemes. Every aspect of Blackpool Football Club has
been enriched by being in the Premier League,
irrespective of whether they retain their league status.
Now, the consequence of that is to de-risk some of
that when they get relegated; they need a softer
landing. What we have done is the parachute
payments, which have always been there. On the
extension to four years, it is only half what they would
have got, so the positive side of this is that 12 of the
24 clubs in the Football League—half of them—enjoy
the benefits of the parachute, which is good for the
sustainability of those clubs. Basically, if you want
them to compete when they come up, you have to
protect them when they go down. Interestingly, it has
not distorted the competition, if you look at the
Championship this season. I haven’t checked the
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Ev 154 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
league table after last night, but I don’t think there
was a team that was relegated. No, there isn’t. Neither
Burnley, Hull nor Portsmouth is in a play-off position
to come back up, so you can’t believe it has given
them a huge competitive advantage over the others.
Q674 Chair: On the recent European Court of Justice
case, or rather, the opinion of the Advocate-General,
that may lead to an ECJ judgment on the sale of
exclusive territorial rights, have you done an
assessment of how damaging that will be if it is
upheld?
Richard Scudamore: We haven’t done an assessment
of how damaging it can be, because I don’t think the
opinion is clear enough as to what the outcomes will
be. The opinion is difficult; it is convoluted. It
suggests certain things that might happen. As you will
be aware, the process of this is that the opinion gets
put towards the ECJ, the judges. The judges have to
answer, I think, 18 questions set by Justice Kitchin
here in the UK. Then the answers to those questions
come back and he has to weave them into his ultimate
decision. What is very hard to see at the moment is
how we get all this to add up—even the copyright
issues that have been explained, even this concept
where it might be possible to make a legal distinction
in the UK between a domestic card not being allowed
to be used in a commercial premises in the UK. So, a
UK domestic card might not be allowed to be used in
a pub or commercial premises, but somehow a foreign
domestic card could—under some interpretation of the
freedom of movement—be allowed to be used in a
pub or commercial premises in the UK. It is difficult;
it is complicated.
What I do know is this. You questioned the Secretary
of State last week on this particular topic, and we are
very grateful for his support on this and UK
Government support, where it is essential for content
owners to be able to sell their rights in a way that
works for consumers as opposed to some ideology of
some pan-European market. We don’t sell the same
Premier League product across Europe. We sell our
rights—the components to a Premier League
product—across Europe. It is then for the people in
each territory and each country to create a product that
they in that market require.
With your other hats on as Culture and Media, you
will understand the territoriality and the essential
nature of territoriality in that regard. So the French,
when they produce Premier League coverage in
France, concentrate often on French players, French
clubs. It is scheduled to avoid the French league.
Similarly in Italy, in Spain, in other countries, when
they show our rights, they not only concentrate on an
element of the Premier League that is more relevant
to their audience, but schedule it around what is a
unique part of each country’s culture.
It is the same in this country, which is the reason why
we will fight strongly, for example, against if Mr
Platini and others come along with a summer calendar
for football, because we believe it is pretty difficult to
play cricket in this country in the winter—rain
stopped play would be rather more prevalent.
Therefore, it is things like that, where you have to
protect the sporting culture of a country and you have
to support media being available on a territorial basis,
because that is the way you create cultural diversity
and protect the culture of each individual territory. It
is an important case, John—
Chair: It is an extremely important case.
Richard Scudamore: And I think you should
concentrate some of your minds and efforts on it.
Q675 Chair: Indeed. That may be your view, it may
be our view, it may be the Secretary of State’s view,
but at the end of the day if it is not the European
Court of Justice’s view, there is not a lot we can do
about it.
Richard Scudamore: No, except, as I say, the problem
with this case is that it is possible to sit down and
work out theoretically what we might do about it, but
unfortunately every solution is not as good for the
consumer, not as good for the broadcasters in each
country as what currently happens. The idea, for
example, that we might have to sell our rights on a
pan-European basis does rather make a nonsense of
having broken our rights down into packages, with our
other European Commission challenge, with Ofcom
ensuring that we encourage plurality in the media
world to make sure that more than one broadcaster
has our rights. All this kind of stuff contradicts all the
things we have been discussing in a regulatory sense
with these people up until now.
Q676 Chair: I entirely understand that, but is that a
case that you think you are capable of persuading the
European Court of?
Richard Scudamore: Unfortunately, we don’t have
any chance now in front of the European Court, do
we? That is the way the process works. They will
be crafting their opinion. If there is anything that the
Government can do, whether this Government or
whether other Governments across Europe, to weigh
in with their views, I think that is important, because
we need to—and that is what my lobby people will do.
Q677 Chair: But you will have begun to think about
what will be the impact if this opinion is upheld?
Richard Scudamore: It leads you to thinking about,
unfortunately, the UK as just one element of Europe
and where you would have to do whatever you do on
a pan-European basis, which is a bit odd because
clearly the UK has more interest in our Premier
League rights than any other country in Europe, and
you would expect that, wouldn’t you? So the idea that
we suddenly think of Europe as one market, when it
is effectively 53 markets, is possible; it is doable. It
doesn’t hold any fear to us, but it is just a very
convoluted, complicated way of going about doing
something when the current system works perfectly
well.
Q678 Chair: But it is also likely to result in a drop
in income.
Richard Scudamore: Again, you just can’t make that
stretch. In some ways, the other challenge that we
have in terms of the Ofcom pay TV review and our
appeal to that is important, because it hits right to the
heart of a plural media rights market, where, as you
know from that particular case we are arguing, if all
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Culture, Media and Sport Committee: Evidence Ev 155
5 April 2011 Sir Dave Richards and Richard Scudamore
these other media companies have a wholesale offer
situation with Sky, which has to wholesale all this
sport content to them, their incentive to bid for our
rights will be vastly reduced. In a sense, that has more
potential threat to the income of the Premier League
than perhaps the ECJ case.
Q679 Chair: On the issue of broadcasting income,
you get about over £1 billion in broadcasting income.
It was suggested, I think by the Sports and Recreation
Alliance, that you had signed up to a target of
investing 30% of net broadcasting income into sport—
£300 million. Are you meeting that target?
Richard Scudamore: We are more than meeting it.
There is one word you have missed out, if I may
correct you. It was net broadcasting income.
Chair: Yes.
Richard Scudamore: What the code absolutely
envisages is the cost of putting on that competition
must be able to be deducted from your gross income.
While we can sit and talk about our £1.2 billion worth
of revenue, of course we have a huge cost of sale, and
that cost of sale is the 20 clubs’ aggregated costs,
player costs, stadium costs in staging the competition.
Any other governing body—for example, the FA—is
allowed to deduct the cost of running the FA, the cost
of putting on the England matches and the cost of
everything else, so to be treated like any other sports
governing body we have to be allowed to look at net
revenue, which is when you have basically extracted
your cost of sale of putting on the show. We stand up
very well indeed. Our £162 million we gave away by
way of solidarity—13.4% of our revenue. There is no
other sporting body in the world—no other business
in the world, I don’t think—gives away 13.5% of its
revenue. Not of its profit, of its revenue. So we stand
up extremely well to anybody else, whether in a
sporting context or in a business context.
Q680 Chair: So what is your estimate of net
broadcasting income?
Richard Scudamore: Well, it is a net loss, to be
absolutely honest, so goodness knows what that
means our percentage to contribute is; it must be
infinite.
Q681 Chair: So it is a pretty meaningless
commitment to say you are going to give away 30%
of what is a net loss.
Richard Scudamore: I would ask you to concentrate
on our submission: £162 million given away. If you
can show me another sporting body or another
company that gives away 13.5% of its gross revenue
it will be very interesting.
Q682 Dr Coffey: I wonder if Mr Scudamore could
just clarify where that kind of money goes? Is that
referees or is it pitches or—
Richard Scudamore: What, the £162 million?
Dr Coffey: Yes, or is the parachute payments?
Richard Scudamore: No, the £162 million effectively
goes—let me check the detail of it. I wouldn’t want
to mislead you. Yes, £162 million of it goes into
solidarity and good causes. That is roughly broken
down as £60 million in parachute payments, about £62
million in solidarity payments—that is both for the
Football League and for the Football Conference, who
you will be speaking to later—and the rest to
charitable causes, charities.
Q683 Dr Coffey: So about £10 million outside, if
you like, the professional clubs?
Richard Scudamore: No, about £42 million, I think,
goes to good causes in the community. That is in our
submission.
Dr Coffey: Oh sorry, £162 million. I wrote down the
figure wrong.
Richard Scudamore: Yes, £162 million, with £40
million-odd to charity and good causes, yes.
Q684 Dr Coffey: Supporters. At the end of the day,
the game exists for players, but supporters pay for
the success, whether through Sky subscriptions, ticket
prices or similar, but they get terribly frustrated—
probably the cause of this whole inquiry—because
they feel they have no say in the governance of their
clubs. What additional measures can the Premier
League take to increase that say?
Richard Scudamore: Well, again, we would
absolutely commend any club having a dialogue, and
our rulebook envisages a supporter liaison person at
each club; we would encourage all clubs to have a
decent and open dialogue with their fan base. You will
also see—you can do this another time—the
appendices that we put into our submission. There is
no other sporting body, I think, that does the extensive
nature of the research that we do, among our fans and
our non-fans. We are absolutely in touch, I think, with
what all fans feel, and that is difficult because there
are very vastly different opinions. I think in a practical
sense we fund now Supporters Direct, and we have
done for some time.
Q685 Dr Coffey: Will you continue to do that at the
current level?
Richard Scudamore: We will continue to make
available, as you know via the Fans Fund—This is an
ongoing debate as to whether we, the Premier League,
should be funding these organisations. We took up the
Supporters Direct funding when Government decided
it didn’t meet the Government’s criteria of
participation only. It is the same in all the
organisations, such as the Football Supporters
Federation and the National Disabled Supporters
Federation: for the central bodies that currently
exist—associations formed by those like-minded
people who wish to share common views—we will
continue to make funding available to them to achieve
some of their aims. They admit by their own efforts
that they would rather find more sustainable sources
of funding, because they find it awfully odd being
paid for by the Premier League, but we were certainly
always open in that dialogue. I have personal dialogue
with the leaders of all those organisations, as do my
team.
Ultimately, you cannot argue against having decent
fan liaison and decent fan communication, but, as you
have heard in evidence before this Committee, not
every supporters’ trust thinks it is right that they
should have a seat on the board, because they wish to
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Ev 156 Culture, Media and Sport Committee: Evidence
5 April 2011 Sir Dave Richards and Richard Scudamore
remain more removed from the fiduciary duties that
that would bring. There is a raging debate about this.
I would put you back to the evidence. Our evidence
is that since the Premier League was formed, 67%
more people are coming through the turnstiles and
attending our matches. English football was at its
worst throughout the 1980s in terms of violence, of
hooliganism, stadium disasters and no television deal.
On taking the game back from that position—more
fans are more interested in our surveys, very
independently done by Populus, and again I offer up
to the Committee access to all those Populus
surveys—the reality is there are more people
interested in our league and what we do now than
there were before.
Q686 Dr Coffey: You mentioned that you are a bit
of a closed board; there is no other entrance in and
out, which was the justification for the creditors rule.
I recognise you are all football supporters, but given
that you are a closed board, how do you get new, fresh
blood in? I suggest to you that one way, Sir Dave and
Richard, would be to say that there is a fixed-term
limit on how long people can be on the Premier
League board to encourage new blood in, and perhaps
a role for supporters on that board as well.
Richard Scudamore: If you go back to my original
description of what the Premier League board really
is, the Premier League board is effectively the clubs,
and Mr Parry will be able to advise you exactly on
the intentions when the shareholders set the thing up.
We have new blood all the time. In fact, we have new
blood, we have old blood. We take by rule three new
clubs every year, but then the clubs themselves turn
over and, effectively, the clubs come along as
shareholders and that is the new blood. We are for
ever being challenged by new blood on what is
effectively our board, which is our clubs.
certainly seen the Premier League grow—has not
been, if you like, replaced. Is there a view that the
chairmanship should be not quite such a long-term
election?
Richard Scudamore: I think that is entirely a decision
for the 20 shareholders. We turn up and say to each
other before every shareholder meeting that it is like
reapplying for your job at every single meeting, and
our predecessors sometimes went to those meetings
and left without their jobs.
Q688 Dr Coffey: I would be really interested to hear
Sir Dave’s view.
Sir Dave Richards: No, it is absolutely true what
Richard tells you; you are as good as the last meeting.
You could turn up at a meeting and find out it is your
very last. On terms, you get elected every year. If you
have a bad year you don’t get re-elected. There comes
a time when you think to yourself, “Well, perhaps
we’re okay,” but the Premier League is so fluid, and
Mr Parry can tell you the times that we have had—
the way it has changed.
But we are governed in such a way that the 20 clubs
are the governance of the Premier League. The board
has a set of rules and it is a set of rules that we can
work to, so the board is not like you believe it to be,
like a PLC, because the PLC part is the shareholders
and they are the board. We are very limited in how
we can make decisions as the two members of the
board. Mr Parry will tell you that he helped write the
rules, so he will tell you how difficult it is that you
must work within those parameters. If I break those
parameters, I can tell you I will be out overnight.
Chair: We have to stop there. I thank the two of you
very much.
Q687 Dr Coffey: With respect, Sir Dave—who I
think has been a distinguished Chairman, and has
Examination of Witnesses
Witnesses: Brian Lee, Chairman, the Football Conference, and Dennis Strudwick, General Manager, the
Football Conference, gave evidence.
Q689 Chair: I welcome Brian Lee, Chairman of the
Football Conference and Dennis Strudwick, General
Manager, and thank you for your patience in waiting
until we reached this point. We are very pleased you
were able to come and join us this morning. Perhaps
I might begin, following on from the theme we were
discussing with the Premier League just now about
the involvement of supporters, and in particular
supporters’ trusts and clubs, by asking, what is your
experience of the success of supporters’ trusts and
clubs, and do you find that they are more likely to be
involved in community activities?
Brian Lee: First, thank you for seeing us and,
secondly, this is a very hot seat.
Chair: Indeed.
Brian Lee: We support supporters’ trusts generally,
but there is no one model; one size does not fit all.
There have always been supporters’ clubs and
supporters’ clubs have formed themselves into
supporters’ trusts more legally. We have good
examples at Exeter, which is a supporters’ trust. If
you go there, an example is after the game: all the
supporters, having paid their entrance fee, go and
clean the terraces, as it were, as their contribution to
their club. I think that is supporting and supporters’
trusts. We have AFC Wimbledon, which obviously
came out of a specific set of circumstances. FC United
of Manchester came about in another set of
circumstances. They are all different.
The problem with supporters’ trusts is that they do
not have the financial background. They have a lot
of enthusiasm and a lot of passion, but unfortunately
enthusiasm and passion don’t pay the bills, an
example being a club we lost last year, Chester City.
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5 April 2011 Brian Lee and Dennis Strudwick
In fact, nobody could save them. They did have a
group of supporters and a supporters’ trust, but the
finances involved were just too great. As you know,
they went out of existence and were reformed by the
supporters. They started at the bottom of the ladder
and are now top of their division. They are getting
crowds of 2,000, which is way beyond the average
there, and are on their way back. Supporters’ trusts
really are supporters’ clubs more professionalised.
Q690 Chair: Where it has not been possible for them
to acquire a stake, are you generally in favour of the
idea of their being represented on the board?
Brian Lee: Yes, indeed. I think nobody could exclude
good dialogue between the club and the supporters.
Whatever the constitution of the club, they want their
supporters because those are the people they set out
to cater for, those are their customers. My own club
is Wycombe Wanderers; we have a board of five and
two of those are from the supporters’ trust. They have
a say. They are not going to change everything
overnight, but they can practically demonstrate, as I
have said about Exeter, a major contribution to the
club.
Q691 Mr Sanders: It was said in the last session that
the big story out of the session would be about Leeds
United. I think the big story is the possibility that AFC
Wimbledon, the fans’ own club, could end up getting
into the league at the cost of Crawley Town because
they won’t come clean on their ownership. Do you
have ownership rules within the Conference in
wanting to know who owns what, or are you
considering having that as a rule?
Dennis Strudwick: We don’t at the moment. It is dealt
with by the Football Association and we liaise with
the Football Association on ownership, so it is not as
transparent as we would probably like in the
Conference. It is something we are prepared to
consider.
Q692 Mr Sanders: Transparency is important.
Supporters ought to be entitled to know who owns
their club, so would you push for this to be a rule?
Dennis Strudwick: Yes, I think it is something we
need to take up with the Football Association because,
as I say, it is dealt with by them at the moment. If we
have any questions to ask, we ask them and they liaise
with us. We have a rule within our competition about
conflict of interest or dual ownership as such, and we
would liaise on any issue that we were aware of.
Q693 Mr Sanders: Crawley could end up not going
into the Football League because they are not meeting
the Football League rules and so wouldn’t meet your
rules.
Dennis Strudwick: You have mentioned Crawley
Town, and we suspected that might be on the agenda
anyway, but the Football Association, through our
liaison—the Football Conference—has visited
Crawley Town. They are due to go back there. They
have established the investment there so it is being
dealt with.
Brian Lee: I think it is very difficult, from the
Conference point of view, if the model at Crawley
Town satisfies the Football Association. It will satisfy
the Football League, because they are due to go into
the Football League and you have heard about the
Football League rules. Therefore, if they are satisfied
it is difficult for us to do anything about it because we
are completely satisfied from the Football Association
and the Football League.
Q694 Paul Farrelly: I want to go back to supporters.
The reason that we are doing this inquiry is because,
for good or ill—it is there in the coalition agreement,
just below eradication of debt and transformation of
the National Health Service—the Government will do
something about encouraging more supporter
involvement in their local clubs. That covers a wide
range of possibilities, from the Maldon Sea Salt’s
works team to Torquay United or even Stoke City.
Brian Lee: Who?
Paul Farrelly: Stoke City, a club quite close to my
heart. But the question is whether the Government
were well advised to put this in the coalition
agreement and how should they best go about doing
it. What three or four things would be in the
Government’s grasp to fulfil that coalition pledge?
Brian Lee: First, I don’t think there should be
intervention. I think there should be co-operation and
development of the game with the governing body. As
you have heard, the governing body isn’t—I would
agree with this—the governing body it was or should
be, in my view. In terms of governance, it has lost it.
It is fair to say that there are other governing bodies
in a similar position—a state of flux—at the moment.
Lawn tennis is an example.
I think the importance from a Conference point of
view is to give the independence. We are going along
a line, I think, which is satisfying the member clubs
and a bit like the evidence you have heard. We are
there to satisfy them. We have 68 clubs. Sorry, we
have 67, because one club went during the year
because they were living beyond their means. We are
doing everything we can to get clubs to live within
their means and we have financial initiatives and we
have co-operation with HMRC. Unlike the previous
evidence, we don’t agree with the creditors rule. We
think that everybody is the same, as far as debt is
concerned, and we will encourage everything we can
and we are working at it. We have taken evidence this
year, as a trial year, to try to implement it in rules next
year in terms of greater financial responsibility.
Q695 Paul Farrelly: Still I am not getting an answer.
What can the Government do? If it is in a
Government’s grasp, what lever can a Government
pull? Let me give you one example. If you wished to
set up an ownership model that encouraged fans to get
involved, you could make special exemptions from
tax or give tax incentives to invest in football clubs,
then the question would be, does football occupy such
a special place in the country’s life that the same
shouldn’t happen with cricket or rugby? That is one
example. I am just trying to see what your thoughts
are, from the lower reaches of the leagues, on how the
Government can implement this manifesto pledge.
Brian Lee: It can certainly give relief to sports clubs
and football clubs, bearing in mind the clubs are not
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Ev 158 Culture, Media and Sport Committee: Evidence
5 April 2011 Brian Lee and Dennis Strudwick
just there for themselves; they are there for the
communities. The Premier League has been extremely
helpful to the Football Conference and this year we
have, for example, £800,000, and that is for three
years, so that’s £2.4 million we are putting into our
clubs via the communities. Therefore, the Government
may well say, “Yes, that’s good, we might look at
some rate relief on that.” That will be quite logical
because we are making a financial contribution. In
doing so, each club is allowed £12,000 over three
years, but that is 50%, so if somebody else is putting
in the other £12,000 there is a partnership, often the
local authority—
Paul Farrelly: No, supporter involvement?
Brian Lee: And supporters, and supporters are—
Q696 Paul Farrelly: To encourage supporters’
involvement, that is—
Brian Lee: Yes, but the supporters are involved in it,
you see. Again, a lot of it is done at the low level—
in school, in health and education and in developing
players—and those players eventually are going to be
supporters. They all have parents involved. There are
all sorts of things that are happening.
Dennis Strudwick: I think every club—we have 67 at
the moment, as you have heard—is an autonomous
body. If the Government wished to make that an aim
or an objective, as a Conference we would welcome
some advice on what might be a good business model
for supporters’ involvement because we have to sell
the idea to these autonomous bodies, which are run
under a variety of business models. If it is such a good
idea to have that degree of supporter involvement, we
have to sell the idea. There is the Football Association
and there are major leagues like us to get this
message across.
Q697 Paul Farrelly: Final question, because we are
at an impasse here. You are asking the Government to
give you some advice and the Government is asking
for some advice, in part through a Select Committee
inquiry, so we are no further forward.
Dennis Strudwick: Okay, there is a discussion point
that we need to meet to decide the best way forward.
If it is such a good idea, let’s both talk about it.
Q698 Damian Collins: What is the average wage to
revenue ratio in the Football Conference?
Brian Lee: We are working on it so that it will be
about 60%, but some are above that, some well below
it. That is part of our exercise—gathering information
this year to implement next year.
Q699 Damian Collins: Is that to be implemented as
a rule similar to the rule that exists for League Two?
Brian Lee: It is not a rule; it is advice and guidance.
As I said, we have this financial initiative independent
committee on which the Football Association also has
representation from its financial regulation
department. That is how that is being devolved and
being aimed at—roughly 60% after turnover.
Q700 Damian Collins: If clubs are in breach of that
guidance, is that a matter for them?
Brian Lee: It is not in the rules at the moment, but
that is where we are working to in terms of advice
and it is going to go into the rules, yes.
Q701 Damian Collins: It will go into the rules?
Brian Lee: We are hoping it will go into the rules, yes.
Q702 Damian Collins: If it is approved, there could
be sanctions for breaching the rules?
Brian Lee: Yes, but we are gathering evidence at the
moment.
Dennis Strudwick: Can I go back a little bit on that?
When I joined the Football Conference four years ago,
we had what we call the improved playing budget
scheme and it was a comparison between expenditure
on wages with turnover and the yardstick figure was
60%. It was quite labour intensive to work. We relied
on the information that we were given by the clubs,
which we would naturally expect, and it was difficult
to prove the figures in support.
What we have done since then—we found it quite
laborious, that system—is move on in our reporting
system so that each quarter a club will report debt,
HMRC debt and what the position is, whether it has
agreed arrears and whether it is paying it off. But we
have not abandoned the first idea. What we have in
there is turnover and salary, player wages. What we
are finding though is—it emphasises our reason for
moving away from the very focused structure of the
APB system—that some clubs who spend below 60%
of turnover on wages might be perceived to be in
some financial trouble when other clubs who are
spending above 60% perhaps are not. The 60% really
means that some clubs might run very prudently on
voluntary labour and may be able to afford to pay
more than 60% while others are a bit more labour
intensive and can’t. We have shifted the reporting
system on to a broader base and it has proven quite
interesting in the last two years.
Brian Lee: I think the interesting thing, if I may say,
about the Conference is we have all these clubs
coming down from the Football League, wellestablished clubs with their own models, and we have
the clubs coming up in the pyramid that are
developing their models, possibly more sensibly but
at the same time being ambitious. Each year we hope
that one of those clubs will go into the Football
League, and that one of the clubs that comes down
will have rehabilitated.
Q703 Damian Collins: Obviously you have a
concern about unsustainable models of finance that
clubs have, but it seems that even at the Conference
and at lower levels there have been incidences of
clubs that have a wealthy owner—Crawley has been
talked about; a couple of divisions below you have
the problems with Croydon Athletic as well—who
pumps in a lot of cash in the short term to try and get
the club into the league. That money goes away and
the club comes crashing back down to the ground
again. Is that part of your thinking in trying to create
a more sustainable business model?
Brian Lee: Absolutely, those are the things to aim at
and to defeat. We also have to make sure we have
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Culture, Media and Sport Committee: Evidence Ev 159
5 April 2011 Brian Lee and Dennis Strudwick
greater knowledge, I think; that is really what we
want.
Q704 Damian Collins: You said, Mr Lee, that you
disagree with the football creditors rule. Is there a
football creditors rule that applies in the Conference
at the moment?
Brian Lee: No.
Damian Collins: No, there is not. Thank you.
Dennis Strudwick: Sorry, what was that?
Brian Lee: The football creditors rule.
Damian Collins: Yes, you don’t have one?
Brian Lee: No.
Dennis Strudwick: The football creditors rule? No,
we insist on football creditors being paid. We have an
empathy with the theory of football creditors because
a football club does most of its business with other
football clubs. There is this empathy on understanding
of the rule. However, in the broader system, our
reporting and our rules are geared to paying all the
bills.
Q705 Damian Collins: Just so I am clear, in the
conditions of membership of the league, if you like,
or the Conference, football creditors don’t have a
preferred status?
Brian Lee: No.
Damian Collins: So they are treated the same as all
other creditors?
Dennis Strudwick: There is an observed status. We
want people to pay the other football clubs, the clubs
they are competing against. They are the ones who
have this integrity problem with the competition, but
the bottom line is we want the football clubs to pay
all their bills.
Q706 Chair: You will have heard we spent some
time this morning discussing the structure and
composition of the FA, particularly the Board and the
Council. Do you feel that your interests are given
proper weight in the deliberations of the FA?
Brian Lee: We have representation, following Lord
Burns’s report. We have representation on the FA
Council, so we have two members. The three feeder
leagues also have one representative. At our level of
the game, if you can call it that, there are five
Members of Council. Council, on the other hand, is
118 people, which is far too big. The board is far too
big and we don’t have any representation on the
board. We find ourselves betwixt and between: the
Premier League is up there and we have the national
game down here, and we are at the point there and at
the bottom there.
We feel that our level of the game deserves and needs
its own board, so we would become a board of 266
clubs—the Alliance Game Board, as has been
suggested. When the Premier League disappeared,
everything was on its own—the Premier League and
the Football League. We were non-league, but when
we started we were non-league from the Football
League, when it had four divisions. Non-league
now—what does it mean? We are supposedly at the
top of the national game alongside the teams that play
in the Bolton and District Sunday League. That can’t
be right, particularly as the professional clubs are
coming down from the Football League and we have
clubs who are ambitious to move. There is a fair
amount of money involved.
We are pressing the Football Association, but, as an
example, the decision has been agreed by all the four
competitions and gone to the Football Association and
the board. The board has deferred it for comment, as
it were, from the national game. I find that that is
one of the problems. When you have all the members
agreeing, I feel that we should be able to carry on and
do it for the benefit of those member clubs—266 clubs
all agree, but no. The Football Association shouldn’t
hold it back; it should encourage it.
Dennis Strudwick: Chairman, if I could try and
illustrate a little more about our position. At the
moment, it is the professional game and the rest is
the national game. We all understand the professional
game; we have met those two gentlemen today. The
national game embraces the rest. We believe, with the
Football Conference having 19 full-time clubs out of
its top 24 in its top division, and being semiprofessional at least for the rest of it, that there is a
niche to recognise that level of football, even with our
feeder leagues below, which would fit in below the
professional game, but above the national game. We
think there is a niche there.
I think your question was about how we feel our level
of the game is being represented. To give an example
of our level of the game, our fixture calendar has
recently been published. It is very comprehensive,
from all the matches taking place at international level
to under-15 girls’ team friendlies. Nothing wrong in
that, very comprehensive. At our level of the game,
we have an international level. It is called England C;
if you like, call it England’s third team or whatever.
Their fixtures are not on that calendar yet we have just
won a series of international matches in what is
known as the international trophy. We are in the final,
where I believe we are playing Portugal.
Brian Lee: We are playing Portugal in this country,
at home.
Dennis Strudwick: The final is not on the calendar.
We think there is a niche there for our level of the
game, which is being overlooked and underrepresented.
Q707 Mr Sanders: The television coverage that the
Conference was getting seemed to give it a higher
profile for a while. It was ESPN, wasn’t it?
Brian Lee: Setanta.
Mr Sanders: Setanta, yes. ESPN has taken over
Setanta, but not the contract, so you don’t benefit from
that. But was it helpful to have that profile?
Brian Lee: Yes, you can’t argue really about
presenting the game. We now have an agreement with
Premier Sports Television—they film just over 30
matches during the season, but it is not of financial
benefit to all the clubs as the Setanta agreement was.
The only clubs that benefit from the present agreement
are the competing clubs, but it does give us the profile.
Q708 Paul Farrelly: One question, and I won’t call
it a breakaway or a break-in, but you mentioned 266
clubs. How far does that extend?
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Ev 160 Culture, Media and Sport Committee: Evidence
5 April 2011 Brian Lee and Dennis Strudwick
Brian Lee: That extends to what are known as steps
1 to 4, so that would take in the Conference and the
North and South divisions. Then it would take in the
Evo-Stik, the Ryman League and the Southern League
and their divisions. That group also plays in the FA
Trophy and they are also probably the end of
contracted players, if you think about the—
Q709 Paul Farrelly: Would that be permanent? The
266 wouldn’t be an exclusive club?
Brian Lee: People are coming in and out of it, just
the same as in promotion and relegation, absolutely.
Dr Coffey: My local club, I hope, will be promoted
tonight into the bottom league of Ryman South.
Q710 Jim Sheridan: Apologies, Chairman, if the
question was asked when I was out of the room, but
you may have heard the accusations this morning
about bullying. Are you aware of any bullying within
the FA structure?
Brian Lee: Bullying? A lot of it has been levelled at
Sir Dave Richards and I found it astounding. I have
been a member of the professional game board and
seen it happen, and I find it amazing. They have been
unbelievably co-operative as far as we are concerned.
They need not do it but they have, and we have a very
good relationship. We have a good relationship with
the Football League because of the promotion and
relegation there and I think we also have a good
relationship with the Football Association because we
partially represent them, as you have just heard.
Q711 Jim Sheridan: The reason I am asking is that
in earlier evidence some people suggested that the
lower league clubs would be reminded of their
obligations when anything was going on in the FA and
they would have their freebies withdrawn if they
didn’t co-operate. You have never heard anything?
Brian Lee: Absolutely not. Never heard anything like
that, no.
Q712 Chair: The only other suggestion, I think, was
that Cambridge United were critical of the fact that
their up and coming players immediately got poached
by Football League clubs. Is that just inevitable?
Brian Lee: It is a problem because we have been
encouraged to do it. We have a Football Conference
Youth Alliance that is aimed at the 72 clubs in it; it is
for the 16-to-18 group, but only boys at the moment.
No reason why girls shouldn’t join in—we would
encourage that—but at the moment there are boys, 16
to 18, who are going to college, so it is an education
and a football course. They do so many hours of
coaching per week.
The problem with the development of youth football
is travel and the cost of travel, but that is one thing.
The problem really is one of losing those good players
at clubs. An example is Weymouth, which almost
went out of existence last year, but continues to run
26 clubs in the community of lower age range, starting
with the under-sevens. Despite the big club going,
there is sufficient encouragement and enthusiasm
there, so the parents rallied round, but you don’t hear
that story.
I think the important message on youth is
compensation when a player is taken from a lower
club to a higher club. There is some formula being
worked out through UEFA and it is being discussed
in England. I hope that true, proper compensation will
ensue based on some sort of formula. I think that is
being worked on.
Dennis Strudwick: Can I go back to Mr Sheridan’s
question? I don’t want to go back into the too-distant
past, but I have heard of sanctions from county FAs,
many years ago. I have never heard of it from the
Football Association, but it was, “If you don’t play in
the County Cup or Senior Cup, you won’t get your
FA Cup tickets.” It was that kind of thing. I have
looked upon those as, perhaps, sanctions, but never
heard of bullying. If nobody is listening, working with
the FA is a bit like running through treacle sometimes,
but it is not bullying.
Jim Sheridan: There are about 2 million people
listening.
Chair: I think that is probably all we have. Thank
you both very much for coming.
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Culture, Media and Sport Committee: Evidence Ev 161
Tuesday 26 April 2011
Members present:
Mr John Whittingdale (Chair)
Ms Louise Bagshawe
Dr Thérèse Coffey
Damian Collins
Paul Farrelly
Mr Adrian Sanders
________________
Examination of Witness
Witness: William Gaillard, Adviser to the President, UEFA, gave evidence.
Q713 Chair: Good morning. This is a further session
of the Committee’s inquiry into football governance,
and for the first part of our evidence this morning I
would like to welcome William Gaillard who is the
adviser to the President of UEFA. Can I invite Thérèse
Coffey to begin?
Dr Coffey: Welcome, Monsieur Gaillard. Why is it
important for UEFA to introduce Financial Fair Play
Regulations at this time for its competitions?
William Gaillard: Thank you. Certainly, it is not too
early to introduce Financial Fair Play measures. It
may be a bit late but I think the financial crisis has
induced us to probably quicken the pace of the
financial reforms that we were contemplating for the
past two or three years. We felt, in particular, that the
growing inflation of wages and transfers, the large
number of clubs facing an unsustainable debt burden
and the fact that a number of clubs Europe-wide were
going into administration, meant that the system
needed some reform. We felt that the countries where
a strong licensing system had been in place were not
facing the same problem as the ones where licensing
was weak or nonexistent and, therefore, we felt that,
through our licensing mechanism for our own
competitions, we could introduce some order and
more rationality into professional football.
Q714 Dr Coffey: So what would you suggest UEFA
is doing to avoid unintended consequences, like
increased ticket prices? UEFA has already come under
criticism for the high cost of Champions League
tickets that are open for purchase. What about the
clubs?
William Gaillard: In terms of the Champ