Football Governance...HC 792-II Published on 29 July 2011 by authority of the House of Commons...

HC 792-II Published on 29 July 2011

by authority of the House of Commons London: The Stationery Office Limited

£24.50

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

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 Page

Patrick Collins, Mail on Sunday, Sean Hamil, Birkbeck Sport Business Centre, University of London, and Professor Stefan Szymanski, CASS Business School Ev 1

Lord Burns, Graham Kelly, former Chief Executive of the Football Association, and Lord Triesman, former Chairman of the Football Association 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


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


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


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


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) Ev 188; 278

5 Premier League Ev 207; 276; 279; 281

6 Supporters Direct Ev 218; 279

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,

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 Ev w94

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

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 evidenceTaken before the Culture, Media and Sport Committee

on Tuesday 8 February 2011

Members present:

Mr John Whittingdale (Chair)

Ms Louise BagshaweDavid CairnsDr Thérèse CoffeyDamian CollinsPhilip Davies

________________

Examination of Witnesses

Witnesses: Patrick Collins, Mail on Sunday, Sean Hamil, Birkbeck Sport Business Centre, University ofLondon, and Professor Stefan Szymanski, CASS Business School, gave evidence.

Chair: This is the first hearing of the SelectCommittee’s inquiry into football governance. Iwelcome our first three witnesses: Patrick Collins ofthe Mail on Sunday, Sean Hamil of the Birkbeck SportBusiness Centre and Professor Szymanski from CASSBusiness School.

Q1 Ms Bagshawe: Could we start with a briefoverview of things as you see them? How robust doyou think the English model of football is?Professor Szymanski: Partly I think the question iswhat do you mean by the English model of football?Are you talking about professional football? Are youtalking about football in the top leagues—the PremierLeague, the Football League? Are you talking aboutthe national team game? Are you talking aboutgrassroots? Are you talking about local club football?Are you talking about, indeed, mass participation infootball on an informal scale? Part of the problem iswhich bit we are talking about.If we talk about the professional game, my view isthat the professional game is extremely robust andvery successful. We have the most successful footballleague in the world in the Premier League. We havethe most popular lower tiers of football anywhere inthe world: the English Championship is by far themost popular second league in the world, the third tierand fourth tier are very strong. They have very highlevels of attendance and of income. Although on theface of it people say, “It looks like they have lots ofindividual problems”, taking the system as a whole, itis very robust.If you think about the national team, obviously peopletalk about issues with that, but that is a very specialproblem. If you think about the grassroots, in terms ofparticipation, people participate very strongly infootball in this country. There are lots of facilities andI would say overall I think it is fairly strong androbust.Sean Hamil: It has a lot of strengths, but there areproblems, and I think that is the reason why thisCommittee is conducting this investigation. Theprofessional leagues are strong in the sense that theygenerate a lot of turnover, a lot of people want towatch it and English teams perform comparatively

Paul FarrellyAlan KeenMr Adrian SandersJim Sheridan

well in European competition, but if you focus on onekey financial indicator, there have been 53 incidencesof financial administration in English football since1992. There has not been a single year since thefoundation of the Premiership that the clubscollectively have made a pre-tax profit. Football isdifferent but turnover is vanity, profit is sanity. I havegot a copy of the Portsmouth administration documenthere. It is sorry reading, and one of the problems isthat essentially what you have in administration isthat, because of the football creditors rule, the keyfootball creditors all get paid 100%, which means thatthe tax authorities get proportionately less and all thesmall creditors, such as St John Ambulance, do notget paid. Even looking at that as an isolated episode,that should be intolerable. I recommend thateverybody read this document, because it is availableon the Portsmouth website, and all the administrationsfollow the same pattern.It should not be acceptable in any industry that saysit is a private business but has a loss-making financialmodel. Essentially, it receives a de facto subsidy fromthe public purse through the non-payment of taxes. Tobe fair to the football authorities, they have recognisedthis fact and we now have early warning for taxpayments, but there has been a long history of non-payment of taxes at football clubs, and you have toask why is it only now that it is being addressed? Thereason, in my opinion, is because the tax authoritieshave finally said, “Well, we’re going to get serioushere”.The other fundamental problem with a loss-makingmodel is that it is about the quality of the owner thatyou get. If you have a scenario where someone of thequality of Delia Smith, a successful entrepreneur orSir John Madejski, successful entrepreneur and localboy who tried to build a sort of major sportinginstitution in his hometown, decide it is not worth itand that they would like to get out, I think that that isa problem.Similarly, if you look at the Liverpool situationrecently, in the nick of time, there was some veryeffective work by the interim chairman and his teamto deal with failed owners who basically bought theclub 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 beingbrought into the game but where you have a leveragedbuyout, money is going out of the game. In our writtensubmission from Birkbeck, we acknowledge all themany strengths of English football. It is veryimportant to do that if you want to have a balanceddiscussion, but there has to be a realistic assessmentof this particular issue. If you are losing money yearafter year after year, I’m sorry, that is a problem.Secondly, we have the recent example of the lack offinancial regulation in the credit crisis. I make nobones about this: there is a role for effectiveregulation. That is the lesson of the financial crisis.The only question is what form it should take.Patrick Collins: Essentially, I agree with very muchof what Sean has just said. If it were sufficientlyrobust, we would not be having this Committee at all.I also think that the game tends to get judged on thesuccess or failure or otherwise of the Premier League,which is a mistake. The Premier League has greatweaknesses, which spring possibly from itsfoundation. I think it was conceived in the spirit ofgreed and over the years it has probably got a gooddeal greedier. This is one of the central problems ofthe game: judging everything by how much moneyit can make rather than what sort of contribution itcan make.The solution is obviously far broader than this, but thenotion of having two independent directors of the FAis an excellent one, because one of the central thingsthat is going wrong with the game is the ongoingconflict between the Premier League and the FA. Thathas to be resolved. Once that has been resolved, wecan look at the game much more calmly. I have somehopes of this Committee because it has been long,long overdue that Parliament has taken a proper lookat it. I have urged for years that there should havebeen an inquiry of this sort and I am very pleased thatyou have decided to have one.

Q2 Ms Bagshawe: Thank you very much. That leadsme neatly on to my follow-up question. If we think ofthe structure of English football as a pyramid, fromthe Premier League down to League One, LeagueTwo, Conference, semi-professional football, hasoverall the introduction of the Premier League, wouldyou say, strengthened or weakened the Englishfootball pyramid as a whole? Mr Hamil, what doyou think?Sean Hamil: I think any high-level competitiveleague where people want to watch it is a good thing,so I don’t think the Premier League is a bad thing. Itwould show a lack of focus on the part of theCommittee if the way that it proceeded was that thereis a problem with the Premier League. I don’t thinkthat is the problem. The issue, as you allude to, is therelationship between the Premier League and the restof football.It is well recognised in all sports models that there isa pyramid, because the grassroots provide the players,even in an international marketplace, but they alsoprovide the fans and the whole participation culturecreates the interest. It is well recognised that thereshould be solidarity from the top to the bottom. Thecritical 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 betweenthe Premier League and the grassroots, either throughthe Football Foundation, through payments down tonon-league football or through partnership with theFA. But the Premier League itself is not the problem.The problem is that the relationship has got out ofkilter, and you can see that, as Patrick alluded to, mostobviously on the board of the FA where, instead ofhaving a unitary board that tries to serve the interestof the wider game, you have two sectional interestswho are not quite sure how to relate to each other.Professor Szymanski: I agree with Sean about this notbeing just about the Premier League. One thing youneed to take into account is the context of Englishfootball around the time the Premier League wasformed. The history here is that in the post-war era,up until 1985, attendances were continuously indecline at English football. We all know the history ofwhat the problems were in English football: neglectof investment, poor facilities, poor crowd control,hooliganism, a sense of danger and it not being a safeplace to be.If you look in my written submission, I show a chartof the actual movement of attendance in Englishfootball; that reverses in 1985 and since 1985 it hasgone continuously in the opposite direction. In termsof people going to football, we have just got back towhere we were in 1960, and one of the things thisCommittee should think about is what brought aboutthose changes. Why has English football become somuch more popular? The Premier League is part ofthat in the sense that the Premier League wasmotivated by the advent of satellite broadcasting,which was again motivated by partly or largely byderegulation of broadcasting in Europe, which createdcompetition to own broadcast rights, which createdcompetition to be able to show things like Englishfootball. That competition bid up the value of therights, which brought money into the game and thatmoney has been used to buy players and make thegame more attractive. That is that part of the story.Of course another part, as Sean would probably drawyour attention to, is the improvement in footballstadiums, which was motivated partly out ofGovernment intervention following the Hillsboroughtragedy and the Taylor report that followed on fromthat. But I would also point to another big change,which was an internal change that happened inEnglish football in the early 1980s, which was thatfollowing the recession of 1980–81, the FootballLeague authorities looked at football again and saidthat one of the problems in English football was thatit was not commercial enough. You could not paydirectors, you could not pay dividends and,essentially, the Football League’s own investigationconcluded that it needed to adopt a more commercialapproach. That is what, I think, underlies all thechanges that have gone on in the last 20 or 30 years.Football has become more commercial. Of course thishas caused a lot of outrage because ticket prices havegone up, and there is new merchandising and newways of selling football. Certainly people of mygeneration or older look back and say, “Oh well,things must have been better in the past.”

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But in reality you have to look at the level of nationaland 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 thatyou might focus on, but the overall backgroundpicture should be one of this is one of Britain’s mostsuccessful export industries right now and, before youthink about interventions that the Government mightmake or the state might introduce, you should askyourself, “Could we jeopardise any of that success andpopularity in the future?”

Q3 Ms Bagshawe: Mr Collins, have you anything toadd, particularly in relation to how the PremierLeague affects the other strata of English football?Patrick Collins: I think, and it is going way, way backto roughly the time Stefan was talking about, somepeople have a certain yearning for the kind of equalitywhich prevailed before 1983, when each club tooktheir home gates and paid the away team 20% of thatgate. The result was a rough equality among the 92clubs. In fact, going right back to 1965, the firsttelevision contract for the season was £5,000 whenthe 92 clubs received around £50 each. I would notrecommend that, but after that in 1985 when it startedto change—the first division took 50% of the revenuefrom television, the second division 25% and the thirdand fourth 25% each—it produced a game that I agreehad many of the problems that Stefan spoke about butit was also an age in which clubs succeeded by virtueof their ability. Derby won a league title andNottingham Forest won two European cups, notbecause they were richer than the rest but becausethey found a manager who was better than the rest.The game seemed to be then centred on sport ratherthan money.It is absolutely inconceivable that you could have aDerby or a Nottingham Forest, totally inconceivable.They couldn’t approach the feats that they did. I findsome regret in the way that the Premier League cameand corralled the huge percentage of the money andmade a much more unequal game. So you now havepeople coming into the game with huge spendingpower, you have a sheikh here, another guy up there,who can determine the course of the season by thepower of their purchasing. Sport lost a great dealwhen it lost the kind of equality that used to prevail.

Q4 Mr Sanders: As we are going to be dealing withsupporters trusts in this inquiry, I have to declare I ama member of the Torquay United Supporters Trust.That leads me nicely to my question: is there sufficientredistribution of income down the pyramid to sustainfootball’s structure in the longer term?Professor Szymanski: That is a very good question. Iguess again it comes down to what one would meanby “sufficient” in this context. In a sense, you don’tneed any money to trickle down the pyramid in orderfor there to be people interested in playing footballand people to want to play. For example, if you cutoff all solidarity mechanisms now from the PremierLeague to the lower levels, the lower levels would allcontinue, people would still go to watch. If you wentto a school and asked how many kids would like toplay Premier League football, if you cut off all the

solidarity mechanisms, that number of kids would notgo down. Ultimately, football is a game played bypeople and the key incentive is, “Do you want to playthis game?” and that is not going to change, regardlessof the solidarity mechanisms.That does not mean to say there is no justification formoney trickling down, and it is perfectly reasonableto say that money should come from the top levels inorder to help provide facilities and provide investmentand maybe improve the quality of the game. That isno doubt true, but again one of the things we shouldperhaps ask ourselves is: where do we want ourfootballers to come from? A lot of people are veryconcerned that there are not enough young footballerscoming from this country and too many footballerscoming from abroad. In other words, Premier Leaguemoney is being used to track down talent globallyrather than nationally. Is that a bad thing? Should wethink that it is more important that we have moreEnglish footballers or more Welsh or Scottishfootballers, rather than having more Africanfootballers? We have not had any major stars in thePremier League from India, for example, but no doubtthat will come at some point, and more Chineseplayers and so on. Is it bad that they spend theirmoney on that?In a sense, when you talk about the trickle down andis there enough money being redistributed, ultimatelyall the money that gets spent in football goes onfootballers in one way or another, and the teams at thetop are looking to find the best players that they can.I do not see any particular reason to say that there isnot enough money currently going down to thelower levels.Sean Hamil: Your question brings us back to theproblem of loss-making. On the current system, thereis a famous academic paper by Peter Sloane that sayswhat sports club owners do is they maximise utilitynot profit. They want sporting success, therefore theyalways overspend. Alan Sugar used the rather crudeexpression “the prune juice effect” about Tottenham:money goes in one end and out the other end toplayers.What happens in that scenario is that unless you areable to deal with this fundamental challenge abouthow you can stop clubs spending more than they earnon salaries, you will always have chronic financialinstability. To go back to the trust example, I was anelected director of Supporters Direct. It is well knownI am a passionate supporter and continue to be, butone of the problems we faced at Supporters Direct,post-ITV Digital, was that 17 clubs went intoadministration because of a collapsed TV deal. At onepoint I think there were seven league clubs in fanownership, basically because there was an investorstrike, because no one would buy a league club in thatbrief period of 18 months, so it was like a financialaccident and emergency. The volunteers took over,they cleaned up the balance sheets through voluntarylabour, fans’ investment, and at the end of the periodwhen the situation stabilised of course the fans said,“We can’t compete because our rivals have got a sugardaddy.”. So what happened? They were reluctantlyforced to sell back to private owners. In other words,financial virtue did not have its own reward.




That is why the principles of UEFA financial fair playare absolutely critical. The fact they happen to comefrom Europe is neither here nor there. They shouldbe applied in every league in Europe independentlybecause what happens is that if you are overspendingon players you are not spending on disabled facilitiesfor local fans, you are not spending money on thatfamily facility, you are not spending money on thatoutreach into the community. Stefan, who is one ofthe most pre-eminent sports economists in Britain,throughout Europe, has written extensively about thiswhole business of somebody has to pay somewherealong the line.

Q5 Mr Sanders: Where do you regulate and whoregulates?Sean Hamil: It is absolutely clear who shouldregulate. The regulators should be the footballauthorities but the Government has a role in nudgingthem in the right direction. If you take the Taylorreport, 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.” Ithink we’re at a similar turning point.From 1992, four factors came together to create aperfect storm for football. First of all, stadia werebeing modernised with a 25% subsidy over 1992 to1997 from a levy on the pools betting duty. Englishteams had just re-entered European football in 1990.The pay TV revolution had just started, and we hadjust started 15 years of uninterrupted economic growththrough to 2007 and, as we all know, as growth rises,a disproportionate amount is spent on leisure. Thatended in 2007. We are in a paradigm shift now and itis important that the football authorities focus on that.Things have changed. European money is now anecessity not a bonus. The TV money domesticallyhas plateaued. They have to pay for their own stadiamoney now and we are in a financial downturn. Thatis an appropriate time for reflection. But to come backto your fundamental point, something has to be doneabout loss making because loss making basicallymeans spending everything you have on players andnot building the club as a viable institution, which notonly benefits its shareholders but also the widercommunity.

Q6 Mr Sanders: You mentioned the footballauthorities. A lot of people give that answer, “Thefootball authorities should do something”. Who arethe football authorities?Sean Hamil: The FA should be the lead body becausethe FA is the governing body of football, and on theboard of the FA are representatives of the FootballLeague and the Premier League. When people attackthe FA, they are actually attacking the Premier Leagueand the Football League as well. It is the governingbody. If you read the submissions from the PremierLeague, they acknowledge the relationship and so on.There is no need to reinvent the wheel. What isnecessary is to recalibrate the relationship between thetwo leagues and the FA and, in my opinion, to allowthe FA to get on with its historic role of governing thegame in the wider interest. The job of the leagues is torun two successful leagues. It is not to govern football.

Q7 Mr Sanders: Can I come back to my originalquestion about the pyramid? The pyramid is not justabout an agreement of income going down; in the pasta lot of transfer money also went down the pyramidthat now tends to go overseas. Would Patrick want tosay something on that? There also used to be moreredistribution within by sharing of gate receipts,which went out of the window, which clearly benefitsthe bigger club against the smaller club.Patrick Collins: The transfer money point you makeis very relevant. In the last transfer window, I believe Iam right in saying that the leagues outside the PremierLeague benefited by about £12 million, which isobviously peanuts given that about £200 million wasspent. So this doesn’t happen. We hear about thistrickle-down effect. One of the great dangers of theso-called trickle-down effect is that when a monstrousfee is paid, for instance like the one that has just beenpaid for Fernando Torres, it sets the bar at a differentlevel. 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 thatgo with it, the salary even more so than the fee. I donot know what Chelsea are paying Torres but it wouldbe enormous. The next agent will know what Torresis being paid and he will negotiate on that basis. Theidea of this wonderful pot of money going down anddoing good all over the place seems to me to be amisnomer.I take Stefan’s point that the Premier League hasfulfilled many of its aims and ambitions, but I remindyou that one of the central reasons it was brought intobeing, one of the reasons under Graham Kelly, who Ibelieve is speaking to you later, under the blueprintfor football he devised, which effectively brought thePremier League into existence, was that the PremierLeague would make for a successful England team:because of the extra time players would have toprepare because of fewer games and so on, we wouldhave a successful England side. As we all well know,every two years we have inquests and eruptions whenfirst England fails at the World Cup and then it goesout at the European Championships. The PremierLeague does a good job of preparing the world’splayers to perform at major tournaments, but sincethere are fewer and fewer English players playing inthe 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 tostay in football. Can I therefore ask you about the roleof football agents, because from where I am sittingthe agents take money out of the game. That moneydoesn’t go back into the game; that money goes outof the game. There is a self-interest in agents movingplayers around clubs in order that they get theircommissions fee and so on. Given the fact that thereis only one source of income for football, and that isthe paying fan who buys the merchandise, thetelevisions, the tickets, they’re the only people thatput the money into football, is there an argument toregulate agents so that they do not move players orencourage players to move around clubs and get theseextortionate, ridiculous sums of money? That is




money that is leaving football; it doesn’t come backin again.Professor Szymanski: Before answering that, can Ijust briefly go back to a point that you were raising.Your comment about the trickle-down effect is, Ithink, completely wrong. If you go back historically,there never has been a trickle-down effect. If you goback to the very first Government report, theDepartment of Education and Science’s report in 1968by Sir Norman Chester, it showed that, in fact, teamsin the third and fourth divisions were paying netmoney to the top division. The trickle-down effect isa myth and that is part of the problem with the wholeapproach when people talk about it. They do not basethe arguments on researched facts. I am sorry, that isnot a particular criticism of you, but in general thereis a reluctance to look at the data about what we knowand more interest in talking about emotions.To come to your question now, from the day thatagents came into the game, it was clear that the clubsand the football authorities hated them and would liketo get rid of them. Why is that? It is because footballagents drive up the wages of their clients, and ofcourse they have been unbelievably successful in thelast 20 or 30 years in doing that, so you will get a lotof calls for regulation of football agents because ofthe damage that they allegedly do. If you think aboutthe situation we had before we had football agents, wehad the retain and transfer system in football, whicheffectively tied players to the clubs for their lifetime.Up until 1960, we had a maximum wage rule thatsaid that players could only be paid up to £20 a weekmaximum. Effectively, all the money that came intofootball was kept within the clubs, within theorganisations that run the clubs, and the players gotnothing.There are two points one could make about that. Onecould make an ethical case and say, “Is it fair that thepeople who create the performance on the pitch get atiny fraction of what is paid?” We could argue aboutthe ethics of that. Most of these people would play fornothing. Any of us would love the chance to play atthe top level and so maybe they do not need to bepaid that money. But the other question to ask is, whenthe money did stay with the clubs and theorganisations that ran football, was it well used? Wasit invested for the future? Was it invested indeveloping the game? Arguably, that coincides withthe period of dramatic decline in English football. Itis so easy now, 25 years on, to forget the scale ofthe crisis in English football that was continuing andpersistent over a quarter of a century. The game reallywas on its knees. Allegedly, Margaret Thatcher talkedabout shutting down football in this country. It isunimaginable.

Q9 Jim Sheridan: Football has changed in 25 years.We have come a long way in 25 years. I am notsuggesting for a minute that the clubs keep the moneyand do not pay the players appropriately, but thebottom line is it is the supporters that are paying £50million for players. That is supporters’ money.Professor Szymanski: Absolutely, but the supporterswillingly part with the money because they go towatch the football and they watch the football.

Nobody is forced to go to watch football. Again, ifyou are talking about any high-quality product, peoplepay a high price to get that high-quality product. Wewould not be having a committee here about any otherhigh-quality service that is being provided. Wewouldn’t be talking about Gucci shoes or luxury carsand saying, “People are paying large sums of moneyfor this. Why is that money not being used for theright purposes?” The point about this is that the agentsnegotiate on behalf of their players to get them areward for their services. This is true not just here inEnglish football, it is true worldwide. If you look atthe United States, for example, very much the samesituation prevailed up until the 1960s: the players gotnothing and the teams took all the money. Thenplayers got freedom of contract, agents came into thegame, and the players’ wages went up dramatically.The clubs told everybody and you can look atcongressional hearings where the clubs and thefranchises all say, “Oh, you’re destroying our gameand it’s ruining the game” but the fact is that there,again, attendance has grown, people have becomemore interested and the coverage has increased.Regardless of the ethical question, in terms of does itdamage the health of the game, I think not. Partly thereason is that the agents have the incentive to go andfind new players. What they have done is the qualityof football has gone up, I would argue, because therehas been this persistent search globally to find the bestpossible players.Patrick Collins: I butt in because you do not oftenhear defences of agents. I think they are a scar and astain on the game. The money the agents have takenout—we cannot be sure because all the figures are notavailable. Everyone has terrible stories about footballagents because so many regard them, not as Stefanseems to, but as leeches and parasites. There was one12-month spell around 2009 when Premier Leagueclubs paid them a total of £70.7 million. That ismoney the game will never see again, and for what?It is money that is just lost to the game and I thinkthat is quite scandalous.A couple of examples. When Wayne Bridge movedfrom Chelsea to Manchester City, the agent, PiniZahavi, was paid £900,000. Now, Bridge wanted togo to Manchester City, Chelsea wanted to sell himand City wanted to buy him. Both clubs had chiefexecutives who could have picked up a telephone anddone the deal in about five minutes, I would guess,yet Zahavi took £900,000 from this deal and nobodythought that was appalling. Years ago, in 2004,Manchester United paid an agent named Rodger Linse£1.3 million for renegotiating the contract of Ruudvan Nistelrooy—not negotiating a contract butrenegotiating it, and he got £1.3 million for it. Yetthere is something called the Association of FootballAgents whose chairman is somebody called MelStein, and he wants them to have a seat on the FACouncil, because he says, and I quote, “Agentsperform a valuable role and should be acknowledgedas stakeholders in the game.” Those arguments, at themoment, go unchallenged by the football authorities.We need people there who will take on this nonsenseand we do not have them at the moment.




Sean Hamil: May I just make a very briefobservation? The thing about agents is that it islegitimate. I have done a bit of active trade unionismmyself. It is legitimate that you have a representative,but the problem with agents is that there has been somany abusers taking money from both sides and soon, but there is also potential for corruption. At theheart of the Calciopoli scandal in Italy in 2006, agentshad players who they effectively controlled on bothsides in a game. The role of agents in sport is muchmore complex than it is say, for example, in movies,and for a whole lot of different reasons it needs to bevery aggressively regulated.

Q10 David Cairns: It struck me in reflecting on whathas just been said that there is a connection, which isthat when all this money goes on wage inflation andto agents, it is the people who make Gucci handbagsand Lamborghinis who benefit from this. Maybe weshould get them in as part of it.We are going to talk about debt financing andleveraged buyouts later, but just a couple of specificquestions before we do. Picking up Adrian’s pointabout redistribution, although this is an inquiryprimarily focusing on England, there are clearlyimplications for Scotland and Wales and all the restof it in terms of fit and proper persons, leveragedbuyouts and foreign ownership, so we will bear thatin mind. One of the things that rankles in Scotland isthat the clubs that get relegated from the premiershipget 30 times more money than the team that wins theSPL. Isn’t this parachute payment—it is a form ofredistribution and I understand the logic of it—just abig fat reward for failure? You come last, so you getextra money for it. It is a Fred Goodwin model ofrewarding people. Worse than that, doesn’t it importinto the championship wage inflation that wouldotherwise not be there, because of this grotesquedistortion?Professor Szymanski: The point you make aboutrewarding failure is a very important one, because theCommittee will think a little about the Americanmodel and why something like the NFL—we just hadthe Superbowl—is so incredibly successful. One ofthe points people make about that is that it is a systemthat rewards failure as well. The traditional footballmodel we have in Britain, Europe and most of theworld is a model that punishes failure throughrelegation, and that is one of the things that drivesthe clubs to live financially on the edge. They livefinancially on the edge in order to avoid relegation andto get promoted up the system, so we have a hyper-competitive system. This is true not just of thiscountry; it is true everywhere in football. It has alwaysbeen true, because of the nature of the incentivesystem.The NFL is the most profitable football sports leaguein the world by a country mile. The 32 owners areincredibly wealthy and they get incredibly wealthy outof American football, and they do this by being, asthey describe themselves, 32 socialists who voteRepublican, because what they do is they shareeverything in common: 40% of the gate money goesto the visiting team. They share all the broadcastingmoney absolutely equally, they share all the

merchandising income equally. Imagine ManchesterUnited sharing its shirt income with Stoke. That iswhat goes on in the NFL: every team shares equally.They also have a salary cap, which limits the amountthat they can pay players, and they have a draftsystem, which rewards the worst performing teamwith the first pick in the draft, which in addition givesthem exclusive negotiating rights, which helps to keepthe wages down. They have designed a system thatkeeps wages down.

Q11 David Cairns: What is the salary cap?Professor Szymanski: I cannot remember the latest. Ithas changed. They are just about to have a big strikeprobably because the collective bargainingagreement—they have a union and an unionised—David Cairns: It is socialism then.Professor Szymanski: It is socialism. Again, inAmerica all the players are represented by strongunions. The old agreement I think was 58% ofrevenues. I think it was 58% but I would have tocheck the figure.But they have these arrangements, which mean thatthings are held in common. One interpretation of theparachute payments, to come to your question, is thatin fact the Premier League is setting about doing thesame thing. One implication of the parachutepayments is that teams that benefit from thesepayments are very likely to get promoted again. Theyhave just extended the parachute payments, so in otherwords they are reducing the size of the club that canparticipate in the Premier League.One way of thinking about what they wouldultimately like to do to run it, to be successful and toavoid all the financial problems that they have, is tobecome a closed league like the NFL, get rid ofpromotion and relegation entirely. In many ways,when you think about the mechanisms that you mightthink about to bring financial security to the PremierLeague, you might be helping to move it towards anNFL style organisation in the future. I think that issomething you should bear in mind in yourdiscussions.Patrick Collins: I would agree with Stefan’s analysis,though perhaps I would not share his sympathies. Oneof the principal reasons for sport is winning andlosing. You win, you succeed; you lose, you suffer theconsequences. 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 tobring in this idea of no relegation, keep the wholething, so you won’t have to worry about losing vastsums when you go down. It was a rather subtle wayof doing it. In order to bring this about, the parachutepayments, which I think are a really important subjectwith regard to this inquiry, have now grown toenormous size. They are £18 million for the first twoyears and more over the next two. This seems a lotanyway, but when you realise that, from televisionalone, every old-time second division club gets £1million whereas every Premier League club gets £45million, the gap is horrendous. The parachutepayments involve going down with £18 million inyour pocket when everyone else has got £1 million




and so the likelihood is, as Stefan says, they will comestraight back.The idea of at least a two-division Premier League isstill lurking there. In that sense, again it is what I wassaying earlier, the whole thing has become who canwave the biggest cheque, and I don’t think sportshould be like that. It should be more than a battlebetween billionaires, and the public rightly expectsmore of it than that, but that is the way it is going atthe moment.Sean Hamil: Stefan is correct when he says that anobvious solution to the loss-making is to have a closedleague and the increase in the parachute paymentlooks very like a de facto attempt at that. But you candeal with that within the European system ofpromotion and relegation, and the way you deal withit is to say through some version of financial fair playit is written into your membership of the league thatif you get relegated you have to renegotiate yoursalaries. I am not a fan of the football creditors rule,I don’t think it is sustainable in the currentenvironment, but the leagues have enormous powerbecause they control ownership. If you want to playin the league, you have to get the league’s permission,and if the league is really serious, it can say whenyou get relegated, particularly if you have the financialprinciple that you cannot spend more than you earn,then written into every player contract is renegotiationof salaries. It can be done. There has to be radicalthinking about this. The key thing about sport is thatit is a joint product. The reason why the Republicansvote socialist is because they recognise the peculiarcharacteristics of sport. Even the children in theschoolyard know “I pick one, you pick one” if youwant to have a competitive product. Only in sport doyou want a strong competitor, and it is not for anypolitical, ideological reasons that you need to regulate.You need to regulate because of the peculiar nature ofsports competitions, and this particular conundrum isjust one more example.You just need to be a little bit imaginative. We can stillhave all the good things of promotion and relegation.Hopefully AFC Wimbledon are going to embody thatby getting back in the Premier League soon fromstarting again in 2002. The problem with a closedleague is you get rid of that romance and that magic,which is at the heart of the economic power ofEnglish football.I just want to add one thing. Salomon Brothers in1997 brought out a report on how you value a footballclub. It was a very insightful piece of work by a groupof hard-headed analysts. They said fans’ emotionalattachment to their clubs—fan equity—you can put aneconomic value on it, because they won’t substitute.You know if you get relegated and you’re LeedsUnited you will still have 28,000 supporters and youcan borrow against that. They did borrow against thatand it was a disaster, but that is not the point. Thepoint is that you can put economic values on thesefactors. They understood the peculiar nature of fans’relationships, and because they were clever andimaginative, they were able to define it in financialterms. That is the challenge here. Let us try tounderstand the peculiar nature of this industry and tocome up with regulatory measures, like the

renegotiation of players’ salaries when you getrelegated, which are a moderate response to thatproblem, unlike the radical response that would be aclosed league.

Q12 David Cairns: As a Merton councillor at thetime that the local community was stabbed in the backby Wimbledon FC, I entirely agree with you aboutAFC Wimbledon.May I change the subject and ask a question aboutsupporters who are, after all, at the heart of all this?At the risk of coming over all jumpers for goalposts, Iremember as a boy hanging around outside Cappielowasking random strangers for a punt over the turnstiles.Obviously that does not happen any more and I do notencourage children to ask random adults for that, butis there any cause for concern that according to theDaily Mirror, an outstanding organ, the average ageof a Premier League football fan is 43? Speaking as a44-year-old, that is still young, but it cannot be goodthat the average age of a football fan is 43. Thecorollary of that as well is, maybe not outside Londonbut certainly inside London, it is becomingincreasingly a middle-aged middle-class pastime, andour future players are not coming from the ranks ofthe middle-aged middle-classes. It may be sustainableat the minute but long term is there not a problem ifyou get an ageing middle-class fan base?Sean Hamil: Yes, there would be.Professor Szymanski: I think you will get the patternhere. No, it is not a problem: think of the PremierLeague as a luxury car. Who has luxury cars?Typically, middle-aged wealthy men, no kids. ArePorsche saying, “Crikey, the average age of ourowners is 43. Have we got a long-term problem thatpeople won’t buy our cars?” Of course they are not,because people know that that is something you onlyget to have if you have a high enough income. If youcannot afford a Porsche—I cannot afford a Porsche—you go down the ranks. We have tiers of football aswell that people can go to. It is noticeable that, whilethe Premier League’s attendance has grown by only70% in the last 25 years, against a background whenprices have increased more than seven or eightfold inreal terms. What has happened in the Championshipis attendance there has risen by 180%. That is partlybecause prices have not risen by so much. Back in1985, you could go to a Premier League game or a topdivision game for £2.80, that was the average price ofa ticket, which in today’s money is about £6.60.Imagine if that was still the price today. The stadiumswould have lines outside of them going for milesround the corner because you just could not fit all thepeople who would want to go and watch. It is sopopular. Of course that overflow has gone down intothe lower leagues and it reflects the overall popularityof the game. You might say, “Is it terrible that it hasbecome gentrified?”

Q13 Mr Sanders: It is interesting that overflow hasgone into the lower league. The fact is the lowerleague attendances are lower today than they werebefore the Premier League, if you go back 30 or 40years.




Professor Szymanski: No, no. That is completelywrong.Mr Sanders: My club’s attendances are significantlyless than 40 years ago.Chair: Adrian, we are going to have to move on, weare very short of time.

Q14 David Cairns: I understand that as a model. Ido not accept it; I understand it. If I can’t afford aLamborghini, I buy a Ford Sierra, fine. If I’m a youngkind growing up in Tottenham and I can’t afford toget into White Hart Lane, I am not going to go toTorquay to get into it, so I think, the analogy is faulty.But the question isn’t about whether or not it worksas a business model today but whether there are anyimplications for the long-term health of the game ifyoung working-class kids are not getting access intothe grounds to see these things and inspire them?Maybe this is tied up to our inability as Scotland andEngland to produce decent players that can wintournaments.Patrick Collins: I think it absolutely is. I think toothat Premier League clubs recognise this increasingproblem. At the moment, the Premier League chargesthe most for tickets in all of Europe; it is the dearestticket in Europe. The average price is difficult but inLondon it is perhaps between £40 and £50. There arefamily deals and concessions until the age of 16 andthen comes the gap. It used to be one of the rites ofpassage that you went to football on your own, usuallywhen you were younger than 16, but certainly from16 you went on your own. Now they cannot afford itbecause they have to pay full price and they cannotdo it. So between the age of, say, 16 and 30 they arepriced out of the game. They still watch football, theygo down to the pub and watch it on television. Theywatch the Sky broadcasts in the pub. Those are thepeople who are most likely to be lost to the gamebecause you then take the risk that after all these yearsof watching football relatively cheaply down the pub,they are going to go off and buy a season ticket atHighbury or somewhere and it probably won’thappen. It is a real cause for concern that one.

Q15 Alan Keen: I want to give you the chance totalk about debt, but first can I ask you a very basicquestion. Who are we doing this inquiry for? When Isay “we”, I mean everybody. All the people here havea great interest in football. I was brought up in a non-political family. The first time I was offended bysomething, which I didn’t know was political untilyears later, was when I went to buy tickets at the oldAyresome Park, Middlesbrough’s ground, came backand asked my mother why it said MiddlesbroughFootball and Athletic Company Limited on the doors.I was shocked to find that there were shareholders. Ithought I owned it in the same way as I owned therecreation ground equally. I mention it because of thecurrent debate. The other thing that offended mearound about the same time was finding that ImperialChemical Industries, that saved Teessideeconomically, owned the Cleveland hills at thebeginning of the Yorkshire moors and that offendedme, and it is particularly pertinent with the forestrydebate that is going on.

Are we doing this because we care about the footballsupporters? If they are offended, of course it willaffect the money people afterwards, and you have justbeen touching on that. Why are we doing the inquiry?What do you think we should be recommending atthe end?Sean Hamil: You are doing it because football is notjust a business but it is a very significant nationalcultural institution. I absolutely acknowledge thetremendous success of the Premier League and theFootball League, and Stefan is right about this.Crowds are up significantly and that is down to goodmanagement, good marketing and improved stadiums,and a lot of private investment as well as publicinvestment, but it is obvious that there are problems.I make no bones about it: I do not think that you canleave everything to the market because you end upwith negative equity and a lot of other nasty,unpleasant things. There is a role for Governmentintervention. Always remember that the Taylor reportwas the catalyst for the reform of English football.There is disquiet at the moment about what ishappening on a number of fronts. People are notrejecting the genuine successes. I think it is legitimatethat the elected representatives of the people shouldtake an interest in a subject that is close to people’shearts.Professor Szymanski: I have a very specific answer,which again is in my written evidence, but I think youshould be guided by the Treasury Green Book whenyou think about this, which recommends the basis onwhich there is action justifying public intervention. Ithas to be either some kind of market failure, andspecific types of market failure are listed in the GreenBook, or some need to redistribute income becausefor some social basis it is not justified. My paperexplains that there is not a market failure that I cansee very obviously, and it does not fit the normalcharacteristics. If you argue there is an incomeredistribution element, I come back to my luxury carspoint. There is an income redistribution point in thesame way that poor people do not have access toluxury cars.Patrick Collins: I think you are doing it because itmatters. These things matter because football is thegame that the nation plays and it is the game that thenation loves. As we have already said, it holds a placein the history and in the affection of the country. Youcan see it when the World Cup comes around and forsome people football is an expression of thenationhood in a sense, and the disappointment isalways crushing when it happens. The game has lotsof things going for it: a large passionate fan base,wonderful stadia, wonderful players. People know thatand it is frustrating because we know we can do better.I heard the Minister for Sport talking about footballbeing the worst run sport in the country, and it mightwell be. I do not know how he measures that. That isnot good enough. If overnight the television moneydried up—the Murdoch money dried up and Skywalked away—and all we had done in that time wascreate a lot of wealthy young men and rich agents anda few very wealthy directors, it would not only be asporting tragedy but something of a national tragedy.




Q16 Alan Keen: On the debt, because we are shortof time, I will restrict it to one question. The fair playrules meaning that clubs will not be able to competein UEFA competitions from 2013, what effect willthat have? Will that solve the debt problem? In a wayit has got to, the clubs have got to solve that problem.But we would love to hear what you have to sayabout it.Sean Hamil: We will not know until it isimplemented, but my view is that, for all the reasonsI have outlined, I just do not believe that you can runan industry long term loss-making without problems.I think that UEFA, for its own reasons, has realisedthat. The European Club Association, whichrepresents the major clubs in Europe, supports them100%. The proof of the pudding is will it be able toforce it through. If it is able to do it, if it is able toestablish the basic principle that you should not beable to spend more than you earn and that money onyouth development, stadia development is exempted,then everybody will benefit because what will happenis the Delia Smiths and the Sir John Madejskis of theworld will say, “I don’t have to sell” and you will geta step change in the quality of the owner, and thingswill improve.The problem at the moment is that there are too manypeople with an unhealthy appetite for financial risk. Iam sorry to keep emphasising this point, but sooneror later that ends in tears. The Portsmouth example,they said there would never be an administration inthe Premier League. Well, there it is, read it. It is a sadread. What went on at Manchester City with ThaksinShinawatra was absolute skin of the teeth escape froma 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 bedisadvantaged because everybody in Europe, if it isimplemented correctly, will be subject to the samerules. What is necessary is for the English footballauthorities to now engage in active partnership withUEFA. I am not saying they are not active partners atthe moment but just that maybe they could be moreactive partners, because what English football has tosay is important for the future of European football.Patrick Collins: I very much agree with that. It isrisking everything to speak about debt with twoeconomists here, but we are constantly told that debtis no bad thing, that everybody has debt, thatsustainability is the thing. Then we see ManchesterUnited, a club that never owed a penny, suddenlysaddled with £750 million worth of debt andLiverpool, run by the much loved Hicks and Gillett,amassing debts of £351 million. Those areextraordinary figures and the public thinks that iswrong, and I think the public are right to think that.But there was one thing I noticed. One of your nextwitnesses, Lord Triesman, in 2008 said, and I quote,“I don’t think anybody who is rational can lookaround this environment we are in and think they areimmune. Football is obviously carrying a pretty largevolume of debt. People will be making businessjudgements about whether it is sustainable or not butit is carrying quite a large volume of debt. We nowhave 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 whoare financially secure or not.” Triesman was roundlycondemned for that but I think he had it absolutelyright and I think he is still right.

Q17 Paul Farrelly: The St John Ambulance situationwas mentioned earlier by Sean. If I am running abusiness that is going bust and I do a special dealwith some creditors, that is illegal because it is calledpreferential treatment. If I am a new owner of anyusual business, I do not pay off the previous creditorsunless it is worth my while, yet in football I am forcedto do so, setting up a post facto preferential treatmentof particular creditors. Is that wrong and should it bemade illegal?Sean Hamil: There is an argument in sport, becauseof its peculiar economics, for special arrangements.You could have made an argument for the footballcreditors rule in the past by saying that there is a needto protect clubs who manage their businessesreasonably effectively from the odd exceptionalreckless behaviour. But the trouble is the recklessnessnow is absolutely endemic and therefore a directanswer to your question: I personally do not believethe football creditors rule is sustainable. I think thefootball authorities, all three of them, have sort ofrecognised that in their more assertive approach todemanding that their clubs demonstrate they arepaying their tax debt they are sort of halfway there. Itis in their own interests to drop it now. Who knowswhat is going to happen with the court case. The pointabout the football creditors rule is that it is totemic,because what they are basically saying is, “If you’rein the club we are going to look after you. If you’reoutside the club…” I don’t think it’s sustainable.Professor Szymanski: For once, I completely agree. Ithink it is a crazy rule and it should be eliminated.Once you start to treat football as a special case, onceyou start to say, “Oh well, it has got this specialsignificance in our society”, that is when you go downthis route of having crazy rules that do not work. Thesame thing is going to happen with financial fair play.It is 80 pages long at the moment. In five years, it willbe 800 pages long. The lawyers are going to crawlover it and money, a lot more money, won’t be goingto agents, it will be going to lawyers, but once youstart to regulate these things, it mushrooms and youget into inconsistencies and regrettable situations.Patrick Collins: I agree totally with my colleagueshere. It is very difficult to make the case for being aforce for good in society when you attempt to enforcesuch an antisocial rule. The idea that football mustlook after itself first and that everything else comes ina distant second is offensive.

Q18 Paul Farrelly: There is a bigger question on thefinancial fair play rules, which have been welcomed,as to whether they will bite, because they seem to meto be terribly open-ended and subjective at the end ofthe day. That is something for the future to resolve.But currently, for good or ill, across all sectors ofbusiness, leveraged buyouts happen. As long as theyare conducted legally, it is very hard to stop them, butthey certainly make business more risky. Is it timefor the football authorities to act and put in greater




disincentives? In particular, is the nine pointsdeduction rule sufficiently strict or should clubs thatgo bust be made to start right at the bottom again?Professor Szymanski: I do not think that leverage hasa huge amount to do with the reason that clubs gobust. The fundamental reason is ambition, theambition to be successful or the desire to avoidrelegation. It is inherent within the system that clubswill take every risk available to them. It is perfectlyreasonable to say the football authorities can invokerules and regulations, and probably quite sensible ifthey do, to try and limit some of those financial risks,and maybe this Committee can encourage them todevelop those rules. But right now, of all the 53administrations that Sean referred to, where are thevictims? Okay, the teams get relegated and the fansare disappointed. Are the fans disappointed that theclub lost money and went into financial administrationor are they just upset that the club got relegated? Ithink it is the latter. I do not think anybody, apart fromthe owners, cares about the money. What is importantis the level at which the team plays. But the pointabout that is nobody wants to abolish promotion andrelegation. We want teams to fail. In other words, youcould get rid of all the financial problems of debt andso forth, and the fans are not going to be any happieron average because they will still be losing out whentheir team gets relegated.Sean Hamil: In 1999, in answer to the minority reportof the Football Task Force, the football authoritiessaid, “We don’t need any regulation”. Post ITVDigital, they introduced points penalties because theyrecognised the insolvency process was being abused,notably by Leicester. Since that time, they haveproduced a whole series of reactive measures, whichfundamentally come back to this problem of financialinstability. They already know there is a problem withthe insolvency situation, otherwise we would not havethe points penalty. They already know all this. UEFAalready knows it, because it is a problem all overEurope. What UEFA has done—John Henry, theAmerican guy who bought Liverpool, acknowledgedit. He said that it has recognised there is a need foraction a little ahead of everybody else. What Henrysaid, one of the reasons he bought Liverpool was hethought that financial fair play might create anenvironment where at least he would not lose hismoney. I think the football authorities privatelyalready know that they are at a place now wheresomething 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 simpleproblem at the heart of all this, and the footballcreditors rule and all these other things are just thesame: it is the question of how you can get these clubsto at least break even, because ultimately debt-financed success is financial doping. That is what itis. It is an attempt to rig the competition by spendingmore money than you generate. Therefore it goesagainst the entire sporting ethic, never mind financialcommon sense.

Q19 Paul Farrelly: Patrick, should the penalties beharsher?

Patrick Collins: Do you know, I think it touches onthe fit and proper person test. If you had fit and properpeople running football clubs, there would be fewerbankruptcies and administrations. The one that isalways picked out is Portsmouth, of course. They hadfour different owners last year. This is one of the greatstories of modern football. One was a fantasist whomade lots of promises that were quite baseless.Another, much more intriguingly, it was reported, didnot actually exist. People doubted the existence of thisman. He was said to be a figment of somebody’simagination. I do not know how true that is, but thatis how bizarre things became and yet everybody wasdeemed fit and healthy according to the PremierLeague. I find that bizarre, and I think much flowsfrom that.

Q20 Paul Farrelly: One was the son of an armsdealer, as I recall.Patrick Collins: It is reported, yes.

Q21 Damian Collins: Following on from the fit andproper person test, should there be sanctions againstdirectors involved in a club that goes intoadministration? Without wishing to sort of pick onanyone in particular should, say, someone like PeterRidsdale have been banned from football?Sean Hamil: If you get a club into administrationtwice, you are banned now. I think one of the ex-directors of Rotherham was in that situation. That issomething for the football authorities to decide. Thereis a wider issue about who should own the clubs andtheir competence to mange, but the fit and properperson test is certainly something that should belooked at. I don’t think Thaksin Shinawatra was a fitand proper person. He obviously bought that club forpurely political reasons. He spent all the money off athree-year TV deal in the first year. Potentially, hecould have destabilised the whole competition. If theyhad gone bust halfway through the season when theycould not pay their wages what would have happened?A team in the Belgium league last year dropped outhalfway through and then there was 15 teams insteadof 16 teams. There is an issue of sporting integritythere as well.Professor Szymanski: You can impose all sorts ofregulations but you will not change the fact aboutowning these clubs—these are honey pots, these aresome of the most attractive assets in the world.Powerful people everywhere want to own them, andit is true in every country. Whatever regulations youimpose, that is going to continue to be true. If apowerful person cannot get ownership directly, theywill find proxies, or whatever way they can, to seizecontrol of these assets, and there is going to be hugecompetition. My view is that it is better to have opencompetition and be able to see what is going on ratherthan have some of the rather less transparent systems.I emphasise that we have one of the most transparentsystems of anywhere in the world. The finances ofEnglish football clubs are far more transparent, forexample, than the finances of German football clubs,which I know everybody admires as the great modelright now. I think that is crazy. Most of the Germanfootball club finances you cannot find anything out




about, going back five years. French football, that isadmired but it is not very transparent. The Americanshave very stable systems but no transparency, so youcannot see what is going on. So I think it is more todo with rather than putting on more and more testsand regulations, it is creating transparency so thatpeople know what is going on.

Q22 Damian Collins: We had a submission to theCommittee from a law firm that does quite a lot ofwork with football clubs and they touched on pointsto do with tax, which Sean mentioned at the beginningof the session. I wonder whether this makes it alegitimate area for Government to look at becausethere were financial consequences for the Treasury.They talked about the level of tight financing andindebtedness of clubs that they said: “Had led to apractice of using cash set aside for Revenue &Customs as working capital for the club. In any otherindustry this is an incredibly serious offence thattypically leads quickly to a winding-up petition andpersonal consequences for those involved.” What areyour comments on that?Sean Hamil:What can I say? They are right. It shouldnot have been allowed and it was allowed becausefootball has the power to emotionally—I need tochoose my words, but the non-payment of taxes as anunofficial overdraft was custom and practice and wastolerated within the industry, and HMRC didn’tchallenge it. Now, you could argue that it should havedone, but in reality football should never have allowedthat to come about because that was a sign of a club,or many clubs, out of their depth financially. It should


Witnesses: Lord Burns, Graham Kelly, former Chief Executive of the Football Association, andLord Triesman, former Chairman of the Football Association, gave evidence.

Chair: I welcome our second panel of witnesses thismorning, in particular Lord Burns who chaired the FAStructural Review in 2004, Graham Kelly, the formerSecretary of the Football League and Chief Executiveof the Football Association, and Lord Triesman, theformer Chairman of the FA.

Q24 Mr Sanders: Mr Kelly, is the Premier Leaguetoday the Premier League you envisaged duringnegotiations for its establishment?Graham Kelly: No, Mr Sanders, it is considerablydifferent. If you were to read the Blueprint for theFuture of Football you would struggle to reconcilethat with the animal that exists today in the form ofthe FA Premier League. I do not know if the coalitionthat runs the country at the moment is the coalitionthat emerged from the negotiations back in May butit seems it is rather different. The football that existedin the middle of the 1980s has already been referredto this morning. It was thundered during the middleof the 1980s by one eminent leader writer that footballis a slum sport played in slum stadiums followed byslum supporters and we had to break out from thatsituation.

never have been allowed and it is only in the last 18months that that problem has been got to grips withand only because HMRC has said enough is enough.You might want to look at the Leeds case three yearsago where there was a spectacular attempt to use theinsolvency process in a way that personally I do notthink was terribly edifying.

Q23 Damian Collins: From what you have said, itsounds like we could consider not necessarily specialrules and regulations and extra burdens for footballsclubs but simply applying some of the normalbusiness practices that everyone else has to work to?Professor Szymanski: Absolutely. The more we treatthese organisations as special cases, the moreexemptions and loopholes we are going to create forthem. So I would say, yes, as far as we can, acceptingthere is something special about the way sport isorganised, but as far as possible let us treat them asordinary business organisations to the extent that theyare businesses.Sean Hamil: A very clear area where sport is treateddifferently is in the collective selling of broadcastingrights. Anywhere else that would be an illegal cartelbut it is recognised by everybody now, after twoinquiries, that it is legitimate. There is a balance to bestruck between what is appropriate, the specificregulation for the sector, and where it goes too far. Ithink the tax payment, everybody can see that thatwas not acceptable.Chair: We have to move to our next session, but Ithank the three of you very much for your evidencethis morning.

After the Taylor report, the Government report intothe Hillsborough disaster of 1989, I commissioned theFA blueprint on the instructions of the FA executivecommittee. The FA executive committee was 12leading members of the FA Council; there were nodirectors of the Football Association at that time. TheFA Council comprised 92 members of the FA. Theboard members of the FA were those 92 members ofthe FA Council. The FA did not have a boardwhatsoever at that time and one of my first dutiesupon taking office as FA chief executive was toattempt to institute some reform of the FA but wewere unable to effect any significant change. Upontaking office we tried to effect some reform. Be thatas it may, the Hillsborough disaster sadly occurred andthe Taylor report was the outcome.A lot of things happened in the 1980s, as you haveheard already this morning. The Taylor report cameabout, the blueprint happened and the FA PremierLeague was formed in 1991–92. The model for theFA Premier League was the French league, the Frenchfootball federation or the German football federation,both of which entail vertical integration. The leaguein both those two countries is an integral part of theFootball Association and the key members of the



8 February 2011 Lord Burns, Graham Kelly and Lord Triesman

league were intended to have key roles within theFootball Association Council. Nine members of thePremier League were intended to have seats on theFA Council, but because of challenges to the blueprintand because of various litigation and recriminations,the original plan for the blueprint was notimplemented.

Q25 Mr Sanders: With hindsight, should the FAhave secured more commitments from the PremierLeague with regard to supporting the national teamand the lower leagues?Graham Kelly: I think probably it should. As MrCollins said this morning, one of the prime aims ofthe FA Premier League was to improve the conditionsof success of the England team. At the time, thenumber of teams in the top division was 22 clubs; thatwas reduced. There was to be a phased reduction from22 to 18 and that was one of the aims of the PremierLeague, to come down to 18. That came down overfour years from 1992 to 1996 and I think probablythe commitment should have been or could have beenstronger. There was, as I say, a lot of recriminationbetween—

Q26 Mr Sanders: Do you mean stronger in the senseit should have gone down to fewer clubs or do youmean stronger in other ways?Graham Kelly: Not necessarily fewer. There perhapsshould have been a stronger commitment from thePremier League to the success of the England teamperhaps in the initial stages maybe, but I don’t know.

Q27 Mr Sanders: Lord Burns, how happy were youwith the FA’s reaction to your review?Lord Burns: A certain amount of therecommendations that we put forward have beenimplemented and some have not been implemented.There has been, undoubtedly, progress since I did thatreport. We have had the introduction of anindependent chairman, and the chief executive is nowa member of the board. The process by which therules and regulation are implemented has improvedsince that time. Some of the proposals we made aboutthe national game were partly followed: having aseparate board and a funding rule that means it gets aproportion of the revenues from the FA. It has beenleft to manage them itself, and that has worked prettywell. I think that whole national game board side hasworked pretty well.The main recommendation, of course, which was notfollowed was with regard to the board. Irecommended that there should be at least twoindependent directors and if the chairman was anindependent director then there probably should beanother 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 nationalgame and five members from the professional game isreally not a sensible basis for going forward. I do notwant to put too much emphasis on this becauseEngland’s performance in the World Cup has verylittle to do with governance. The fact that we did notget the World Cup here in 2018, I am not sure has anenormous amount to do with it. But I listened to the

conversation this morning in terms of how the gameis being taken forward and how the FA really needsto become an effective regulatory body. If we are tohave regulation of football, which I assume we dowant, and as we implement the rules that have nowbeen developed in UEFA, then it needs a board that isconstituted differently from that which it is now. Thepresent board, is as if with the Financial ServicesAuthority we had a controlling interest by the bankswhom they are regulating. I do not think anybodywould regard that as really being a satisfactory stateof affairs. So a lot depends on what you think thepurpose of the FA is. Is it to run the England team? Isit to be an effective governing body and regulatorybody of football? The more you want it to play thesecond role, the more that it has to have some peopleon the board who do not have vested interests in theregulation that is taking place.

Q28 Mr Sanders: Lord Triesman, when the formerGovernment engaged with football bodies on footballgovernance, your response to the then Secretary ofState was to refer him to the responses submitted bythe Premier League and by the Football League. Whydid the FA not submit its own?Lord Triesman: The former Secretary of State askedthe three organisations to prepare a joint response tohis questions, and I thought that was absolutely right.It would be very good if it was possible to come tosome amicable agreement about how to carry forwardthe regulation of the game. The Football League wascompletely willing to engage in that with the FootballAssociation; Lord Mawhinney was completely willingto do so; the Premier League was not. After someperiod of trying to persuade everybody to cometogether to do it, the Premier League produced—Ithink we have probably all read it—its own responseto Andy Burnham.The Football League then produced a response toAndy Burnham and the FA, which had been doingvery considerable amounts of work on footballregulation for some time past and discussing it withall the partners, produced a document that wassubmitted to the FA board, having been discussed witha number of other people. The professional gamerepresentatives on the FA board took perhaps amaximum of two minutes to say that the documentshould not be submitted and to issue a boardinstruction that a response should be made simplyreferring the Secretary of State to the wisdom of theprofessional league, and in particular the PremierLeague. I thought that was a grave disappointmentand, Mr Chairman, just in case it is helpful, I havebrought the response that we would have made.

Q29 Mr Sanders: I was going to ask were there anysubstantive proposals that you would have liked tohave submitted but were unable to do so?Lord Triesman: There were a significant number ofsubstantive proposals, some of them were to do withtightening the overall arc of financial regulation,because it was very apparent that we were inextremely choppy waters financially and that youcould see very great football clubs with very longhistories in severe trouble. It was by no means clear




that they would all pull out of that severe trouble. Wecould see a whole range of difficulties in the fit andproper persons area. I heard earlier the example ofManchester City being mentioned. Quite aside fromthe financial thing, as a former Foreign OfficeMinister, I thought that there were other very, verygrave doubts about the person who had taken overManchester City and, indeed, had been sent by theForeign Office to encourage him not to dispose of hispolitical opponents in quite as ruthless a manner. Butnone the less, he was able to take over that club.I believed that it was entirely possible to have oneset of regulations for finance. It might, rather like ourcompany law, have a different requirement for plcs tolimited companies. Of course you could havesomething that graded the level of difficulty so thatyou would not be asking a very small club to performas though it were a massive club, but none the lessone set of regulations, preferably coherent with theemerging UEFA regulations. It would be possible tohave one set of regulations about fit and properpersons and so on, right through the regulatorysystem.I answer the question in that way because one of thethings I have found, not least with colleagues in themedia, is trying to describe how the bodies all havecompletely different approaches and how things fallthrough the gaps between the different approaches isvery difficult. When you try and describe that tofootball supporters, it becomes almost impossible. Itis a thoroughly unsatisfactory system with the keyconsequence that the FA itself, in my judgment,having been its first independent chairman, has, apartfrom on-field discipline—red and yellow cards and thelike—has backed out of regulating altogether.

Q30 Chair: Lord Triesman, we are extremelygrateful to you for bringing a copy this morning ofthe submission that was not put forward by the board.Are you providing that to the Committee?Lord Triesman: I am, Chairman, because I think thatthe response of the FA must have been all butunintelligible to the rest of the world. It was to me.But I thought it best that people should see the bodyof work, and very kindly a former colleague at the FAlast week sent me a copy and I have brought it.Chair: Thank you. We will read it with considerableinterest.

Q31 Dr Coffey: I have to declare an interest. I amundertaking a sports parliamentary fellowship with theFootball Association. I have done one day. Youspecifically mentioned the former owner ofManchester City. Is it your view then that the ForeignOffice, either proactively or reactively, said thisperson does not pass the fit and proper test? I amtrying to understand what you just said, because youwere saying as a former Foreign Office Minister thereis no way he would have passed the smell test, butare you sure that the Foreign Office said that, eitherproactively or reactively?Lord Triesman: I do not know, because I had left theForeign Office by that stage. All I can reflect on isthat there were severe difficulties, which you can findin the human rights annual report, which were

associated with that individual. While there are rulesabout who is and is not a fit and proper person, it isextremely unlikely that somebody at that stage, a headof state or immediate past head of state, is going tofall foul of the courts in that country. That is not whatis going to happen. Consequently, you know that theseare issues, that they have not been tested in law, butthe body of public knowledge about the individual isquite large enough to say, “Is this an appropriateway?” I can answer the question a little more bysaying that were this to happen in a plc, I have nodoubt whatsoever that the board of a plc would say,“We’re not going to do that”.

Q32 Damian Collins: I would like to pick up on thefit and proper person test, just to follow up on thequestion I asked in the previous session. Do you thinkthere should be greater powers for redress against thedirectors of football clubs who preside over their clubgoing into administration—clubs like Leeds andPortsmouth are particularly strong examples—to actas a disincentive for people to engage in bad practiceand as a message to say that if people have done thatin the past, “We don’t want you in this game”?Lord Triesman: I think there is a very strong case forthat. The principal reason that I say that is becausemost of the clubs that have got themselves into thatposition—and this would not be 100% of all clubs thathave got themselves into that position—have got intothat position by spending money, as I think wasdescribed in the last session, related to their ambitionrather than to their business model. They want to beatother clubs; they spend what they believe is necessaryto do that. The model falls apart—Leeds is a verystrong example of that—and they are left with a hugefinancial crisis on their hands. People in other clubsreflect not only on the amounts that were spent but onthe unfairness to the competitive regime that it creates.I know people think that “financial doping” is a ratherdramatic term but it is a pretty accurate term for whatis described. From my own experience, this is not amatter of an outside observer believing that that is thecase. Most of the people I spoke to who ran footballclubs were among the people who were fiercest aboutit, fiercest about the points deductions, argued oftenfor greater points deductions or for other kinds ofsanctions. People want it to be a fair competition ona level playing ground, and they are right.

Q33 Damian Collins: Lord Triesman, followingyour comments earlier, you talked about the fact thatthe FA, other than regulating the rules of the game,does not get that involved any more in the regulationof football more broadly and I just wanted to ask acouple of questions about that. Do you think there isscope on certain issues that are linked to the way clubsare run where the FA should have more of a voice?David Cairns mentioned Wimbledon in the previoussession. Should we have clearer rules that say youcannot pick up football clubs from one part of thecountry and move them somewhere else? Should theFA have a voice on whether it is desirable forTottenham to move their club from north London toeast London? Should those be the sorts of the thingswhere the FA speaks for football?




Lord Triesman: That is a very sensitive question toask me. The FA has a large book of rules, much asthe Premier League and the Football League do. Thequestion is whether it applies any of those rules in anysystematic way. My view is that it should do so: itshould do so systematically, it should do sotransparently and everybody should know the reasonsfor a decision, including on-field decisionsincidentally. I see no reason why those should not bepublicly disclosed; not just the penalty but thereasoning. One of the key reasons for doing so is thatunder FIFA’s statutes, the FA is supposed to fulfil thatrole. That is one of the things of the independentfootball associations of each of the countries that aremembers of FIFA are supposed to do. Subcontractingit is obviously a model that does not fit with theinternational regulation of the game. I have no doubtthat in the course of hearing evidence you will hearpeople who will say “The FA does do all of thosethings and it is not realistic to say that they don’t, andhere is the book that sets out all the regulations.” I amjust saying at first-hand experience that it hassubcontracted and does not question the subcontractorin those key roles.

Q34 Damian Collins: Do you think the way in whichthe game is run drives this incentive for clubs to takefinancial 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. Wehave just seen the very large expenditure at the end ofthe January transfer window. Do you think that actsas an incentive to clubs to pay higher signing fees andsalaries, because they know they have literally arapidly closing window of opportunity and that can beexploited by other clubs and agents to drive up pricesin a sort of shotgun transfer?Lord Triesman: It does do so. It certainly does forclubs fearful of relegation, although I do not thinkthey were the main people spending money in this lasttransfer window. It does it for clubs who are fearfulof not getting a European slot at the end of the season,because that is the key to the door of very, very muchlarger sums of money. The answer to it, I am veryconfident in my own mind, lies in the arrangementsthat Michel Platini has advocated. Sadly, because heis French or because it was not made here, he alsowas attacked very roundly and very frequently. Butsaying to a business that over a period of time it reallyought to wash its own face, that it should not driftfurther and further into debt as an attempt to buy thatkind of success, seems to me to be absolutely right.Believe me, I am no mad advocate of massiveregulation. I would like to think of myself, particularlywhen I was in Government, as a deregulator ratherthan a mad regulator. But with a little furtheradjustment in, for example, debt ratios—excluding thebuilding of new grounds and improving facilities,which is a different sort of borrowing usually securedagainst the asset—you could probably get faircompetition across Europe and without the excessiverisk.Lord Burns: Can I just comment how it seemed tome from an historical perspective? The FA grew up inmuch the way that many of the governing bodies of

sports did whereby there was a Council of people whocame up through the national game- effectively,through the county football associations— and theyhad a whole series of committees. The tasks that theyset themselves were basically to do with running theEngland team, running the FA Cup, the on-field rules,regulations and discipline. They really spent relativelylittle of their time in these other matters that we havebeen talking about with regard to regulation. Then wehad the emergence of the Premier League and thehuge amounts of money that have come fromtelevision, including the FA Cup, the Europeancompetitions and the vast amounts of money that areinvolved in these. The game became a very differentgame. The role of the FA in principle then, of course,became much wider as far as regulation is concernedand they also set up a board of the FA that initiallyhad the job of trying to simply deal with the financialaspects of the Football Association.I would not like the idea to emerge that somehowhistorically the FA had played a very important rolein off-field regulation of football or of the structure offootball and it has retreated from that area. It seemsto me what has happened is that the game has changedand the requirement and the interest in some of theseoff-field aspects of regulation has become muchbigger, because the sums of money involved are muchgreater. It has become a much more internationalbusiness, both in terms of the matches that are played,in terms of the ownership of clubs, in terms of theinterest worldwide in watching the games ontelevision and therefore the value of the rights. Thathas set up a different set of issues.My perspective on this is that the FA has struggled tocome to terms with the extent of the change in thegame and therefore the burdens and the requirementsthat have been placed upon it. It has operated a sortof subsidiary model as far as the management of theleagues is concerned. We now have the slightlystrange situation where the lead has been taken byUEFA in terms of the fair play rules and they arebeginning to carve out an approach to it. Our FA, Ihave to say, looks to me to be being dragged alongbehind that rather than, as one might have expectedgiven the historical position of the FA, having beenmore in the lead on these issues.

Q35 Damian Collins: Do you think UEFA can createan equitable system for the European leagues? Therehas always been a lot of competition between theEuropean leagues and one thing we might credit thePremier League for is that there is a lot more moneyin the English game and a lot more of our players playhere. I looked up that when England played Germanyin 1990 in the World Cup, seven of the starting 11 hadeither or did go on to play football in Europeanleagues. In the last World Cup when we playedGermany, none of the England starting 11 had. Now,you can draw your own conclusions as to whether itis a good or bad thing for players to play abroad butit used to be a big factor that we supplied theEuropean leagues with players and now they come tous. We cannot turn the clock back and we must beconcerned that we might hamper the Premier Leaguein that regard.




Lord Burns: First of all my perspective on the waythat UEFA has approached this. It has not been thatits seeking to regulate our leagues or our games but itis seeking to regulate fair play among its owncompetitions. Therefore, it all comes down to thelicensing of the clubs who might be eligible for theUEFA competitions. The rest, I am afraid, is a matterof judgement. My observation would be that the hugeamount of money in England for football has meantthat this has become the real marketplace whereeveryone is competing to be—much the same, say, aswith financial services. The result has been, of course,that it has become more and more difficult for ourplayers to get into the Premier League teams. Also thepeople who are very good, the outstanding players,can make a very good living here by comparison withgoing abroad, whereas once upon a time some of themore successful teams were overseas. So there hasbeen a shift in the balance.Graham Kelly: The shift has been over here becausethe majority of the money is here. The Sky money,the satellite money, is here and it has attracted moreof the players here.Lord Burns: And kept our good players here.Graham Kelly: Our clubs are more able to retain thebest players and to attract the best players here.

Q36 Damian Collins: The Minister for Sport, HughRobertson, said that he thought football was the worstgoverned sport in the country. I know Patrick Collinswas asked this question on the radio this morning, andhe said that, with all due respect to the Lawn TennisAssociation, it was. Do you think that is a fairassessment by the Minister for Sport on thegovernance of football in this country?Lord Burns: I do not want to answer that directly. Butif we were looking at this in terms of outcomes I findit very difficult to imagine that that was the casebecause we do have the most successful football inthe world. It is taking place in the UK on ourtelevision screens, that a huge amount of people canwatch. We have wonderful stadiums and we havewonderful playing surfaces. I compare this to the kindof football that I watched when I was much younger,and it is completely different, looked at in terms ofwhat is it that is being produced. It is really quiteremarkable what has taken place over this period interms of the quality of the football that is now playedin this country and that you can turn up and see at thestadiums in this country. You cannot say that that hasbeen a result of brilliant governance or managementby the football authorities. It has been a combinationof events, as has already been mentioned. But in thelight of that, it becomes quite tricky, and I would sayquite difficult, to substantiate the charge that this is theworst managed sporting organisation in the country. Iwould not like to have to justify that. David may havea different view.Lord Triesman: I think in terms of outcomes weobviously have fantastic success in the PremierLeague and that is to be applauded. It is an amazingcompetition; last weekend was an amazing exampleof that competition. If we look at outcomes forEngland 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 asa straightforward England football fan in that senseand I think that we have done very poorly. As asystem, if the Minister was thinking about whether wehave a good system, we have systemic failure. Theboard is heavily conflicted. By the way, Terry—if youdo not mind, Chairman—I ought to say that after asmall while I learned that I should never use yourname in FA headquarters. I could talk about thereforms but if I wanted some sort of means offrightening the children I would quote you.We are deeply conflicted. Terry was saying would youhave a banking regulatory system. The model thatalways went through my head was would you haveOfcom exclusively made up of Sky, ITN, the BBCand possibly ESPN now. The answer is you wouldnever ever construct something that way, which iswhy the original recommendations on independentmembers is such an important proposition. The realityis we have now seen some extremely good andextremely sophisticated people coming into themanagement of parts of the football business: IvanGazidis at the Arsenal, not my club, as many peoplehere will know. There are people of great quality whohave come in, but generally speaking as you go round,is this broadly a successful group of people runningsuch an incredibly important institution as well asbusiness in our society?Other sports have changed in those last areas, in theirsystems and in the people. They have become diverse;we did not. They have not the same conflicts ofinterest in the way in which they govern; we do. HughRobertson has made a point that should not bedismissed. Cut into the layers of it, it is a serious pointand should be taken seriously.Graham Kelly: I’m sure, Mr Chairman, the FA fullyaccept that they must take on board the concept ofindependent directors. They know they have to go forindependent directors. They know, the PremierLeague know that there must be independent directorsat the FA. I’m sure they will welcome thatrecommendation. They have to be committed to thatnow. They have to go for that now.Chair: They didn’t welcome it before.Lord Burns: It was very interesting because thepeople who are on the FA board from the nationalgame 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 footballteam, go down when the FA Cup final is taking place,nice seats to watch the games, and they are highlyrespected by their colleagues. They see that they haveworked for years and years and years through thecounty associations and therefore this is an honourand it is the peak of their ambitions in football. Tothen say to them as I tried to, “Well, I’m sorry, youcan’t have five or six people from the national gameon the board of the FA, it should be reduced to three”and all of a sudden there is panic as to, “Which threeof us are going to have to leave and over which periodand what does it mean?” The professional game wasnot so concerned about the number. They would havereduced their numbers, but of course it wantedequality with the national game. You cannot have asystem whereby you simply increase the total numbers




of people on the board otherwise it would havebecome unmanageable.So, whereas most of them would agree about theprinciple of independence they had two problems.One was, “What does it mean for me and thereforewhat does it mean for my colleagues and for thenumber of people who will be able to be on theboard?” The second, which was put to me more thanonce, is they would say, “What is the point of havingindependent directors because independent directorsclearly don’t know anything about football and whatis the point of having people here who don’t knowanything about football?” Whereas the idea was, inprinciple, acknowledged—I’m sure Graham is rightthat many people would like to see it—there is anawful lot of built-in resistance to this. I am not holdingmy breath about a big change in this area unless thereis some real push from someone.

Q37 Chair: Do you stand by the recommendationsin your original report?Lord Burns: Yes. Everything that has happenedsubsequently confirms that this is the direction oftravel. Indeed the only slight regret I have is thatmaybe I should have been more ambitious about it. Iwas hoping to have a set of recommendations thatwent in the right direction, that went far enough tomake a real difference but which had a reasonablechance of being accepted, because I knew the wholeproblem about turkeys voting for Christmas. It maybe that instead of saying there should be two or threeindependent directors, if I was looking at this now Iwould be looking for a larger number of independentdirectors.Graham Kelly: I wouldn’t want there to be anymisunderstanding about this. I am very, very proud ofthe Premier League for a lot of reasons. Last year, £36million was distributed by the FA and the PremierLeague via the Football Foundation. You talked to theprevious witnesses who talked about the trickle-downeffect: £36 million trickled down and was distributedby the FA and the Premier League throughout footballthrough the Football Foundation. That goes downthroughout football to all levels: to stadiums, tograssroots, new pitches, new small sided pitches.It isn’t the Premier League that was originallyenvisaged, I know that, I’m not stupid, but before itcame into effect, ITV had a cartel. Patrick Collinstalked about Derby winning the first divisionchampionship, and they did because they had abrilliant manager and they had a good team, brilliantteam, but by and large Liverpool had pre-eminenceover a lot of years in the 1980s. There was the bigfive and in 1988 to 1992, ITV signed a secretagreement with five clubs. Nobody knew about that in1988 and the money—only a small number of clubswere guaranteed exposure under the televisioncontract in those four years. So until that was broken,there was not the spread of television matches like wesaw last week with West Brom versus Wiganmidweek. So there wasn’t the spread of matches likethere is at the moment, so there isn’t the concentrationof power in the Premier League like there was in theold first division. So, football isn’t quite so romanticas sometimes we like to think it was.

Q38 Chair: Lord Triesman, Lord Burns suggestedthat he might have been even more ambitious had hebeen able to. Going on your experience when youwere chairing the FA, do you think the Burnsrecommendations would have done a lot to make theFA a more effective organisation and would you liketo go further, as he is now suggesting that he would?Lord Triesman: We would have been more effectiveif we had adopted all the recommendations and itwould have been good to go further. The reality isthat what counts in this country as being an insider infootball or somebody who comes in who isindependent is probably a rather blurry line. I do notknow whether I would have counted—I wasindependent, I was the first independent chairman, butI had played football right the way through to my mid-30s, got to the bottom ranks of the senior categoriesof referees and had my coaching awards. Apart fromoccasionally going and earning a living, I always feltthat I was deeply embedded in the sport and probablypeople who would have come in as independentdirectors would have also had that love andengagement in the sport.Lord Burns is completely right, also to say, as peopleused to say to me, that there was no appetite forchanging the personnel at any level. That was notbecause members of the council had not made a greatcontribution around the counties. I can think of one ortwo of them: Ray Kiddell from Norfolk who had beenone of the great driving forces in women’s football,for example, and should get great credit for that, andDavid Elleray in refereeing. But if you try to raise thequestion of, “Why is it that this room is entirely madeup 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 hasplayed professional football or has been a coach inprofessional football?” the answer, of course, is youdo need those voices and you need that knowledgeand that experience in any professional and amateursport but they weren’t there and no one was going tochange it. I understand that people see it as the summitof a great deal of very valuable work. Of course thatis true, but other sports have managed to change andother sports reflect what Britain is like today in waysthat have not damaged those sports.

Q39 Paul Farrelly: Thank you, Lord Triesman, forproviding us with the FA’s proposed response. It ishas helped save the FA time, effort and expense incomplying with a polite request from this Committeeto provide it, so hopefully it will go on our website assoon as possible for the world to read. The title of thisinquiry is football governance and I wanted really justto probe further into how the board of the FA operates.Lord Triesman, you have given me the perfectexample when you cited the case of therepresentatives of the professional game taking justtwo minutes to look at your document and then it wasdecided not to submit it. By my arithmetic, the boardis made up of 12 people, five from the professionalgame, 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




before the FA board and it comes to a conclusion. It isled by the most powerful force in professional footballbecause the most powerful force in professionalfootball controls such a high proportion of the moneythat flows through. At that stage, there were 11because we were between CEOs; there were 11 peoplerather than 12. When you get into the room the pointwas made, as it happens, by the chairman of thePremier League, that this should be disregarded fromthat point on and we should simply acknowledge thework that had been done by the Premier Leagueprincipally, but by the professional game, andreminding the members of the national game, theamateur representatives there, where their moneycame from.

Q40 Paul Farrelly: So in good Leninist style, therepresentatives had had a pre-meeting—weencountered this in the Labour Party not too longago—but still there were six. So are you saying thatthe representatives of the national game are all tooeasily cowed into not standing their ground?Lord Triesman: On issues which are regarded asabsolutely critical to the professional game, they maynot vote with them but they will not vote against them.

Q41 Paul Farrelly: You mentioned the chairman ofthe Premier League, Sir David Richards. Can you justgive us a flavour of how, following these pre-meetingswhere the line is decided, he conducts himself at FAboard meetings when issues of vital interest such asthis come up?Lord Triesman: Let me preface this by saying that Ibelieve the problem is systemic rather than thepersonalities. It is to do with the balances and theinterests and the conflicts of interest. My experienceis that he will put his point politely in a board meetingbut discussions outside, across football generally butcertainly with some people, are extremely aggressivediscussions, really aggressive discussions. The pointsare 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 hearfrom time to time is that the premiership representedby its chairman occasionally might threaten towithdraw its clubs if the FA did not toe the line. CanI quote from The Beautiful Game by David Conn, whois a Guardian journalist, “I have it from threemembers of the FA’s main board that Dave Richardswas constantly threatening to withdraw thepremiership clubs from the FA Cup, or saying theclubs would withdraw if he didn’t get his way on anissue, usually over money. The sources complainedthat they could not debate with Richards in any detail.He would fly off, be dismissive or issue a threat.” Onthe following page, 365, the book also quotes DaveRichards’ response to that as, “Bollocks”. Do yourecognise that sort of behaviour?

Lord Triesman: That has a terrible ring ofauthenticity.

Q44 Paul Farrelly: Is it right that the chairman ofthe Premier League, who does not represent a PremierLeague club, although I think he was involved inSheffield Wednesday many years ago—and we wishSheffield Wednesday the best of success in thefuture—should be on the FA board, and certainly after10 or more years should still be on the FA board?Lord Triesman: I think there is a good principle intrying to get a circulation of people on the boards ofany enterprise. It is inevitable, and I am not makingthis as a comment about anybody in particular, thatyou get a little stale if you are doing the same thingyear after year after year. Of course you bring growingexperience but you do not necessarily bring new ideas.So circulation would be a good thing. The structureof the FA board puts the chairman of the PremierLeague on the FA board. That is a structural decision;whoever it was would be there. The reason I am sosupportive of Lord Burns’ view is that we could havedone with probably even more independents thanappeared in his report is because it is extremely hardfor anybody who comes in representing the PremierLeague 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 historyand why it is so important, but that is not what isbeing represented and that is the problem.

Q45 Paul Farrelly: Is it the case that if you havebeen around for a long time and you have a certainway of behaving and a certain track record in gettingyour way, you might lack some of the self-awarenesswhere other people independently might say that youdon’t recognise that your behaviour might be aproblem and also for the reputation of the PremierLeague itself as well?Lord Triesman: The reality is this is a very, verymacho sport and I think some people have cultivatedwhat they think is the language of the dressing roomas being appropriate everywhere.

Q46 Paul Farrelly: After a decade or more, do youthink it is right for the Premier League to questionwho it has as chairman and who it chooses torepresent it on the FA board and whether, indeed, SirDave Richards, with that description of authenticityabout the behaviour—some bullying behaviour asmany people would categorise it as—has really hadhis day?Lord Triesman: Whoever the Premier League decidesit wants as its chairman or therefore wants on the FAboard under its current arrangements must be a matterfor the Premier League. It has a board of two peoplewith, I think, a third person attending. I think that isright. It may be three but I think it is just two withone other person attending. It comes to its decisionsand it must be for the shareholders in, I suppose Ishould give it its proper title, the FA Premier League.It is still its actual title. We held a golden share; Icould never find out to use it. But the decisions aretaken by that board of two people and I guess withthe support of the clubs. I’m not trying to avoid your




question. I do think, though, that bodies that areconstituted properly in their own right need to takethose decisions. I would like to think that they lookedat things afresh from time to time, because it is in theinterest of the sport to do so.

Q47 Paul Farrelly: I would like to put a couple ofquestions to the other panel members but, LordTriesman, you mentioned you have heard also that theboard of the FA and perhaps the FA itself—you tellus—could be categorised as white, middle-aged andmale. I do not have a bone of political correctness inmy body, but you said that there were certain intereststhat should potentially be more widely representedthroughout the FA. Did you try yourself, when youwere 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. Ithink that sums it up pretty much. When Ian Watmorewas the CEO—in my view, an exceptionally talentedperson—and stayed for just nine months, he also madereal efforts to see if change could be achieved. Youmay well be seeing him and you can ask him thequestions for yourselves, but he did not believe thatchange was going to be achieved. He had, as analternative, come up with a proposition, which Isupported because I thought it might at least makesome progress, to get a group of people in who wouldbe advisers who were drawn from the game, who weremore diverse, both in ethnic and gender senses. Thatidea was dismissed. I do not know that it took muchmore than the two minutes either. That idea wasdismissed on the grounds that the talent that wasneeded was in the room and so there were a small butvery significant number of people who, in myjudgment, would have been very valuable advisors tous, but that was not possible either.

Q48 Paul Farrelly: I hope we will get a chance toask him. What do you understand was the straw thatbroke Ian Watmore’s back?Lord Triesman: I think you need to ask him that. Hewas managing director of Accenture. That is a post Ibelieve you get by being elected by your partners. Itis probably not the easiest job to win in the world. Hehad vast experience in business way before he cameinto senior positions in the civil service. If I were onyour Committee, I would ask him whether hebelieved, based on all of his experience, he thoughtthat 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 linkedquestions? Who would be responsible for appointingindependent directors so that they are not creatures ofone constituency or another? In appointing anindependent chairman and independent directors, whatis 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, isthe fact that the board is dominated by people whosemain interests lie on one side of the game or the other.If the board is going to carry out a regulatory role thenit needs some rebalancing, and for the reasons alsothat Lord Triesman has explained, independent

directors do bring a different perspective on life. Theyare usually working elsewhere, they are seeing howother boards work, they see standards and practicesand the way that things are done, and they are able tohelp in terms of the whole culture of the way in whicha board operates. I have spent the last 13 or 14 yearson a whole variety of company boards and theindependent directors really do bring a very differentperspective. They ask the questions that very often arenot being asked by the executive team or the peoplewho are not independent.Indeed, following my report, I notice that there hasbeen an introduction of independent directors on tothe national game board. I think there have beenindependent people brought on to the regulatory bodythat has now been established. So the principle doesnot seem to be lacking in the FA. It is just that whenit comes to the FA board itself, the vested interests ofthe people who are on that board are making it verydifficult to get any real breakthrough on this. Havingone person who is independent—and all credit to LordTriesman for seeking to carry out that role—it’s anenormously lonely role to be the only independentdirector. Frankly to be chairman and the onlyindependent director I think is even more lonely.

Q50 Paul Farrelly: Who should do the appointing tomake sure they are truly independent?Lord Burns: In the end that has to be a process ofnominations by the board itself, but the council thenshould have a role in terms of approving them. Thecouncil are effectively the shareholders or, in a sense,the parliament of football. I think they are the peoplewho are best placed to do that. I can’t quite see whatother body would do it. I do not think there would beany great shortage of candidates. I think there wouldbe a lot of really very good people, as we see from lotsof 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 arebeing represented: the referees, the professionalfootballers themselves and various minority groups,women’s football and so on. So there has been a bitof opening up of that but it is still very muchdominated by the same groups and the same methodsof working their way through the national game. It isa structure that makes change enormously difficult tobring about because of the positions. There are oneor two people who were on the council, who wererepresenting positions, which it is very difficult to seehow in this day and age they should have beenrepresentated. I will not name any but you just haveto go down the list to see some of the anomalouspositions that are there. They came to me andprotested about the suggestion that some of themshould no longer have seats on the council. It wasclear to me that one of the overriding concerns theyhad was that they would be seen as the last personwho had been a representative of this particularorganisation and they would go down in history as theperson who had lost their seat on the FA Council. Thiswas something that they were not quite prepared tolive with. So you have these enormous forces for nochange that are built into it all.




Graham Kelly: No, I can’t add to that, Mr Farrelly,It’s just too entrenched. The structure of the councilat the moment is just too entrenched. It needs openingup to support the independent chairman. I do notknow how Mr Bernstein is going to approach it. Theyhave made the appointment of a different independentchairman now, but he needs the support to makeprogress.

Q51 Jim Sheridan: The turkeys at the ScottishFootball Association have some difficulty in agreeingwith Christmas as well because they want to cut thenumbers but see it as somebody else’s job that theywant to cut. On this bullying, harassment and threatsof the Premier League, if I was a supporter of a lowerleague club hearing that this sort of behaviour is goingon and that the FA, the body that is supposedlylooking after my interests, is being bullied andthreatened, that would give me some concern. I wouldbe looking for the current board of the FA, or ifnecessary the Government, to take some sort of actionto stop this behaviour. What help or advice could yougive the current board to stop this?Lord Burns: I believe that the board has to be theagent of change for itself and it then has to carry onthe process of changing the constitution of the councilitself in terms of opening it up to other groups. I fearthat I share a view that I heard expressed in the earliersession today: it is not easy to see where Governmenthas any real purchase on this. I think you have to askthe question whether there are any built-in advantagesthat football has, which in a sense have been providedby Government, either in relation to tax or the waythat it deals with administration or whatever. Tosimply have Government march in and try to exercisea role would be quite difficult. I think it has beenmentioned again earlier that one of the requirementsof FIFA and of the international bodies is that theFootball Association should be independent ofGovernment. So Government has to be very carefulabout how it sets about this.I worked with John Major back in 1991 in terms ofputting together the proposals that eventually led tothe all-seater stadiums. If I remember, we channelledsome of the pools betting duty into the Football Trustto support the all-seater stadiums on the basis that theclubs were themselves going to also put in money.This provided Government with a certain amount ofleverage because it was doing something itself. Butwithout that leverage, and without something thatGovernment is putting in or has some role or wherethere are some special privileges that football ishaving as a result of Government action, I thinkGovernment 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 bequite important in bringing about change. As Imentioned earlier, that is coming, through UEFAwhich has done a lot of work on fair play, particularlywith regard to financial matters. It has its leveragebecause it has to agree that the teams that may be inthe Champions League, or the other competitions, arelicensed to do so. It then passes on the job of doing

that licensing, I think, to the FA. That in turns givesthe FA a certain amount of power. The process has tobe one of persuasion. I think that Government simplystepping into this area and seeking to impose solutionswill run up against considerable obstacles.Lord Triesman: Obviously, I have thought about thatissue at some length. It seems to me that there arethree ways in which you can potentially get people tochange what they do. The first is that you persuadethem and if there is a process of persuasion andauthority that is fine, that will always be the best, butI think that is pretty hard. UEFA will help in that, Isuspect, but it would not necessarily have an impacton the clubs going right the way down though thesystem.The second is finance and finance has been used forleverage purposes. I do not mean debt leverage butleverage on the FA. For example, there was a lot ofreluctance to accept the new anti-doping regulationsof WADA and we were put under considerablepressure to do that. The paradox, of course, was thatwe would lose Government money if we didn’t do itbut the money we lost was essentially money that wasgoing to the amateur game; the issue about dopingtesting was in the professional game. There was amismatch and it was very hard to make that work. Ihope that it now potentially can work.The third is, and I think this is an interesting debateto be had, is that it is certainly true that FIFA does notwant the intervention of Government in football butthere are a number of countries that have a basicsports law. It covers all sorts of things like mountingOlympics and world cups and so on, so you can thendo with secondary legislation what we trawl our waythrough dealing with primary legislation. You can useit for all sorts of purposes but it can also, and it doesin some countries, allocate the key responsibility forthe regulation of sport to the sports governing bodiesso that they must do it and they must be accountablefor it. After that the Government stands back. I havenot known FIFA withdraw its authority or threaten toexclude any one of those countries from its full rolein running the sport. It would be a great pity to haveto consider legislation as a means of doing it but itwould not be right to rule it out. It certainly wouldnot be right to rule it out on the ground that FIFAwould automatically object to it if the consequencewas that that sports governing body—in this case theFA or the SFA—had the absolute clear responsibilityfor 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 weekof leverage being available with the woman who wasbuying TV coverage of football from Greece? I wentto Brussels as part of a small team of people to lobbythe European Union when there were threats to theability to negotiate the Premier League games as atotal rather than let it go to individual clubs. That is avery big issue if European law was brought to bear. Ithink Damian was a little bit unfair on Peter Ridsdale;he was sort of saying he is a bad man. I think there isno comparison between Peter Ridsdale who did whatthe Leeds supporters wanted him to do—it was badfinancial and technical football decisions that he made




and it failed—but you contrast that with the Glazerswho have no interest in Manchester United or theirsupporters. There is no comparison. I think we didPeter a disservice.Secondly, David, you gave Michel Platini the creditfor the fair play rules. The all-party parliamentarygroup plan in 2009 recommended that. My sparringpartner and friend, Richard Scudamore, straightawaysaid it was impossible to define. It was not impossibleto do because they have found ways to define it, so itis going to happen.I wanted to ask about FIFA. Is it true that the FA hasnot really over the years made proper efforts to engagewith the international game through FIFA? Wecomplained when we did not get the 2018 bid—I wasas disappointed as anybody—but really we, as part ofthe international game, should be looking to spreadthe World Cup around the world. Maybe one time itshould be a well-established nation like us and thenext four years it should be a developing nation. Butthe main question is has the FA failed to engage withFIFA. Going right back in history, we felt so importantthat we didn’t even join. Is that right?Lord Triesman: Over a long period, apart from theprocess of bidding for the 2018 World Cup, the onlyreal link with FIFA has been Geoff Thompson who isone of the vice-presidents. Aside from that and effortsmade in special circumstances, I don’t think there hasbeen any real engagement at all.There is one area in which we do engage, along withthe Scottish, Welsh and Northern Ireland FAs, and thatis in the International Football Association Boardwhere those four FAs and FIFA are responsible for theon-the-field laws of the game. That is a fantasticallynice piece of history to still have in place. But it iscertainly true that to have a great sense of the internalcouncils of FIFA you have to have vastly moreengagement than we have had. Sometimes we havebacked out and had none.

Q54 Chair: Lord Triesman, I can’t resist: Alanmentioned FIFA and the World Cup bid. Do you haveany observations on the outcome?Lord Triesman: Very, very acute disappointment. Ithink there will be a time, Mr Chairman, when thecontacts that I and others had with members of theFIFA executive should be described in detail, becausesome of the processes I don’t think really stand up toproper scrutiny.

Q55 Chair: When should that time be?Lord Triesman: I think it would be a long part of asession here. I am not averse to doing that, but itwould probably be rather longer than you intend forthis morning’s session, given where we are at thismoment in time. When we set off on the bid, therewas a huge amount of encouragement from FIFA whosaid that they weren’t certain about how the financesof South Africa would work out or how the financesof Brazil would work out. There were risks. Their riskregisters on whether these tournaments would returna substantial income to FIFA were very high. Therewas, for those reasons, a lot of encouragement forEngland to go for it, because we could do it, we couldproduce tremendous returns, we can organise eventsof that kind and complexity and handle security andall the other things that you have to do. Had they saidat the time that the aim was to break into newterritories, I would have advised the FA board not tostart in the first place. We started on what turned outto 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 thankthe three of you very much.

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Tuesday 15 February 2011

Members present:


Dr Thérèse CoffeyDamian CollinsPaul FarrellyAlan Keen

________________


Witnesses: Greg Clarke, Chairman, the Football League, and Andy Williamson, Chief Operating Officer, theFootball League, gave evidence.

Chair: This is the second session of the SelectCommittee’s inquiry into football governance. Iwelcome 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 introductionof the Premier League weakened or strengthened thefootball pyramid?Greg Clarke: On balance, and this is a personalopinion, it has strengthened it. I think we have someof the best club football in the world. We have someof the most valuable media rights in the world on theback of that. I have worked all over the world,working for large corporations and running largecorporations, and everywhere you go you can seeEnglish football on the television. That is a bigstrength, but with every big strength there are somedownsides too.

Q57 Mr Sanders: And what are the downsides?Greg Clarke: There is the usual sort of club versuscountry conflict. If you have teams largely full of thebest players in the world, not all of them are going tobe English. That means on occasion that Englishplayers get into first teams later than they could havedone, but that is a classic club versus country issuethat many countries have.

Q58 Mr Sanders: That is not an issue of thepyramid, is it? That is a separate issue.Greg Clarke: You could say that. I am only bringingit up because the pyramid, when you don’t get Englishplayers at the top of that pyramid they don’t get intothe national teams quickly.Andy Williamson: We have had to rise to thechallenge that has been set, effectively. I was therebefore the creation of the Premier League so I knowwhat those days were like. Indeed, at the point thatthe Premier League was formed in 1992 there was alot of uncertainty. At that time, we lost two clubs, inAldershot and Maidstone United, but it is fair to saythat we have risen to that challenge within theFootball League and we have seen the popularity ofthe game get back to the days of the immediate post-war period.

Q59 Mr Sanders: When Aldershot went, effectively,bust and Maidstone went bust, Aldershot have comeback, but remind me, did they drop down into a lower

Mr Adrian SandersJim SheridanMr Tom Watson

division or did they just go out altogether and startagain at the bottom?Andy Williamson: They went out of businessaltogether as Aldershot FC.

Q60 Mr Sanders: My next question is aboutparachute payments, which exist from the PremierLeague to the Championship. They also exist, veryhelpfully, for some clubs who drop out of the FootballLeague into the Blue Square league. But is there adanger that those parachute payments distortcompetition, both in the Championship and in theBlue Square?Greg Clarke: That is one of the most contentiousissues that the Football League has debated, the extentto which parachute payments distort competition.Currently, the Premier League gives its relegatedclubs £16.5 million in the first season and in order toequalise the playing field somewhat they give £2.2million to the other Championship clubs. If we get asituation where the clubs that are relegated areautomatically promoted, that is not in the interests ofa fair competition because you just cannot win unlessyou have access to Premier League funding.Interestingly, the trend is changing. This season,because of the large debts some Premier League clubshave, they spend quite a lot of that parachute paymentservicing and paying down their debt. If you look atthe current three relegated clubs, and one that wasrelegated a couple of years ago but still gets parachutepayments, none of them is in the automatic promotionslots 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 paymentsat the bottom of the Football League into perspective,the amounts paid to the clubs relegated from theFootball League is considerably less, of the nature of£170,000, so it does not create, in our experience, anysignificant difficulty at that level.

Q61 Mr Sanders: But isn’t that just a reflection ofthe distribution of the funding from the top to thebottom that the payments are so small and yet forthose small teams they can make a big difference,even though they are tiny payments?Andy Williamson: Certainly they reflect thedistribution of wealth, if you like, within theprofessional game.

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15 February 2011 Greg Clarke and Andy Williamson

Q62 Mr Sanders: If you are a small league twoteam, 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 toconvince you £170,000 is not a lot of money. Whatwe are trying to do is convince you it is not as goodas £16.5 million.

Q63 Mr Sanders: I think what some of us arethinking is that £175,000 is not enough for the smallteams and more should trickle down. Is theredistribution of income from individual PremierLeague clubs to Football League clubs, for instancethrough transfer payments and compensation foryouth development, fair and equitable?Greg Clarke: I think it has become accepted that clubsunder the current scheme can get fair value for theirplayers. If a small club spends money on playerdevelopment, brings in youth talent and develops thattalent, the current system means that the tribunalusually gets fair value about right. The club sellingwill think it is not enough, the club buying thinks it istoo much, so arguably it is probably about right. Wehave serious concerns about youth development.Should we be forced on to the FIFA model, which isdesigned in a completely different way, the amountsmaller clubs will get could decrease markedly, whichcould once again seriously prejudice the finances ofsmaller football clubs and potentially force many ofthem out of youth development. Currently, only twoof our 72 clubs have no youth development facilities.Should they become less and less profitable, becausemany of them make a bit of money selling playersto big clubs, they will not be able to afford youthdevelopment. Some of them, for example Crewe,make about £1 million a year from youth developmentbecause they have a real investment in both peopleand facilities. If that is undermined by the newproposals it will change the business model for a lotof small clubs.Andy Williamson: In terms of the transfer system, Iwas aware that comments were made about the lackof redistribution of wealth that the transfer systemonce did. It is fair to say, however, that there is stillprofitability for Football League clubs, which in themain are selling clubs in that area. For example, onthe domestic market the profit that is madecollectively by the 72 Football League clubs in theirtrading with 20 Premier League clubs is still £62million for the last complete contractual year ending30 June 2010. It is still considerable, but it is perhapsnot as good as it should be. Given the amount ofmoney that there is in the game and the redistributionmechanism that it once represented, it is not aseffective as it once was. Obviously the Bosman rulinghad an effect on player registrations, and morerecently, of course, the introduction of transferwindows had a similar effect. We comment in oursubmission to this Committee that that is one areawhere we would seek the support of your inquiry,Chairman, to try to inject new life into the domestictransfer market.

Q64 Mr Sanders: Why was the transfer windowbrought in?

Andy Williamson: That is a very good question.Going back to the intervention from the EuropeanCommission which was looking at the validity of thetransfer system around the turn of the millennium,ultimately an agreement or accommodation wasreached, it is fair to say, following politicalintervention, between the Commission and FIFA. Thatinvolved the creation of a number of changes in theuniversal transfer system that applies across the worldand 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 havereceived confirmation in writing from the then CultureCommissioner at the European Commission, VivianeReding, that that was not at the insistence of theCommission, it was a football invention. So it wasFIFA and UEFA who chose to include transferwindows as part of the package that came out ofthose negotiations.

Q65 Mr Sanders: Do you subscribe to the view thatperhaps the transfer window has weakened theposition of League clubs in the transfer market andthat they have not benefited as greatly as they mighthave done had there not been a restricted period fortransfers?Greg Clarke: I do. I think that when there is aneconomic imbalance between buyers and sellers, thepressure to get a deal done within a limited period oftime can favour the buyer, usually in the larger club,usually the Premier League club.

Q66 Mr Sanders: The £62 million you mentionedearlier is of course not evenly distributed, is it? It isterribly unevenly distributed. I think there is a greatdanger in this inquiry that we get given a lot ofstatistics that show a fairly rosy picture, but when youstart to unpick it, there is an enormous amount ofdifference between a small group of clubs and thevast majority.Andy Williamson: Those are the receipts fromtransfer sales of professional players, effectively, andthat is the profit from the dealings between the 72members of the Football League as against theircounterparts in the Premier League. The total turnoverwhen transfer fees are spent and re-spent within thatdomestic market is in the order of £350 million. Ifyou add in the amount that is spent abroad, I think thefigure for the year ending 31 January this year, theclosure of the transfer window, was something in theorder of £600 million. So, it is a significant amount ofmoney that is being spent by football clubs ontransfers, either at home or abroad. That mightproduce a mechanism, for instance, for funding futureyouth development and perhaps a levy on transfer feesoverall could provide the funding going forward.

Q67 Mr Sanders: That was going to be my finalquestion: what can be done to help fund thesedevelopments 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 theFootball League spends in excess of £40 million ayear developing talent, and if the new system

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envisaged by the Premier League reduces that numbermarkedly, many of our clubs will not be able to dothat.Mr Sanders: Will that be a percentage on the grosstransfer fee?Greg Clarke: We believe that would be a good ideato 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 metwith the new chairman of the FA, David Bernstein,and said, “Look, we want a constructive fraternalrelationship with you. We want to work together andsupport you in getting change into the game.” So weare happy to support initiative from the FA on that.Andy Williamson: There is already a levy on transferfees to fund the players’ pension scheme. Strangelyenough, it has just been reduced from 5% to 4%because 4% takes care of the premium that is requiredfor that purpose. But that single 1% with a £600million turnover would produce £6 million on its own.

Q69 Damian Collins: Mr Clarke, you were criticalabout the elite player performance plan in reports intoday’s newspapers. Would you like to say more aboutthat to the Committee?Greg Clarke: Of course. I fundamentally buy into theproposition that we need to do more to develop ouryouth talent, but I am a businessman. I have spent 30years working for and running large public companies,so I try to start from where do we need to be in fiveyears and what do we need to do to get there andexamine the parameters of the problem, because I amalways frightened of unintended consequences ofaction. If, for example, we attract all the best talent tothe Premier League clubs and cut off youthdevelopment inadvertently, because I do not think thePremier League are trying to put the small clubs outof business, I just think they have not thought throughthe economic consequences. Some clubs are good atdeveloping talent. Middlesbrough are good at it,Southampton, Charlton, Crewe. If the economics ofthat proposition goes away so they can no longerafford to do it, you are forced into a model where afew clubs will develop our top talent. I believe it isbetter for the game that all clubs embedded in thecommunity develop their talent. Of course the topclubs will have an advantage, I accept that, but Iwould not want to see them create that advantage,then abuse it by undermining the economics of thesmaller clubs, because I think that would be bad forEnglish football.

Q70 Damian Collins: What do you think is best forthe development of young players?Greg Clarke: The first thing we need to be cognisantof is the well-being of the young lads being trained forfootball. It is all right looking at this as productivity,economics, games, returns, net present values, cashflows and all the other rubbish we talk about, these arehuman beings, most of whom end up on the footballscrapheap and never become a paid professionalfootballer. We work very hard, for example, with thePFA, with League Football Education, to try and keepthem in education, to try and make sure they have

qualifications outside the game. I would like to see areal emphasis on making sure we develop well-rounded, successful human beings who, great, if theymake it as a professional footballer but their life is notover if they do not.

Q71 Damian Collins: But the current rules wouldmean that David Beckham would not have been ableto sign for Manchester United’s youth team, forexample.Greg Clarke: Yes, and I am not necessarily againstscrapping the geographic limit. For example, we havelots of clubs who are good at youth development inLondon and they are just around the corner fromArsenal or Tottenham or West Ham. If you are goingto take a young child out of their community and sendthem a couple of hundred miles away to a boardingschool where they are educated with the objective thatthey are going to be a professional footballer, whathappens if they do not shape up or if they break theirleg? Do you just dump them back where they havegot no friends and no network? I would just like tosee all the welfare issues around children factored intothis in case we become too economically grounded inour analysis.

Q72 Damian Collins: But presumably these aredecisions that are taken by the children themselvesand their families and so the bleak picture you paint—I think you referred to kids being dumped back ontheir council estate at 16 with no friends or future—seems a bit dramatic.Greg Clarke:Well, as a guy who grew up on a councilestate, I have got some form in that area and I knowwhat it is liked to be dumped on a council estate, andI know what it is like to kind of be beaten up on theway back from the chip shop. What I was trying tosay is, once you come out of that and you lose yourfriends and your network—let’s not put kids in theposition where their only value is football. That is theonly point I am making. I am not saying I am againstthe geographic idea; I am saying the first issue on myagenda is the welfare of the kids.

Q73 Damian Collins: Around the discussion of theelite player performance plan, the idea of establishinga programme of 10,000 contact hours with the youngplayers, do you think the investment that is requiredto run programmes like that inevitably means that itwill be only the big clubs that can afford that typeof investment?Greg Clarke: That is the paradigm that I amconcerned about. If it is only the big clubs that canafford to develop talent, we are fundamentallychanging our game. I return to my remark aboutunintended consequences: are we sure about what thatwill do for small and medium-sized professionalfootball clubs in the communities? Do we want to losethem as a consequence of that or can we protect whatis good in the Premier League proposals but notundermine the economics of the clubs, smaller clubs,and the welfare of the kids?

Q74 Damian Collins: I think you are right to focuson unintended consequences. I am sure it is not the




intention of the Premier League that it has a financialconsequence there. But another question might be putto the Football League that are you seeking toinfluence the way these rules are established for thefinancial benefit of the Football League clubsprimarily and the development of the players is asecondary issue?Greg Clarke: Don’t get me wrong, we are absolutelytrying to look after the financial welfare of theFootball League clubs. I am happy to talk about thatin detail, but there is nothing like—I am a LeicesterCity fan, we’ve had our ups and downs. Nothingexcites the crowd like having a lad that grew up in thecity and came up through the youth team making itinto the first team. I can still remember Emile Heskey,Gary Lineker; having one of your own you have seenin the bus queue actually playing for your localfootball club is a great feeling and I don’t want tolose that.Andy Williamson: We need to emphasise that all weare looking for in terms of compensation forschoolboy players is fair compensation that continuesto incentivise clubs, those same clubs, to continue todevelop. If there is no incentive then they may as wellgive up, but what we have presently is a very broad-based scheme that has the benefit of uncovering thebest talent. You see in the present England setup someof the players who have been either developed partlyor wholly by Football League clubs, and that we wantto preserve. The participation of as many FootballLeague clubs in this process as possible is what wewant to encourage, but at the same time we need toensure that they are adequately compensated if clubshigher up the ladder come in for some of their youngerplayers. Going back to the distance rules, manyFootball League clubs are already close to PremierLeague clubs in their own region and suffer that effectin any event. Clubs in London have to compete withTottenham, Arsenal and Chelsea, for example; clubsin 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 beendeveloped by the Premier League clubs who end upplaying in the Football League.Andy Williamson: There are, and one of the keys hereis to ensure that there is adequate provision for playerswho are developed to graduate into first team football.That is one of the critical areas and we can providethe solution to that dilemma, both in terms of clubs inthe Football League producing their own players andgetting them into their first teams that much earlier,which is the experience. Debuts in the FootballLeague very often are at the age of 17 or 18. So theyare getting into Football League teams that muchearlier and being introduced into competitive footballthat much sooner so their development is enhanced.The danger with development football is that playersare not prepared, even in their late teens, to move backinto competitive men’s football because they havenever been exposed to it. That is one of the problemsthat we can help resolve.

Q76 Jim Sheridan: Still on the question of youthdevelopment, could I ask specifically about thesecompensation payments for youth players? The reasonI am asking is parliamentary colleagues in Scotlandare asking the same question: kids as young as eightyears of age are entering into contracts, and indeedthe Children’s Commissioner in Scotland has alreadyexpressed concern about people as young as thisentering into contracts. Certainly when the footballingauthorities in Scotland were asked the question aboutcompensation payments for youngsters, they acceptedthere was some concern but they did say that theproblem was even worse in England in terms of thepayments that these children get paid. Could you giveus a flavour of the criteria for these contracts or howmuch money do the kids get paid and when do theyget paid?Andy Williamson: Under the rules of the FA, thePremier League and ourselves, schoolchildren andtheir parents are not allowed to be offered incentives.Those are the very firm regulations that are longstanding. In terms of the compensation that we werereferring to earlier, we are talking about compensationpaid for the time spent in training a youngster by oneclub if and when that player moves on to another club,and that is the fair compensation that I was referringto. But in terms of payments to individuals, that isstrictly against the rules.

Q77 Jim Sheridan: So no kid or their family getsany direct payments?Andy Williamson: Only travel expenses for attendingcoaching.Jim Sheridan: That seems to contradict what thefootballing authorities in Scotland are saying.

Q78 Chair: Obviously one of the major sources ofrevenue into the game is the sale of broadcastingrights. Now, the Football League has had a slightlychequered history in terms of its income frombroadcasting rights, but can I just ask your reaction tothe opinion of the Advocate General about the legalityof using foreign broadcasters’ decoder cards in thiscountry? Do you think that has implications for you?Greg Clarke: It certainly does. It has multipleimplications. Our main issue is that if you imagine asmall football club, Macclesfield or Chesterfield Townor Notts County, who are trying to get 2,000, 3,000,4,000, 5,000, 6,000, 7,000 people to turn up to theirgame on a Saturday and pubs around the corner areshowing Manchester United versus Liverpool live onthe telly using a foreign decoder, it strikes me that thatis making life more difficult than it needs to be. Theagreements we have with the broadcasters at themoment are that Premier League football, likeManchester United versus Liverpool, is shown eitherearly or late so it doesn’t coincide with the kick-off.One of our major concerns is that people might findit so easy to watch top-quality Premier League actionat the same time as League 1 and League 2 are kickingoff that it is just easier to stay in the pub, have a pintand watch the game, and that will undermine ourfootball.




Q79 Chair: So you regard the 3 pm blackout asabsolutely 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 outand we were talking about young players and playerdevelopment. To what extent is it right to ask whethermoney is shared out as well as it could be to supportacademies, to support your league clubs, evensponsoring schools as academies to develop youngplayers? Is that a relevant question to ask about thepurpose to which money is put in the game and isshared out?Greg Clarke: I think the question of fairness infootball, in its economic sense, is an interestingquestion. I have given this a lot of thought since Ijoined because I come from, as I say, a businessbackground.Paul Farrelly: But on the specific worthwhile point.Greg Clarke: Yes, the specific worthwhile issue. EachFootball League club makes a decision on howseriously it is going to take youth development. Somewe have talked about, like Crewe, Charlton orSouthampton, spend a lot of money and they have alot of well-qualified staff working with a lot of kids,artificial pitches, indoor facilities, so they can trainand get the best out of the kids. Some of them, suchas Hereford or Morecambe, do not have youth teamsat all. They have decided that they just cannot affordto be in that business; the business model is too tight.There are funding allocations from within the gamethat help those clubs stay in the youth developmentbusiness and they are vital because it gives smallerprofessional clubs within the Football League a leg upso they can afford to develop their local talent. We seethat as vital to maintaining fairness in the game.

Q81 Paul Farrelly: On debt, is the inability toservice debt through cash flow a problem in the gameand to what extent?Greg Clarke: I think it is the problem in the game. IfI had to list the 10 issues that keep me awake at nightabout The Football League it would be debt, one to10. Let us take Deloitte’s, which—you have all seenit—is quite a good analysis, and just take its figures,because then we do not have to argue about wherethey came from, we can just all talk about the samefigures. It talks about debt in the Football League thisyear in excess of a third of a billion pounds. That fora football league that, if you aggregate across all theclubs, makes no profit. You are trying to service athird of a billion pounds worth of debt with nopositive cash flow and no profit. If we were acommercial organisation, we would be out ofbusiness. As a board and as an executive within theFootball League, we’re saying, “Okay, where will webe in five years?” Just extrapolate trends forward,“What if we do this?” and then we can do a what-ifanalysis. If we can cap the wage budgets, what wouldthat do? If we adopt UEFA fair play rules, what wouldthat do? If we can find new sources of commercialrevenue, what would that do? It gives us the ability todo a what-if analysis. The board are taking the results

of that to our chairmen’s conference, where we get allthe chairmen together in June, because we are onlypart way through, which will say in five years this iswhere we will be if we don’t tackle the problem.The thing that I would encourage you to focus on isthat there is a real misperception in football, which isthat football clubs go out of business. Actually theydo 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” becausesometimes bad people turn up trying to own footballclubs but they always turn up trying to own distressedfootball clubs that are desperate for the owners. Youend up talking to fans and they say, “Why are youtrying to stop us save the football club? Why can’t wejust have Fred or Bill or Mary owning the club?”We’re saying, “Well, actually, they’re not the sort ofperson we think should own a football club.” But thenthere is a tirade of, “Well, if it’s either a bad owner orno football club, we’ll take the bad owner”, becausewe are putting the fans in an awful situation.If we do not tackle the fundamental economicproblems of our game, all the issues about not beingable to pay debts, insolvencies, bad owners, all thatsort of thing will get worse and worse. The one thingwe 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 lotof trouble. It is a good proxy for risk. The level ofdebt within the Football League is absolutelyunsustainable, and we have got three working parties,one for each division, working really hard on how webring our level of debt down.

Q82 Paul Farrelly: Would you like to see your rulesincorporate provisions that would mean that anybodyinvolved in insolvencies previously, either personal orcorporate, subject to rights of appeal, should not beappointed as directors of football clubs or be able,either themselves or through proxies, to takesignificant stakes in football clubs?Greg Clarke:We have some quite good rules in place.We innovated back in 2003, because what we try todo in the Football League is get ahead of the game.Andy will talk you through how the fit and properpersons test morphed into the owners and directorstest to make sure that we get a hard look at who isgoing to take over our clubs.Andy Williamson: Indeed. We do have, coming toyour question, a two strikes and you’re out policy inrelation to previous football insolvency events, notlooking at the wider business record, because there arepeople obviously involved in businesses that rescuecompanies for a living and have been involved invarious insolvency events previously that clearlywouldn’t be appropriate to exclude. But we have apolicy in relation to people who have a record in thegame and also if they have a poor record in othersports, and so those are a couple of examples of thedisqualifying conditions that are embraced into ourwhat was fit and proper persons test and is now calledowners and directors test.Greg Clarke:May I just add a subsidiary point, whichmay be useful? I have done business in Pakistan,Colombia, Saudi Arabia, Australia, all over the world.




I have just come back from running an Australianmultinational for seven years. I used to run Cable andWireless. When we used to do business with people,if we were setting up a joint venture in Russia or inSaudi Arabia or doing a major development in onepart of the world, the first thing you do is absolutecomplete due diligence on your partners because youcannot afford to undermine the ethical foundation ofyour business. If people do business in a different wayto you, you will have a problem at some point in thefuture.We used to use agencies like Control Risks andPinkertons and the main accounting firms to go andsay: who are they, where did they get their moneyfrom, are they ethical people, do they have a goodtrack record, do they treat their employees right, theydon’t pay bribes, could they sign the Foreign CorruptPractices Act? The average project that we did costbetween £300,000 to £500,000 to get those answers.Now, if you’re doing projects on average in the £1billion to £5 billion range as we did, that was just asensible thing to do. Trying to get Football Leagueclubs to come up with sums like that to back up theowners and directors test is just never going tohappen. So, largely our process is self-certification byowners. If we find out they have lied or misled us wekick them out, but we have to take their word on a lotof issues because largely we can’t afford to go to acountry and dig into their background.

Q83 Paul Farrelly: I have been involved in the duediligence business all my life. I just want to come onto a couple of things that you have mentioned, verybriefly. But firstly, you agree rules, you agreeprotocols, but what about deterrents? Do you thinkstrengthening the nine points deduction—even to theextent of you go bust, you start at the bottom—wouldbe a deterrent, or would it be a penalty for supportersbecause of bad ownership?Greg Clarke: Well, the Premier League deduct ninepoints, we deduct 10. There is a slight differencethere, but your point is absolutely valid. We had avery lively debate at our last chairmen’s conference. Ihad been in the job about four weeks last May whenwe had the conference, and there was a motion fromthe floor from a very respected chairman of a FootballLeague club. He has been a long time, high qualityowner who said, “I’m sick of bad owners going outof business and besmirching the game and what weshould do is automatically relegate by two divisionsanybody who can’t pay their debts and is insolvent”.There is a lot of sympathy for punishing people whodon’t pay their debts, but the vote did not pass, and ifI can try and give you a thematic approach to why itdidn’t pass rather than quote lots of different peoplewho had nuanced arguments. It was because youaren’t actually punishing the people who screwed upthe club. You are punishing the football club and thefans and the community, because the guys who havegone out of business have gone, largely. We were in asituation of how much do we want to hammer a localcommunity and football club who largely have beenmismanaged by a bunch of people who have movedon and left the club in a mess. There are a new bunchof owners, so they are trying to raise money to

refinance a football club, which may be impossible ifyou relegate them into the Conference. Largely wefelt that the 10 point deduction was the best solutionto 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 yourhands dirty. Let’s take Crystal Palace. Crystal Palacedoes a sale and leaseback of its ground to a propertyfinancier whose company subsequently goes bust. Theterms of that sale and leaseback are so onerous interms of rent that Crystal Palace goes intoadministration because it can’t pay it. Then theproperty owner goes into administration as well. Towhat extent do you look at those sorts of deals andget involved, or can’t you?Greg Clarke: Philosophically there are two issueshere: there is the practice of what we do, which Andywill talk about in a minute, and then there is thepracticality. When I hear of a financial restructuringof a football club, which involves the ground goingone way and the football club going another way, allmy hairs stand up on the back of my neck and thealarm bells start ringing, because when a football clubloses its football ground usually bad things happen. Itcan happen for many reasons. It can happen because,actually, this isn’t someone trying to buy a footballclub, it is a property play and if they can shed thefootball club at some point in the future and end upwith a nice property development, they are veryhappy. That is not in the best interests of the club, thecommunity and the fans.But sometimes you sit down with owners. I sat downwith one the other week. I have been to 60 clubs in10 months, because I am trying to do 72 in the firstseason. I am going to Torquay tonight. When you talkto them they are all under phenomenal pressure, andsometimes the last thing they can do is take amortgage on their ground to release cash flow to keepthe club going. I go to a lot of clubs, the majority ofclubs where good, decent local people are putting asignificant amount of their net worth to keep their clubalive, and they are in situations where they just can’tdo any more. They haven’t got any more. What theyhave to do then is give someone—they take a loanfrom somebody who takes a security over theirground. Sometimes I can’t think of a better idea forthem to keep them out of administration. Thepracticalities are, for every time we come across aslightly dodgy owner there are another 20 doing theirbest to keep their club alive in the community andsometimes they have to mortgage their ground.

Q85 Paul Farrelly: Internationally, what lessons doyou think you can learn from the German licensingmodel on insolvency, and also with respect to UEFA?Do you think you might move towards adoptingfinancial fair play rules yourselves in the FootballLeague?Greg Clarke: I am hopeful that financial fair play willbe a way of managing our businesses into a cash flowbreakeven. The good thing you can say about a cashflow breakeven model is your debt stops growing atthat point, providing you’re sensible. If we can stopthe debt growing we are halfway to getting a




sustainable business. If we can start paying the debtdown we can maybe have businesses that can standon their own feet and be less distressed.The UEFA financial fair play model is quiteinteresting because I believe it offers a templatepotentially for the Championship to adopt, to say ifwe have to break even on a three-year period that isjust a soft way of introducing a wage bill cap becausethat is your biggest amount of disposable cash, whatyou spend on your wage bill. But just to be clear, Iam not advocating a wage cap of individual players. Ithink we had that battle 50 years ago, and you can’ttell people what they should and shouldn’t earn. Whatyou have to say is how much can a club afford tospend in total on its wages, and not just on playersbut highly paid executives, for example. Let’s makesure we treat everybody fairly. How much can weafford? If they have to break even over a three-yearperiod there is a reasonable chance that the biggestlever they have to achieve that is to drive their wagebill down. I believe we should do that.I was at an airport watching one of the financialchannels, I can’t remember whether it wasBloombergs or one of the others, and they wereinterviewing a New York banker about the new BaselIII regulations for banking. He said, “We’ll have tofind 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 besmart people trying to figure their way aroundwhatever set of rules are in place. So our job is notjust to put a way in place of driving this business onto a sustainable economic model; it is making sure wehave the sanctions in place to get the people whocheat.

Q86 Paul Farrelly: My final question: you havegone some way in League 2 on salary protocols. Canyou give us a flavour of how that has worked and tellus how many clubs have gone into administration inLeague 2 since that has been introduced? Morebroadly, as you try to encourage it further up thepyramid, having secured, hopefully, the base, underwhat circumstances do salary caps work?Greg Clarke: Do you want to do the details?Andy Williamson: Certainly, yes. We introduced the60% ceiling based on turnover in League 2 as longago as six years now, so it is well embedded. I thinkit is fair to say the salary increases in League 2 aremuch lower than they are elsewhere, so there isevidence that it has worked in terms of ensuring thatclubs are sustainable. In terms of the clubs that havestill suffered financial difficulty, because at 60% youcan still lose money, and Darlington were one club, infact the only club, that were a resident League 2 clubthat got into difficulty during that period. Other clubsthat had been relegated from League 1 and came downwith the problem may have also caused us problemsalong the same lines, but only one resident League 2club has fallen into difficulty since the introduction ofthat salary cap. So it does work. Now we are seekingto shadow those processes in League 1 and, as Gregmentioned earlier, we have working groups looking atcost controls across each division on an ongoing basis.

But it is also fair to say probably there isn’t a singlesolution to this problem. We do have to look atdifferent solutions because there are differentcircumstances at play in the different divisions. Wehave already mentioned, for example, the parachutepayments that come down with relegated clubs fromthe Premier League in the Championship, so thatcreates a different dynamic at that level. So we haveto look, perhaps, at a different way of approachingfinancial viability and, more importantly,sustainability of clubs at Championship level. Thereisn’t likely to be one single solution, one panacea thatcould be applied across the whole of football.Greg Clarke: The psychology of football is quiteinteresting because in business, and many of us haveworked in business, you are taught that you have tobe better every day, the culture of continuousimprovement, otherwise your competition is going toeat your lunch if you get lazy. We can all think ofgreat corporations of 30 or 40 years ago that don’texist any more. Imperial Chemical Industries: wheredid they go? But football can be a bit backwardlooking and when you engage senior people fromwithin the game there is a penchant not to change, andwhen you talk about the problems of debt and theproblems that we need to deal with, whether it issalary costs, management protocols or financial fairplay, it is, “Yes, but we’ve always had these problems,life goes on”. You get them in a room and they willsay, “Yes, we must do something about this” but theynever do. One of the reasons we are spending so muchtime generating our five-year plan with numbers andwith a vision is to show them where you will end upif you don’t do something and say, “This is not anintellectual exercise and it has always been like thisso don’t worry about it, the problems will go away.We are heading for the precipice.” We will get theresooner than people think and we will hope to catalysechange when we validate that, share it with ourchairmen and say, “This is where you are going unlesswe change now.”Paul Farrelly: I hope we can have a look at a draftbefore we finalise our report.

Q87 Damian Collins: With regards to the salary capoperating in League 2, are all the clubs in the divisioncomplying with that protocol?Andy Williamson: They are indeed. If a club reachesthe 60% limit then they are immediately registrationembargoed, so they can’t increase that exposure.There is no facility for them to exceed it becausethose—it is a self-reporting process but we obviouslynow have the experience over six years ofunderstanding individual club turnovers and we havea plethora of information to validate the projectionsthat are submitted. We keep a tight rein on the amountthat is spent on the player budgets and I am pleasedto report that there aren’t any that have reached the60% currently.

Q88 Damian Collins: The fit and proper persons testhas been in place since 2003; how many people havefailed that test?Andy Williamson: I don’t have the figure. Certainlysome have.




Q89 Damian Collins: Would it be 10, more than 10?Andy Williamson: No, it will be single figures, but Ithink what we will never know, of course, is howmany people have been deterred by that test, whohave been frightened away because of the rigours ofthat test. I am not saying it is the be all and end all, butit certainly has created a different approach to peoplecoming into the game and they are aware. We nowhave a pre-approval process as well. If ownership ofa club changes they have to seek our approval. Infairness, that is a procedure that we copied from thePremier League so maybe they have inherited someof our ideas and likewise we have inherited some oftheirs.Greg Clarke: I can give you an example of that. Lastweek a chairman and chief executive of a reasonablylarge Football League club asked to see me at shortnotice. I said, “Sure, come on in.” They said, “Wewere approached by this group of people to do someattractive financial deal and we know they haveapproached another two clubs in the London area andthe guy leading it is on his third alias and has aconviction for fraud”. So we just put the word out, allthe clubs were phoned up and said, “Watch out forthis lot”, because they sound compelling and there area lot of clubs who would like to hear an easy story toget their hands on some more revenue and they’re abunch of crooks. So we do try to deter at an earlystageOur biggest problem isn’t necessarily people in theUK, because you can phone around in the UK andyou can get a reasonable off the record view of mostpeople. What if someone pops up from—let me picka country at random where we haven’t had anyonefrom, so they can’t say, “Hey you’re talking abouthim”—the Philippines. How do you find out aboutsomeone who has made some money in thePhilippines? You can phone up the embassy andthey’ll say “Oh well, don’t know much about him.”

Q90 Damian Collins:We had evidence submitted bySteve Beck on behalf of York City Supporters Trust.He is a former chairman of York City, and he said, “Ihad personal experience of dealing with an owner whowent on to try and obtain ownership of at least threeother League clubs over a period of years and wouldhave passed the fit and proper persons test after almostbankrupting my club.” Quite a serious charge aboutthe test. Do you think the test is stringent enough? Doyou have enough power to enforce this, given thebleak picture you have painted about clubs going intoadministration and some of the business practices thatput these clubs right on the edge?Greg Clarke: Let me say that I am hoping that overtime all of our tests and our penalties get stricter,because I believe in a well-regulated businessenvironment that we have here, with real duties to thestakeholders, like the fans and the communities andso on. But the issue is we also have to protect naturaljustice. If we have any evidence we will act. I mean,for example, if someone comes into a nearly bankruptfootball club in good faith and tries to save it and itstill goes over the edge does he become a bad personbecause he has got an insolvency to his name? Thenuances here of real hard evidence and looking at

intent and having the resources to dig into everyperson who wants to be part of a consortium to buy afootball club just provide practical barriers. They areno excuse for lack of performance and we are tryingto do better all the time.

Q91 Damian Collins: In our previous session, thereare some business practices people have been criticalof. Olswang, the law firm who worked with a numberof football clubs, raised one of these, which is the useof VAT money basically as working capital on behalfof football clubs. They said, “In any other industry,this is an incredibly serious event that leads quicklyto a winding-up petition and personal consequencesfor those involved, but this seems to be not just oneor two clubs involved in these sorts of businesspractices but a big problem.” Do you think that issomething that you, as the League, should take aposition on?Greg Clarke: I think we should, yes. We at the Leagueand the clubs that drive the League—because theFootball League doesn’t run the clubs, the clubs runthe Football League; we are a democracy; there are72 votes and they all count the same—are vehementlysupportive of HMRC. We sat down and came up witha set of measures about people start using thetaxpayer’s money as a bank—because, to be frank,without declaring any form of political opinion, theGovernment has got better things to spend its moneyon than football clubs at the minute. If people don’tpay their tax bills, for example HMRC say theyhaven’t paid their PAYE, what we should do isimmediately put a transfer embargo on them so theycan’t sell players. That is a big stick in The FootballLeague. If you ask me would I support extending thatto VAT, yes, absolutely I would. We need to improveour sanctions all the time to stamp out bad businesspractices.

Q92 Damian Collins: Sorry to hurry you but I knowthere are lots of people who have questions. The lastthing I want to ask about is the football creditors rule.If that rule went, for example if you were a footballclub and the football creditors rule did not exist,would you be less likely to sell a player to anotherclub that you thought was in financial difficultiesbecause you might know that you might not get thatmoney?Greg Clarke: Let me just tell you a slightly expandedanswer to your question. I came in here from acorporate background thinking the football creditorsrule was an outrage. I came in thinking the sooner wesee the back of that shoddy practice the better off wewill be. When you talk to club owners and you wouldsay it they would say, “Okay, we are a privatemembers club. We play each other in league, we playfootball together. Would you be a member of a clubwho didn’t pay its bills? Would you support theirongoing membership?” I said, “No, probably not”.They said, “What happens is, if they don’t pay theirfellow football clubs we will kick them out of theFootball League. They will cease to exist. We won’thave them.”




Q93 Damian Collins: Gordon Taylor, who is comingin next, said in his evidence, “The football creditorsrule protects the integrity of the game and ensures thatthe club cannot achieve success beyond their financialmeans.” But that is what they are doing. They mightbe protecting each other in the way they do that, butthat is what they are doing.Greg Clarke: What I am trying to say is, we aresearching—I mean, for example, there is a lot ofdebate within the Football League and the FootballLeague board, for example, the Football Leaguepolicy is to support the football creditors rule for thereason that the default position is if the club doesn’tpay its other football clubs they will kick it out of theLeague and it is gone forever. It can maybe start upround the corner on a park and rebuild itself.

Q94 Damian Collins: Sorry to interrupt, but if thefootball creditors rule didn’t exist, would it help theclubs to police each other? They would be more awarewhen dealing with each other that if I’m buying aplayer from another club and they are in financialdifficulties or are selling to another club, I might notget my money, and therefore they are helping toregulate each other, but at the moment there is no suchincentive at all because they can take each other’smoney. They know the transactions are protected andthat if the club goes into administration they won’t bethe ones that will lose out; it will be a local businessthat supplied that football club.Greg Clarke: Let me answer specifically yourquestion, because it is a fair question. Some of thebiggest organisations in the world mispricedcounterparty risk over the last three years. They lentto organisations that could not pay them back.Expecting half of our football clubs to quantifycounterparty risks—the football clubs—where theydon’t know what their finances are, what assets theypledged, what securitisations they have got in place;what that will do is stop them selling to each otherbecause they don’t have the resources or theinformation to make a well-informed decision oncounterparty risk.

Q95 Damian Collins: My original question was ifthe football creditors rule didn’t exist would clubs bemore careful about buying and selling players to eachother. Would they?Greg Clarke: Absolutely. I think there would be a lotless buying and selling.

Q96 Damian Collins: Given one of the pressures inthe game seems to be inflationary pressure on playersalaries and on player signing fees, that might be quitea good thing. It might be a helpful way of helpingclubs be more sensible about how they do businesswith each other.Greg Clarke: Andy will say a few words in a minute.I would be loath to leap to that position without athorough analysis because the unintendedconsequences could be horrific. But they might begood, and let’s work our way through it because weare looking for a better way.

Q97 Damian Collins: Would you lead an analysislike that from the Football League? Would you say,“This is something we should do”, because a lot ofpeople are questioning why this rule exists?Greg Clarke: One of the scenarios we are generatingas part of our five-year plan is what happens if wemove away from the football creditors rule. What doesit do to the game? What we are trying to do is have away of testing ideas and finding out where we end upif we adopt them rather than just saying, “Let’s giveit a go and see.”

Q98 Damian Collins: The final question on this—Ihave probably taken up quite a lot of the Committee’stime—is that you have spoken a lot about somethingI think we all agree with: football clubs, particularlyFootball League clubs, are a key part of their localcommunity. People are right to ask the question ofwhy is it that if that club goes into administration, itsdebts to other Football League clubs and other partsof the country are taken as a priority, while its debtsto local suppliers that it probably deals with are not.It is the local businesses in the community thatfootball club serves that are more likely to suffer if aclub goes into administration than a football club 500miles away.Greg Clarke: I cannot construct an argument thatallows me to defend the morality of football creditorsand we are working hard to find a more palatablesubstitute.

Q99 Paul Farrelly: Just on this very briefly, you sayin your evidence if the football creditors rule isremoved, there is a greater risk of clubs ceasing toexist. I would say, “Up to a point, Lord Copper.” It ispost facto preferential treatment of creditors, and it issimply an extra obligation and condition that a buyerhas to take on, and therefore it will reduce the pricethey are willing to pay for the club and therefore thesurplus is available to other creditors. Is that not thecase?Greg Clarke: In any normal business that statementwould be true. If you go through the last restructuringsthat Football League clubs went through, and thereare plenty you can get on the public record, the pricepaid for a club, largely, people pay you to take it offtheir hands. If I had sat next to just one chairman whosaid, “If I could find a good owner who would giveme a quid for this place I’d take it tomorrow.” Thebanks take a haircut, the creditors take a haircut. It isa situation of it is not a compelling asset to own.Largely good owners see it as, “I’ve made somemoney and I’m going to pay it back into mycommunity and I am going to try and keep the localfootball club going”.

Q100 Jim Sheridan: The last question I asked aboutcompensation for young players; what kind of moneydoes change hands for compensation for youngplayers?Andy Williamson: That varies enormously. Under thepresent system, clubs are left to mutually agree thelevel of compensation. If they can’t agree, it would goto a compensation tribunal.




Q101 Jim Sheridan: What kind of figure is that:£1,000, £10,000?Andy Williamson: It could range from £1,000 toseveral hundred thousand. I think in recent times therehave been figures as high as £500,000 or £600,000,but I was on one of these tribunals as long ago asmaybe 10 or 11 years for a player called JermainDefoe. He moved from Charlton Athletic as a 15-year-old, and that tribunal set a base figure of £400,000 aslong 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 wemust turn to governance. Perhaps I will make acontroversial statement. Lord Triesman last weeksometimes had the tone of a jilted lover having had alover’s tiff, but the Football League has brought intwo independent directors, including a new chairman,and six people involved formally in football. Whatbenefit has that brought to your governance and doyou think the FA and the Premier League couldbenefit from adopting your board model?Greg Clarke: I have been sitting on public companyboards for large corporations for the last 16 years. Iwas on the board of Cable and Wireless, I was on theboard of BUPA, I was on the board of Lend LeaseCorporation, in Australia, and the independents arethere to see fair play. They are there to balance,because there are always conflicts of interest. Forexample, if the chief executive wants to be paid moremoney, you have to balance the good of the chiefexecutive versus the good of the shareholders: what isthe right balance? The committees that make thosedecisions are largely composed of independentdirectors.The Football League took the decision well before mytime that they would have a senior non-executivedirector and an independent chairman who wereindependent of football, who had been football fans,had maybe worked in football a long time ago, knewwhat football was all about, but came without anyvested interest to any divisions or any clubs and couldbalance the needs, because we do have differences ofopinion between League 2 and League 1 and theChampionship. I spend a lot of my time trying to findcommon ground, along with Ian Ritchie who runsWimbledon, the All England Lawn Tennis andCroquet Club, I think it is called. We spend a lot oftime trying to broker agreements so we can moveforward, because when you have a number ofstakeholders in a decision-making forum it is reallyeasy to default to nothing ever happens becausenothing can be agreed. You end up with anodynestatements that we are all going to work together tosolve the common problems of X, Y and Z, andnothing happens. That is why you need independentdirectors, and we have been very forceful in ouropinion with the FA that they need not justindependent directors but if independent directors seebad things happening on that board, they can standup, make a fuss and be noticed, and if they resign thatis a big issue, not, “Oh, we’ll just get another one.”We made that point in our submission and I have satdown with the new chairman of the FA andencouraged his desire to get independent directors and

pledged the support of Football League to thatinitiative.

Q103 Dr Coffey: You have two seats on the FAboard, I believe.Greg Clarke: We do indeed.Dr Coffey: In the recent change where DavidBernstein came in, were you opposed to that, becausehe still had formal links in a way with football?Greg Clarke: I was not consulted, and rightly so. Letme tell you what happened. One of the problems youget in football is everybody wants to know what isgoing on all the time, and the FA board wereexceptionally good at keeping their deliberations tothemselves so there weren’t leaks about Fred, Maryor Bill is going to get this one. That was on the basisthat each member of the decision-making forum, ofwhich we had one, was sworn to absolutely secrecyand Tony Kleanthous, who is chairman of Barnet, whois on the FA board, was our nomination. Tony cameto me and said, “Greg, these are the conditions. Areyou happy with those?” I said, “Tony, you have mysupport in keeping absolutely quiet but when youmake a decision just let me know.” He phoned upstraight after the board meeting, when it had beenannounced, and said, “It’s David”. I said, “Oh great”.So, I support the process. It is a tough job running theFA, don’t get me wrong, and the best person, a really,really good person is going to find that job tough. Ilooked into David’s background and he is a tough guy.He has worked in real businesses. He has managedfractious boards and shareholders. He has been aroundthe block and he will have our support, but it’s notgoing to be easy.

Q104 Dr Coffey: What about those structuralreforms that you have introduced in your governancearrangements, that without question the FA are notdoing today, that you think could make a visibledifference into the future running of the FA, whetherthat is the development of grassroots sport or whetherit is the success of the England team?Greg Clarke: I met Lord Triesman. I think weoverlapped by a couple of weeks. I was there a weekand the CEO left, I was there another couple of weeksand the chairman left. I thought, “Crumbs, I better notstart planning my pension in this job.” I sat down withhim and I asked him what he thought his role was andhe told me. I said, “Look, I’m here to try and build aconstructive working relationship to get things done,so why don’t we all sit round a table and just say whatare three or four important things and let’s get themdone.” Go through a confidence building exercise andsay, “Hey, we can get things done” and move on toeven harder things.I invited him, because he didn’t come to any FootballLeague games, and I said, “You’ve got to build—”because one thing I know about football is you haveto build a support base. I have done 60 clubs, notbecause I like spending five days a week travelling. Iam going to Torquay tonight; I was at Rotherham theother week; I was at Bradford. I do five games a weekbecause I need to understand what is important tofootball and I need to build a support base. I said tohim, “You don’t come to any of our games. You’ve




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 himas a bad man; he just lacked the common touch ofgetting out there and moving people his way. What Ihave told David is he will have our support. We willtry and drive things forward. We are willing to attackthe contentious issues together in good faith. We arenot going to brief against him; we are not going toundermine him. We are going to be a proper partnerand if we have an issue with what he is doing we willsit down in private and hammer it out with him.

Q105 Dr Coffey: I think you said the new chairmanhas a desire to bring independent directors on theboard. So that is stated?Greg Clarke: Before he took the job he was one ofthe people saying we need that. I would be amazed ifhe doesn’t drive hard for independent directors. I amnot here to speak for him, but he comes from abackground where it is normal to have independentdirectors. We are not talking about, “Shall we go intogenetic engineering of humans” or something beyondthe pale. We are talking about something that thecivilised world has accepted as a normal way ofrunning these sorts of organisations. Why wouldn’t wedo it?

Q106 Mr Watson: The former League clubKidderminster Harriers nearly went intoadministration last week. Do you think there is moreyou could do to work with supporters’ trusts to helplower League clubs or former League clubs improvetheir governance model?Greg Clarke: I am a big fan of supporters’ trusts. Iam not one of these people who just says, “Oh, they’regreat but we don’t want anything to do with them.”Let me give you an example. When we were rescuingLeicester City we did that in partnership with theLeicester City Trust, and the supporters’ trust put£100,000 into the rescue and nominated a directorwho sat on the board. I sat down personally with themanagement committee of the Trust and said, “Look,I’m not being patronising but you have to understandthere are duties on a director of a company and if youbreach those duties there are sanctions that will beapplied by the DTI. You have to understand theCompanies Act, not in detail but broadly what you aresupposed to do and what you are not supposed to do.We encourage you to put forward somebody who canunderstand how to be an effective director andunderstand what he can and what he can’t tell themembership at the trust meetings.” They appointedone of the senior partners of one of the biggest lawfirms in Leicestershire. He was a cracking director buthe got in all sorts of trouble with the trust; not nastybut they would say, “Well, who are we going to buythen in the transfer?” and he would say, “Well, I can’ttell you”. They would say “What good are you doingif you can’t tell us what is going on?” It is a tough jobto have because the person who can discharge those

responsibilities has to say no to a lot of questions fromthe people who put him in the job.

Q107 Mr Watson: Let me just ask you two practicalpoints. Do you think there is more you could do toenable these kinds of trusts, whatever model they take,to take a stake in their clubs? Presumably, given thecomment you have just made, you wouldn’t agreewith some rules around transparency so thatsupporters’ trusts could see the accounts of the club,for example?Greg Clarke: I think every business should publish itsaccounts and be transparent. For example, if I amgoing to sell my club pies I would like to know thatthey have some working capital next year. If I wasgoing to put supporters’ trust money into a club Iwould like to make sure that club has plans to remainsolvent before I put my money in, otherwise I wouldbe breaching my duty of care to the people I waslooking after in the trust. So on transparency offootball clubs: the more we get the better off we willbe.

Q108 Mr Watson: Is there a role the Governmentcould play in making that happen?Greg Clarke: I am not temperamentally inclined toheavy duty regulation in football but we may come toa point where, if football does not make enoughprogress to get its house in order, we will need to godown that road.

Q109 Mr Watson: Presumably if we can help youfind some practical ways the trusts can take stakes andimprove transparency, do you think the truststhemselves might need to be governed at some point?Greg Clarke: Once you are dealing with sums that runinto hundreds of thousands of pounds—for example, Iwas with a club that was in all sorts of financialdifficulty and I was talking to the person who wastrying to help them out about two weeks ago. He said,“I’m talking to the trust. They’ve got £300,000 in thebank.” I said, “Let me get this straight. You are £4million short of staying in business. Are you takingtheir £300,000 unconditionally or part of a £4 millionpackage?” He said, “I’m just taking the £300,000.” Isaid, “I wouldn’t do that if I was you, because if thatkeeps you in business for another 10 days and theylose all their money I will be really unhappy aboutthat.” I had no power to enforce that but at the timehe didn’t do it. We will need ways of protecting well-meaning supporters from losing all their money in afragile football environment. Once we get football onto a sound footing, if football trusts want to invest insteady state businesses that can stay in business thatis great, but at the minute I am not sure all the trustshave the expertise in place to diligently understandwhat they are getting into.Chair: I think that is all the questions we have foryou. Thank you very much.

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Witnesses: Gordon Taylor, Chief Executive, Professional Footballers Association, and Paul Elliott, formerChelsea captain and Professional Footballers Association Trustee, gave evidence.

Gordon Taylor: Brede Hangeland has been illthroughout the night and he has had to apologise forhis non-appearance today. I hope you will understand.Chair: Thank you for that. In which case, may Iwelcome to the second part of the session thismorning, representing the Professional FootballersAssociation, Gordon Taylor, the Chief Executive, andPaul Elliott, who is a PFA Trustee. We send our bestwishes to Mr Hangeland and hope he recovers soon.

Q110 Mr Sanders: A similar question to the lastsession: how robust do you think the English PremierLeague and Football League pyramid structures are?Gordon Taylor: By robust, do you mean how can theyprotect the existence of the clubs, bearing in mindwhat we have talked about with the debt?Mr Sanders: Is there a danger of fragmentation? Arethey secure?Gordon Taylor: Considering, I suppose, they startedwith 12 clubs in 1888 and it never ceases to amazeme—bearing in mind the economic difficulties wehave had in the last few years—how many full-timeclubs we have in this country. It is unique in the wholeworld to have 92 full-time clubs and, in addition, inthe Conference as well, over half those clubs are fulltime. We have the highest aggregate attendances, wehave the highest number of full-time players, so itwould be a little perverse of me to say it was notrobust.But, of course, we have probably never had a timelike this—I have been involved as a player andadministrator through very difficult times. The 1980swere terrible times, both for health and safety reasons,principally when the Government got heavilyinvolved, and since that time, of course, with theadvent of satellite television and the back-upsponsorship, the game has never had more income.On the other hand, it has never had more debt and sowe have that dichotomy. But I like to think when thePFA puts what assets it has at risk when we try tohelp clubs through financial difficulties—probablytwo-thirds out of the 92 clubs have had financialdifficulties over the last few decades.I never thought we would see clubs in the premiershiphave problems but, in actual fact, you can name juston the fingers of one hand the number of clubs whodid go out of existence and then, of course, even someof them have restructured, got back, and we have seenthe likes of Accrington Stanley and Aldershot comeback. We should not underestimate the great strengthof football in this country and these islands, which isquite unique, and how much a part of our social fabricthey are. So if you said, “How robust are they?” Iwould have to say they have met some big challenges.Those challenges in the 1980s were met with the helpof politicians and the legislators, together with policeand local authorities.Those tragedies convinced me that sometimesfootball—if you remember, I think the Prime Ministerat the time blamed football and football blamed thePrime Minister but the answer to those problems cameabout by excellent co-operation between everybodyinvolved in the game and then also supporters that gotthemselves properly organised, Government, police.

There was no interaction between the different policeforces. I couldn’t believe it. At the time, they wouldn’tgive information, and since that time there now is anational information network. When people said,“You will never defeat the bad behaviour or thehooliganism at football, you will never defeat theracism at football”, I have seen football come togetherwith help from people like yourselves and doprecisely that. So there are times when, it has not justbeen robust, it has been quite positive with regard tosocial life in this country, not least of which, ofcourse, is its social responsibility programme that isbought into by both clubs and players.

Q111 Mr Sanders: You mentioned debt. Howserious a problem is debt in the English game?Gordon Taylor: Debt is a serious problem for all ofus in the world and nobody is more aware than youare of the debt we have got ourselves into. I think partof the problem is I have noticed it has been so mucheasier—I get involved in the local citizens advicebureau at Blackburn and Darwen and I have seen themassive increases in debt, the way that we haveallowed people to run up credit cards, to run up debt.On a bigger scale that has been done by the banks aswell so it was almost inevitable. Football is not anoasis from what is going on out there in society. Itreflects it. So if there is debt out there, there is goingto be debt in football. In dealing with it, you havecovered the football creditors rule and you seem tothink that is particularly special to football, as thoughwe are looking for some actual special vested interest.It was done with the purpose of trying to keep a clubin existence and its importance to a community andto try and make sure that the supporters, who didn’trun the club, weren’t discriminated against and thatthe players who had signed in good faith suddenlydidn’t find their contracts not worth the paper theywere written on, and to try and make sure that a clubcould not win a cup competition or a league on theback of players whom they couldn’t afford to buy orpay. We never had any objection, of course, becausewe are all taxpayers, to the Inland Revenue being apreferential creditor. I think it is just since they havenot been allowed to be that, because of Europeanlegislation I believe, that that particular rule has comeunder attack.

Q112 Mr Sanders: Has the number of clubs wherethe PFA is helping to meet players’ wages increasedor is it roughly the same number that there has beenover the last 10 years?Gordon Taylor: Of course, we did have Portsmouthand we have had a number of clubs just of late. It hasdefinitely helped since both the Football League andthe Premier League implemented a better relationshipwith the Revenue and tighter controls from the centre,which is what was needed.

Q113 Mr Sanders: Has the number of clubs you arehelping gone down or has the number of clubs youare helping gone up?Gordon Taylor: It has gone down, albeit Portsmouthwas a massive amount of money compared with some



15 February 2011 Gordon Taylor and Paul Elliott

of the lower Football League clubs. It is allproportionate. Sometimes £50,000 or £100,000 couldcause a Football League club to really struggle,whereas with Portsmouth in the Premier League youwere talking millions, as we were with Leeds whenthey were in the Premier League. What we do in sucha situation is ask the players to hold together, not towalk out of the club. If they don’t get their wages theywould normally be totally free agents to walk out. Weasked the players, as we did with Bristol City 30 yearsago, to try and hold together and agree to defer theirmonies until the club got out of its financial problems.Having said that, there were many in the league at thetime, before the Premier League was formed, whosaid, “Let them wither on the vine. It’s naturalevolution.” I didn’t think so, because I am a greatbeliever in the history and tradition of the game andmany great clubs now in the lower divisions have anillustrious history and vice versa, and that is the natureof sport.

Q114 Mr Sanders: I think most football fans wouldbe very supportive of that view. But as a professionalbody, at what point do you take a decision, “We can’tkeep paying these players’ wages”? Do you have aformula that says, “We can do this for four weeks andif X doesn’t happen that’s it”, or do you just makeup your mind with each individual case that comesbefore you?Gordon Taylor: It’s not a cavalier approach. We havelawyers, we have accountants who will go to the cluband look through the books and see whether it ispossible to save it and try and work with them to lookat what measures we can use to save it. We don’t haveinfinite reserves with the PFA. In fact, the majority ofour funds are charitable funds for hardship, accidentand education, so we need to be quite careful on that.We are a lender of last resort. We try to encourage theplayers to defer some of their monies for a period oftime during which we hope the club can get out oftrouble, and I have to say for the most part that hasworked.

Q115 Mr Sanders: Are you currently lending to anyLeague club at the moment?Gordon Taylor: At the moment there are one or two.

Q116 Mr Sanders: Have Plymouth Argyleapproached you?Gordon Taylor: Yes, Plymouth have approached usand Plymouth is a club we are looking to help at themoment and working with the players to try and doour best to keep that alive, because we don’t have toomany clubs in the south west and, goodness knows,we need to keep them alive. You go down on yourholidays and the youngsters there, they like theManchester Uniteds and Arsenals but they also relateto the local club. I think it is important that we do allwe can to keep Plymouth alive; and you think it wasMichael Foot’s team, wasn’t it?Mr Sanders: Indeed.

Q117 Dr Coffey: On debt, you made a submissionabout gearing being required in all industries. Is therean element here that leveraged buyouts are a poor way

of trying to own a football club or is it simply that thetax incentives on a leveraged buyout are perhapsbetter for financing a club than the all upfront cost ofputting in equity?Gordon Taylor: Are you referring to my reference toAmerica? We have had certain problems in thiscountry where there has been big leveraged buyoutsof some of our major clubs—Dr Coffey: Yes.Gordon Taylor: That situation would not be allowedto happen in the USA where, as you know, they havedifferent franchises and at times they even move citiesand towns. That doesn’t happen in this country;maybe just once.

Q118 Dr Coffey: You have made some veryinteresting comments about liquidity.Gordon Taylor: I mentioned a limit of 20%, wherethey talk about a limit of 20% of leveraged debt, yes.Without being so specifically involved, I am awareManchester United need to keep being successfulbecause there is a big amount of debt and likewiseLiverpool found it hard to service their debt.

Q119 Dr Coffey: I have a personal perspective aboutlimiting gearing as well, which would be sympatheticto your general perspective, but you talk here to someextent about one of the things to follow from Germanymay be about the liquidity. As a former accountant,the one thing you can guarantee is a forecast is alwayswrong. How do you feel that is working?Gordon Taylor: None of us can see into the future butI think we do, at times, need to pay respect toGermany, and not just because they keep beating usat times in international matches. They did have atime when they didn’t achieve the internationalsuccess that they wanted to and they had a root andbranch approach, to youth development. There is goodco-operation between their national association andthe Bundesliga and they set standards for trying tomake sure that a club could, as we have heard before,at least say they had a balance sheet that could keepthem in existence, to see them through the season andthe next season. They have tried different approaches.They have emphasised the priority, which is good, ofhaving full stadiums. They have managed to lowerticket prices and not affect them badly financially andhave full stadiums.You can never just transplant a culture. Germany isdifferent. Holland, for a small country, doestremendously well internationally. You can look atbest examples of other countries. Not too long ago,France was the best example for youth developmentand bringing it through. Now that has moved to Spainand then you see the predominance of Barcelona andMadrid, which is not necessarily healthy, bearing inmind they do monopolise success in that countrybecause those two clubs have their own individualtelevision agreements, which we don’t have that inthis country.It has needed support from Parliament at times to havea collective deal on condition that the Premier Leaguedoes give a very significant amount of money tograssroots and, of course, also to the Football League,albeit in the Football League we have almost




replicated the problem with the Premier League.There was a time when one club probably had moremoney from television than all the clubs of theFootball League and now the Championship is almostbecoming a Premier League division 2. So we arefinding the way they split their money—80% to theChampionship, 12% division 1, 8% division 2—isalmost now making it hard for division 1 and 2 clubsto stay in the same ballpark.

Q120 Mr Watson: Could I ask you about the role ofagents? Currently players’ agents are paid by playersand clubs. Do you think clubs should be allowed topay players’ agents?Gordon Taylor:What has become quite apparent oncewe had Lord Mawhinney with us was that to betransparent with regard to what clubs paid agents, forthe Football League initially and then to some extentin the premiership, is the massive amounts of money.When you think of the battles the PFA had to get anyshare of television rights for its members who peoplepaid to see and sit down and watch at home, and thatthat money goes into charitable causes and communityprogrammes and anti-racism programmes and help forold players, the PFA’s share of that is a drop in theocean compared to what has been paid to agents. Theyhave become very much a part of the game used byclubs. This isn’t for me to beat them on the head.FIFA tried to regulate them and could not; it was putin the hands of the national associations. We thoughtwe were making some progress with transparency andthe full knowledge for the player and the club of whatoffers had been received and what monies had beenreceived. Now it looks as though it is going to be openhouse again.I am just reminded, the more you try and look intoagents, there was an inquiry into American sport as towhether they should be governed by national law,state law or by the sport itself. One of the classicquotes was that they found quite a number of agentshad first class degrees from Harvard and Yale butthere was quite a significant number who had just hadthe third degree from the local police. They are in aworld that is very difficult to control. They areattracted by the money in the game, like they wereinvolved in the film industry and the pop world.I thought we were making some progress with thattransparency and regulation and exams andmonitoring by the FA but it looks as though it is goingto be open house if we’re not careful. If you aretalking about financial propriety in the game, thetransfer system can be a vehicle for abuse because ofthe vast amounts of money and the money that goeson what is called magic roundabouts. Unless you gettransparency 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 tokeep a grip on that and, of course, FIFA needs to keepa grip on a few other things of that direction. But it isnot a time for letting go of a compliance hold onagents. It is a time to be probably tighter than ever.

Q121 Mr Watson: So if FIFA and the nationalbodies have failed in their obligations to regulateagents, do you think the Government would need tostep in?Gordon Taylor: It is like I was saying about theGovernment stepping in: you probably have enoughon your plate with legislating on criminal law andeverything else without football agents. Far be it forme to say, but sometimes it is as a result of InlandRevenue inquiries and our national media. They cando a job sometimes if there has been corruption. Ithink they are either in the game or they are out of thegame. If they are in the game then they need to beunder some form of control. I referred you to theproblems of the 1980s when everybody was passingthe buck and it was only those problems of safetyand violence and other problems were addressed by acombined approach. That approach needed legislationfrom this House and, of course, closed circuittelevision was massive, but many other areas werebrought into play that were a good sign of howfootball could work together with Government.

Q122 Mr Watson: I am going to put a question toyou that I am sure you have heard many times before.It has been said that players’ high wage demands areresponsible for the level of debt that clubs carry.Would you like to address that assertion?Gordon Taylor: Last Friday afternoon I wasanswering questions, because the former Archbishopof Canterbury—I think it was George Carey—said itis up to the bankers and Liverpool players to helpLiverpool. I always find myself on the back foot. Thegame is about players. It is the players whom peoplepay to watch. I don’t think anybody goes to see a filmand complains about Brad Pitt’s wages, or perhaps Ishould talk about a new potential Oscar winner’swages, and the same if you go to an Elton Johnconcert or a Take That concert. I have never heard afan yet say, “It’s terrible the money they get.” It is aquestion of they either pay it or they don’t.I am amazed at the money that television pays footballbut, on the other hand, football has been good fortelevision. The price is higher than what you wouldnecessarily want to make sure people who areunemployed could go there but they seem to keeppeople coming. It is a very short career; an averageeight-year career. We lose 50 players a year withpermanent injury. People seem to forget that they payover half their money, in spite of the fact—and alimited number of players have image rights andbecause they have an image in their own right,particularly the Beckhams, of course, and maybe theWayne Rooneys, but that’s a very small percentage.The vast majority are on a pay-as-you-earn systemand will be paying more than half the money back tothe Treasury.It is not for me to say but when you talk about bankersgetting bonuses, people seem to forget if they get thebonuses over half of that is going to come back to theTreasury. It is the same with footballers. I just thinkevery labourer is worth his hire. They don’t hold agun to clubs’ heads; they never have done. When inthe past out of about 70 clubs where there has beenfinancial problems and there were no wages on time




and those players could have walked out for free andgot another club, they held together for the sake of theclub. At times they don’t get acknowledged for theirloyalty. When everybody says they were loyal in theold days, I’m not having a go at the players beforethe maximum wage was removed. They were loyalbecause there was no incentive to move, because ifyou moved to another club you were on the samewage. It is only since the likes of Bosman hashappened that there has been a greater mobility—anaverage probably three years at a club now.

Q123 Chair: Paul, you had a very distinguishedplaying career; what is your view on that?Paul Elliott: I think football is like a lot of otherbusinesses insofar as always the top half or the top 1%always earn the big money. Whether you are playingbasketball, baseball, or tennis, it is all relative.Footballers are getting commensurate to their valuesand what they bring, because ultimately they drive thevalues. Everybody fills stadiums, whether it is 75,000at Manchester United every week down to 60,000 atArsenal and so on, to watch the best people and theentertainers. Football is a global sport and I have toendorse what Gordon was saying. I myself as a player,having played at the various highest levels, was oneof those players who came out of the game throughinjury.The PFA has been very instrumental in that becausewe talk about the 1% but are we talking about the95% of kids that come into the game at 16; at 18 theydon’t even get a professional contract. Less than 5%of those are still in the game at the age of 21. So weare talking about the ones who are at the outstandinglevel and the risk of injury is extremely high and theiraverage lifespan within football is from eight to 10years. As a former footballer, I suppose every nowand then I have a thought at the back of my head,“Maybe I should have sued my mother and fatherbecause the timing wasn’t quite right.” Butrealistically, as a professional footballer, I wishfootballers all the best because I have heard of storieswhere things have gone wrong for many of them andthey have been bullied out of football clubs. Theyhave not had the support that they would have likedto have had, for young players. I think it is soimportant. There are so many intangibles—that is thepoint I am trying to make—at all levels of the game,so those that get to the very top and stay there, theyare very dedicated, they are very focused, they makea colossal contribution back into the community. Theyset up their own foundations and they have atremendous consciousness about what is going on inthis country.I think that is exemplified if you look at the PFA andthe 4,000 existing members that they have but alsoabout 50,000 that they serve outside of the game andover the last two years over 25,000 community visitsall over the country in a number of areas: crime,drugs, anti-racism. So, everyone wants to talk aboutthe salaries, and I understand that, but equally, as well,you have to look at the other areas where they makea commensurate positive contribution, too.Gordon Taylor: The PFA doesn’t work just for whatis good for players and see a club go out of existence.

We are one body that has been determined to try andkeep clubs alive. We are obviously conscious that theynot only employ our members but many other peopleas well. Everybody talks about salary caps and it isabout wages of the players. The game is about theplayers, but a club like Manchester United managesto attract some of the finest players in the world andyet, of course, keeps its salary levels to below some50% to 55% , I believe, and manages to manageperfectly adequately.

Q124 Mr Watson: Can I ask about the governancearrangements to provide new protections for thepressures that modern players find themselves under?They are not just on the back pages for what they doon the football pitch. They are on the front pages fortheir private lives. They are in the financial pages fortheir financial arrangements. Do you think the currentgovernance arrangements in football adequatelyprotect players and is there more that can be done togive them support?Gordon Taylor: What we are finding in this day andage is probably young men who are a little bitcocooned. You have heard about youth developmentand a club can approach a youngster virtually in thecradle now, from eight and nine and all the way up to16 before they can join a club full time. That worriesme a great deal because there are so many things thatcan happen with growing up even before they havereached adolescence.As Paul said, all I know is that of the 600 who join atage 16 we will lose 500 by the time they are 21. Thoseyoungsters are disillusioned, their parents aredisillusioned; they need picking up, they need lookingfor alternative careers. We provide that but if there isgoing to be a lot more emphasis and money spent onthese nine, 10 and 11-year-olds and the 16-year-olds,we want to see a better success rate, otherwise therehas to be a much better exit route, that theseyoungsters are guaranteed a career outside of footballas well, otherwise there is going to be a big wastageand a great deal of disillusionment.In cocooning them, every youngster they get is toldhe is going to be the next John Terry, David Beckham,Wayne Rooney. Their parents are convinced and, ofcourse, life does not work like that. It is a good thingbut the PFA has taken on the responsibility ofeducating them, together with the Football League andthe Premier League. Life skills—the more moneythese youngsters have, they can have problems,addictive problems. So, it is life skills. It is preparingthem psychologically. There is a lot more effort givento psychological care of these youngsters and thepressure on them. I am not saying they would swapit, it is a great life. But exactly what you say, it needsa lifestyle programme and clubs need to accept that ifthey are going to spend thousands of hours on tryingto make them footballers, you can’t succeed withevery one and there has to be a great deal of time andeffort on trying to keep them as human beings andcontributing, because football is such a short careereven if they make the grade.

Q125 Mr Watson: How many of your members havetold you they thought they had their phone hacked?




Gordon Taylor: Right, that is a bit of a switch. I’mnot sure what that has to do with the governance offootball but the fact of it is that the media, as youknow full well, this Committee, is interested in all thelives of footballers because they are the newcelebrities. I mentioned film stars and pop stars, butprobably footballers and the likes of David Beckhamand his wife get on the front page as much as the backpage. Let’s just say I am aware of very intensivemedia scrutiny of them, as you will see when peopleare encouraged to tell tales about footballers and areoffered payment for it. It is part of that life skillsprogramme that we try and give to our youngsters tomake them aware of what is happening away from thepitch on a 24-hour basis, to be very mindful and tobe careful.

Q126 Mr Watson: So the responsibility to protectprivacy or for players to conduct themselves and takeextra precautions to protect their privacy would liewith the PFA or with the—Gordon Taylor: No, the PFA can’t be responsible foreverything. Every individual is responsible for himselfto some extent. But there are parents there, there isfamily there, there is his club there. The club and themanager are a big influence because they are at thatclub every day, and a lot of clubs do. Some peoplesay footballers don’t associate with the supporters likethey used to and it is perhaps not surprising becausethey feel quite exposed and vulnerable because of thatstronger world from the media and the strongerpressure.

Q127 Mr Watson: Have you given guidance tomembers on how to guard against phone hacking, orwould that be a club responsibility?Gordon Taylor: Well, both really. It’s both. It is aresponsibility of the club and the individual, anyadvisers he has in lawyers, and also from the PFA aswell, yes.

Q128 Mr Watson: Did David Beckham have hisphone 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 notan inquiry about phone hackingMr Watson: No, it is about governance of footballand 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 dayswith the technology we have, isn’t it?

Q129 Jim Sheridan: I apologise because I will haveto leave soon as I am meeting the Speaker. Gordon,you referred in your opening comments to thequestion of racism in the game in the 1980s and1990s. I would like to put on record my recognitionfor what Paul did in Scottish football in trying toaddress the question of racism in football. It is notperfect but a million times better than where we werebefore Paul came. Perhaps this is a naive question,

Gordon, but millions of workers depend on tradeunions recognising or negotiating on their behalf.What is the difference between footballers simplybecause of the money they earn? Just finally, I knowthat you said that the major grounds are full and noone is twisting their arms to go in there but I wouldargue that there are an awful lot of people at a lowerincome level that are excluded from the game,particularly the top game, because of the prices.Gordon Taylor: I agree with you and I get veryworried at the priority of professional sport. We needsupporters and we need them live and if our groundsare not full there is nothing worse coming over ontelevision. When Italy had a situation where it hadindividual clubs doing individual TV deals and theyshowed so many live games virtually of every club,that then affected the attendances and to see big emptyspaces, suddenly television is not quite as interested,neither is the armchair supporter. The atmosphere isnot there. That is the one of the areas with ourcommunity programmes that we have tried to makesure they look to accommodate the unemployed,particularly those less fortunate members of a localcommunity—it is not just a business but within thatbusiness concept and knowing they have to breakeven—to try and make sure the stadiums are full andmake sure we educate a generation of youngsters, ifthey are not playing the game, to at least be watchingthe game in the future, otherwise we have no divineright to be the major spectator sport or participantsport. So I do agree with that.Jim Sheridan: I think at a previous session we weretold that the—Gordon Taylor: Sorry, a lot of clubs are mindful aswell, to be fair, and will give special reduced pricesfor different graded games.

Q130 Jim Sheridan: We were informed that notmany young people come through the gates—I thinkthe average age was 45 years or something.Gordon Taylor: I think part of the price of televisionis the fact that everybody could rely on a 3 o’clockkick-off on a Saturday afternoon or perhaps onemidweek game and that has gone. So it is a lot moredifficult.

Q131 Jim Sheridan:Why can’t trade unions do whatthe agents already do and so keep the money infootball?Gordon Taylor: I am all in favour of that. The onlything is sometimes when we have been asked byparents—and we have handled many top-quality starsof today when they were youngsters—they get door-stepped and they get offered things that the PFAcouldn’t do because it would not be within the rules,which is a bit in line with what you were saying withyour experiences in Scotland, I think.

Q132 Paul Farrelly: I just have a couple of questionsgoing back to agents and who makes what out ofplayer transfers is as important for the reputation ofthe game from the infamous quote, “Cloughy likes abung”. Paul, as a player, do you feel uncomfortablethat agents can, without disclosing it, take a cut fromboth sides of the deal? Would you, as a player, feel




that they are necessarily acting in your best interestsor their own in that situation?Paul Elliott: It is an interesting question. I think youcan either look to yourself personally, because duringmy own career I always negotiated my own transfersbecause I made it my business to get myself educatedand understand about the business. Therefore, I wasalways confident enough to represent myself. So, inthat scenario, from my perspective it is hypothetical.

Q133 Chair: Is that still done or would all PremierLeague players now essentially use agents?Paul Elliott: I think there are a lot of players whoobviously have agents and I think there are a lot ofvery good agents there that serve their clients verywell indeed. Equally, I think it is reasonable to saythat there are players there that don’t necessarily needan agent but would have an accountant or a lawyer,because obviously they are very intrinsic skills thatare very important. Possibly a player would notunderstand the legality of a situation but certainlywhen it comes to understanding their own values andwhat they are worth, I think most players are verycomfortable to articulate that and don’t necessarilyneed a third party to do that.

Q134 Paul Farrelly: Are there any requirements atthe 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 wasreferring to. We have made some progress and it wasthat they needed to give full information of thedifferent offers they had had from different clubs: theoffers 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, sowhether we could do that on our own remains to beseen. If we do it on our own and other countries don’tdo it then it will be said to be impossible because ofthe nature of international transfers. But the points youmake are very valid, how you can properly act forboth the club and the player in the same transaction,but, of course, that has happened and agents have beenpaid by both parties.

Q135 Paul Farrelly: I am asking because this isabout governance and governance is all to do withreputation in the game. In the City of London it isfrowned on but not necessarily unusual for people totake fees from both sides, but the Takeover Code, forinstance, will enforce disclosure. The Guy Hands casewith EMI in court recently, most of the controversywas about taking a cut from both sides. But do youthink disclosure is enough?Gordon Taylor: I think transparency and disclosure isenough, and from that point of view that is the casewith most things in business.

Q136 Paul Farrelly: What about penalties then tomake it worthwhile people being truthful in theirdisclosures?Gordon Taylor: That needs a good compliance unit.Everybody said, “Why don’t you monitor it at thePFA” and this and that, but it is such a world. It

involves almost a fulltime squad. The banks obviouslygot in big trouble, didn’t they? There was supposed tobe the Financial Services Authority. They werefulltime. So you definitely need a fulltime unit lookingat the activities of agents. But, as I say, it is mainly attimes of re-signing contracts or a transfer from a club.Part of the problem that FIFA has not grasped thenettle of is there was a great uncertainty over thevalidity of transfer fees. This was part of thediscussions.We were involved with the Worldwide PlayersOrganisation, FIFPro when Andy Williamson referredto the European Commission and FIFA and transferfees and the fact that it is quite unusual for a playerto go for more than the value of his contract, and thathappened. So, as a result there is a great opportunityfor corruption with transfer fees and that is probablythe time when there should be the most transparency,particularly with the registration of a player at a clubin certain countries in South America, for example,whereby the value of a player, his registration, isowned by a third party who is prepared to put somemoney into the club on a short-term basis. But, ofcourse, when the player’s value increases, that valueis all down to this third party. In that instance, in theTevez and Mascherano case, it looked bad from thestart and it never got any better. I think that is onearea where the game needs to be properly governedbecause, you are quite right, the transfer system is onethat needs to be transparent and illuminated becausethe opportunities for corruption with the amounts ofmoney involved are very big.

Q137 Alan Keen: I just want to make a point. I thinkwe were in danger before of people comparingfootballers with bankers. It is not the players whodecide how much money they are paid; it is the clubwho have their contracts. The bankers are using, inmany cases, our money to pay themselves. So there isno comparison to players.Gordon Taylor: Well, especially now we own quite afew of them, don’t we?Alan Keen: Yes, but we are still not makingdecisions, the players are not making decisions—Gordon Taylor: No, exactly; that is what I said. Theydon’t hold a gun to the club’s head and if they did, ifthey 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 acommittee like this to talk about regulation evenwithin this country, so it is even more difficult to talkabout the international game as a whole. While wehave the opportunity to have you in front of us, I justwondered how you feel. You say you feel a greatresponsibility to players throughout the world. We aretold all the time how proud we should be, and we are,of the Premier League but how much damage are wedoing to the game of football internationally byattracting the very best players here? When FIFAmade the decision to place the World Cup in Russiathey obviously are trying to do that, and set aside anydubious reasons they may have, because they want to




extend the game internationally. What concerns doyou have, both of you, as looking after players in thiscountry, about the gravitation of the wealth that affectsthe international game?Gordon Taylor: Yes, I understand. I think it wouldhave been better if FIFA had come out and said. Theywould have saved us a lot of money if they had said,“The purpose of holding a World Cup is to try andtake it to countries that have never had it”, albeit Ithink we’ve done enough since 1966 to justify holdingit when you look at the efforts we have made with ourstadiums, our safety, our diversity programmes.Having been president of FIFPro, the internationalplayers’ association, sometimes the feelings and theperception of the culture and characteristics fromdifferent countries—as you will be aware on yourinternational visits—is quite true and I think the factis there is a great deal of envy and perhaps jealousyat the success of the Premier League, as waswitnessed when you saw the backlash with wanting totake the 39th game to the rest of the world. FIFA getsits money from international games, it needs a healthyWorld Cup and it will say a lot of things but one ofthem is, “We have far too many games” and thenorganises its own World Club Cup competitionbecause that is what they have never been able tomatch, that is why they are very much involved ininternational football.It is natural for FIFA to want that, in any sport it isnatural to want it, and as an administrator it is notgood for there to be a monopoly on success by fewerand fewer clubs and fewer and fewer countries. So thevery fact that some of these countries are losing theirplayers to here makes it very cosmopolitan here andwith foreign owners as well it means they are notnecessarily going to work for what is best for Englishinternational football because their first priority istheir clubs. That is one of the problems with theFootball Association because, while it took us 100years to get a seat on the council of the FA, it is runby the amateur game and the professional game andthere is no accommodation whatsoever on its mainboard for either the PFA, the LMA—the Leaguemanagers with their experience—or the supporters’organisation and that, I find, is quite offensive whenyou think of the initiatives we have brought into thegame that I have talked about and that you are wellaware of.The fact is that every other country in the world offootball actively encourages its former players whoare prepared to stay in the administration of the game.You look at France, Spain, Germany; they have beenvery actively involved and they have been a force forgood. From our point of view that has not happenedand that is one area where we can learn a great dealfrom the rest of the world. The world perhaps hasbeen looking at us and seeing how cosmopolitan weare. We have more players for World Cups in ourleague than any other country in the world. That isreally going to be hard and what I find is every sporthas a duty to encourage its youngsters to aspire tobecome that next generation of top class footballersbut the squad of players available for England hasbeen getting smaller and smaller.

In the same way that the Premier League now aresaying the more hours spent on learning how tobecome 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 playersfrom abroad and less and less players qualified forEngland. It must impact on the success of ourinternational team. That has been one of thedisappointments of my life in football because I loveEngland to do well. I think there is no reason why youcan’t have a healthy club competition, as we do, andhave success for England as well and much moreproportionate, considering we are the wealthiestfootball country in the world.

Q139 Alan Keen: One final question. You mentionedthe LMA and you have made great strides towardstrying to create a career structure in the game forformer players. We all understand a new managerwanting to bring in his right-hand man, that is thecoach, when he gets a new job and push the othersout, and sometimes they bring in a team of six orseven when they come in. Can you say more abouthow along with the LMA you are trying to do thatand the attitudes?Gordon Taylor: I feel it is sad when suddenly a club’sresults mean that staff depend week to week on thoseresults. I was hoping that with a good youthdevelopment programme all the staff could stay inplace but the fact is, of course, they move the managerout along with his staff these days and I think that isunfortunate for consistency. Another area is, no matterhow much we talk of investment in youthdevelopment and academies and centres of excellence,the fact is between 18 and 21 there is a glass ceilingthat they can’t break through and they won’t breakthrough unless there is some security of tenure bymanagers because their career depends on one week’sresults sometimes. So they never have the courage orthe necessary patience, which is understandable, to puta youngster in, because a youngster needs to play fora couple of games, take him out, bring him back infor more, take him out, when they are gettinginundated with agents—this is one of the good thingsof the transfer windows—to buy a ready-madeinternational player from wherever in the world.These are big issues for clubs and managers. Clubsdon’t always respect management as it should berespected, albeit the LMA have tried to getqualifications being necessary for the job.Compensation, it becomes very unseemly whensuddenly a chap is thrust out of work just because—you have seen what has happened at West Brom anda good young manager who has brought that club upand suddenly hit a bad spell and there is suddenly nofaith and they’re out. That is not just West Brom ofcourse; you name a club, that has been the situation,but there needs to be a recognition of footballmanagement as a proper skill and a profession.Alex Ferguson wouldn’t have been as successful as hehas been if his board at the time had been asshortsighted as some of the other clubs. I canremember Howard Kendall, he was on the brink aswell and then they had some faith in him and he wonthe League. You just find those managers, given the




chance, will inevitably produce, and it is like that withyoungsters. We’re getting into a world whereeverybody wants instant success and it is just notpossible. Success needs time and football is as goodan example of that as anywhere else.

Q140 Dr Coffey: On players’ wages and thefinancing of clubs, in a different industry actors arestarting to take a stake in a film and, if you like, havea lower salary and benefit in the financial success. Youwere talking earlier about loyalty. Players areperceived to be sometimes disloyal; they can be a heroone week, a Judas the following week. Is there a rolefor perhaps part of a player’s remuneration to berelated to the financial success of a club and havingshares?Gordon Taylor: Very much so. Paul made the pointthat it is not just players who seem to want to go.Often they are encouraged to want to go by otherclubs and often they are encouraged to want to go bythe manager who suddenly doesn’t pick them. I hadone youngster who has not had a game for 12 monthswith a premiership club—the squad is that big andthey’re not getting games—and that is just not easy.What you are talking about is there, of course but, onthe other hand, that is why the bookies are rich, youcan’t predict sport and you don’t know whether you’regoing to win or whether you’re going to lose. But, onthe other hand, it is a full-time commitment andgiving it a full-time commitment that needs time, thatneeds energy. They are encouraged to marry young;they have mortgages; they need a basic wage and theyneed to plan for the future. But, in answer to yourquestion, they get extra money for winning things andif they get relegated we are not averse—and webelieve it should happen and now it is probably not asbad because of the parachute payments, but when thegap was so big between the Premier League and therest we felt it had to be the case that that contracthad to be reduced because of the club’s income beingreduced. Now the same situation will arise if a clubgets relegated from the Championship to division 1;the drop in its income from solidarity payments andtelevision will be considerable. But really that is up tothe clubs; it is up to anybody. I don’t think anybodyminds paying out if money is coming in; what is hardis paying out more money if you’ve failed. It is justlike Mr Micawber and Charles Dickens: if yourincome is comfortably matching your expenditure,okay, and if not you know there is a problem. I knowmaybe some people would say debt is okay, youwouldn’t get debt if you weren’t in a strong position,and football does survive sort of on a wing and aprayer because the very nature of sport is it isspeculative.As an administrator you want everybody in everyleague to feel they have a chance of winning it butsometimes clubs do need to be controlled for theirown good because they do get carried away. A bit likeToad of Toad Hall, they think they’re going to winand they spend and suddenly they’re in big trouble.That is why it needs a strong Football League and astrong Premier League to say, “Your spending isgetting out of line; you are not allowed to take on anymore players”.

In the temporary absence of the Chairman, Mr TomWatson was called to the Chair for the remainder ofthe meeting.

Q141 Dr Coffey: I was going to ask Mr Elliott froma player’s perspective—you just said the role of thePFA—would that be attractive or would it be risky?Paul Elliott: I think if you look at the current ratiogenerally across the board of turnover a largeproportion of it is obviously made up in salaries andI think there is a genuine, legitimate case forperformance-related structures. Obviously a playerhas to have a basic wage but I think, obviously subjectto negotiation, there are grounds to have a morerounded, inclusive, performance-related structure thatsupplements that income and runs alongside that.However, I think you have to balance that against theplayer, the stature of the player, because ultimately Ithink you have to understand when we are talkingabout contracts and we are talking about transfer fees,signing-on fees, football is a supply and demandbusiness and you have to accept that clubs are sayingif they want the best player they have to pay the bestsalaries. I think as an ex-player, if I was discussing apotential contract with a club, I know my own worthand I’m doing my optimum and my level best tooptimise my value, that is my right. Obviouslylooking at it now, everybody wants to be part offootball at all levels. I am involved in a game at anumber of levels from grassroots to the very top leveland you have got young parents sitting around allwanting them to be the best but the reality is over95%, 96% don’t even make the grade. I think it isvery important to highlight that point so I certainlywould be favouring it.If I could slightly backtrack to a point that Alan made,particularly about the World Cup and to reaffirm apoint that Gordon made. I was very fortunate to sit onthe board of the World Cup bid as a non-executivedirector, and that was predominantly because ofGordon and the influence that Gordon had in pushingand promoting myself as a former player who hasserved the game at various levels from grassroots tothe top of the tree. It is important to note in thiscountry that we spent a considerable amount of moneyon that, the best part of, for argument’s sake, £18.5million if my maths is correct. What was clearlyevident, there was a number of reasons why we didn’thost the World Cup, politically and otherwise, but Ithink also as well the process, there wasn’t enoughtransparency in the whole process from the outset, andif we are clear on that then obviously we can make aconscious decision as a board: do we invest in thatmoney or do we say, “No, we’re not going to havea real genuine legitimate opportunity. We invest thatmoney back into grassroots, back into CSR, back intowomen and girls’ football, back into the disabled,back into this country in terms of growing our ownand our facilities, assisting Trevor Brooking and hisage-appropriate coaching”? I’d be happier to havespent the money doing that but it obviously wasn’t thecase; we weren’t aware of that. I think thereafter wealways said we would always be FIFA’s potentiallybest commercial partner because of the stakeholders




in this game and the Premier League with the FA werevery intrinsic to that.I think that with the foreign players, one of thefantastic things that they provide in this country is foryoung people to emulate their skills, to see them asrole models, to go into stadiums, because of theemphasis that they have on young people. As an ex-player, one of the things that I’m very passionateabout has always been about players. One of the mainreasons, I think, why we were unsuccessful in theWorld Cup was because there weren’t enoughfootballing people being part of that process. MichelPlatini is a great, great footballing man and on morethan one occasion he said, “I want to talk footballwith footballing people.” I think it is very importantto highlight that point where players are very, very,very influential.The players within the PFA have a significant role toplay within the structure of professional football tomove professional football forward. We have a veryintangible balance at the moment between serving thenational team; we have looked at where the nationalteam is on the global level, we have looked nowwhere we are post-2018 and there is a lot of rebuildingwork to be done among all the stakeholders in thiscountry, because one of the unique factors is theindividual stakeholders, there are so many. What weneed to adopt is a more collaborative process betweenall of the stakeholders to ensure that we can challengeand deal with these issues and, very important,reinstate our reputation, not just nationally, which weneed to do, but I think internationally with FIFA andwith UEFA because there are clearly fracturedhistorical relationships. I think the structure here thatwe are talking about—the reform of the governanceand the structure in the game—is a gilt-edgedopportunity to look at ourselves as individually asstakeholders within the Government, within the PFA,within the Premier League, within the FA.I think we have a very good chairman in DavidBernstein who has come in and he has showntremendous leadership very early on. He is a believerin equality, he is a believer in diversity, and I thinkequality and diversity has got to be glaringly intrinsicto the future of this football, in this game, in thisstructure within the FA, because if you look at thegame every Saturday, close to 24% to 25% of theplayers in the game are all from the BME, black andminority ethnic. But where is that visibility in theboardrooms? Where is that in senior management?Where is that in football administration? Where is thatat academy levels? Where are the women and thegirls? Where are the people that sit in stadiums weekin and week out: the disabled, women and girls,footballers, the people who are big contributors intofootball? Where is their presence on the boards, thecouncils and the committees?They are the defining issues. I think it is veryimportant for the FA to modernise and be fit forpurpose for the 21st century. The game has got tobe far more inclusive, far more diverse and far morewelcoming, because these are the key stakeholdersand there is room for everybody. I think it is importantthat we recognise that and have what I call realleadership, collective leadership, by all the

stakeholders to ensure that we are fit for purpose forthe 21st century, inclusive of all the parties that I’vejust mentioned.

Q142 Paul Farrelly: Gordon, last week we had apicture painted for us of Dave Richards, Sir DavidRichards—Gordon Taylor: Yes, Paul, just for one second couldI quickly say that with reference to Alan and yourself,one of the areas where with regard to youngstersgetting a chance and regarding what is sometimesenvy of our Premier League, with regard to theyoungsters coming through and giving themopportunities, sometimes we need rules. Sometimesthey will be challenged by Europe, but one good newrule has been the home-grown player rule, irrespectiveof nationality, to have at least eight out of 25 in yoursquad. I think that needs to go further and we shouldhave at least three starting on the pitch and if that ruleis applied throughout Europe it gives a chance to ournext generation to have a chance. I think that is animportant 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 boardmeeting Sir David Richards and the Football Leaguerep, they all meet to agree the line. Come the FA boardmeeting, the representatives of the amateur gamewon’t vote against them if they disagree because theyknow where their bread is buttered, and that leavesthe chairman and chief executive, if they disagree,without a paddle between them. Hence, there has beenthe recommendation, which the Football League in itsevidence has supported, of two independent directorscoming in on the FA board. That begs the question ofhow are they appointed and who are they appointedby and what role organisations such as your ownmight have in that appointment. But you haveadvanced a different model. You have talked about atleast representation from sectional interests on the FAboard and you have mentioned at least three: theLMA, the PFA and the supporters’ trusts. What wouldyou like to see happen?Gordon Taylor: I feel very strongly about that becausethe Football Association is supposed to represent allsectors in the game. The game of football, if nothingelse, the players have to be part of that game, it isabout playing the game, and from that point of viewI believe also the record of the PFA in introducinginitiatives. In 1994 we didn’t qualify for the WorldCup; we found we had just not been getting enoughcoaches to coach the next generation. We developedour own department of coaches. Our department at thePFA of coach educators is higher than the FA’s. In the1980s, we developed the initiative of saying to clubs,“You can’t just be somewhere where people will comeif you’re winning and won’t come as much if you’relosing. You need to be a focal point of communityactivities.” We developed about the behaviour, aboutthe anti-racism. We have had good ideas that otherbodies have taken on board. We’re probably a strongassociation because we have been kept out of it but itdoesn’t make it right, if you know what I mean. So Isay, yes.The FA is very big insomuch as amateur andprofessional, I suppose it is like having your local post




office bank with Barclays Global, but the key factorin there are the players and the mangers. We havemanagers who are not mad, they are very dedicatedand they have a lot to offer the game. The footballsupporters I talked about in the 1980s got themselvesorganised. As you will know from the background,they have combined together. They are trying to havea voice. They are not lunatics who are going to go toa boardroom and say, “We demand this, we demandthat”; 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 thecouncil. I go because I respect that but I might as wellbe, to be fair, a little bit of a nodding dog in the backof the car because there’s an executive committee andthere’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 personwere somebody like Paul or the trustees we have, yourChris Powells, your Garth Crooks, loads of lads.But I think at least bearing in mind the amateur gameis there, the Football League is there and the PremierLeague is there, well, where is the PFA, where is theLMA and where are the supporters? It is so glaringlyobvious it hits you in the eye. We are so archaic inthis country, not just in football but in other sports,and I said to you sometimes we think we’re the bestin the world and hopefully sometimes we will be, butwhen you wonder what happened in FIFA you look atevery other body. I go to Wembley because I supportevery game. Their chairman inevitably gets up to say,“Thank you for having us” and he’s inevitably aformer player who has wanted to stay involved in thegame. Everywhere I go it is a former player involvedin administration because they care about the gameand care about the future. I’m not saying thevolunteers don’t but I’m saying at least let somebodywho has put their life and soul and body on the linefor the game be involved in the administration. Weare blatantly ignored. From that point of view it is soobvious, if you look for an independent person whowon’t have a fraction of some of the experience of thepeople sat behind me.

Q143 Paul Farrelly: Okay, Gordon, it is very goodof you to mention an old Stoke City legend, GarthCrooks, but just to use an analogy, yes or no. To usean analogy, is your position on the future governanceakin to saying that the unions are on the supervisoryboards of German companies, why shouldn’t theunions be on the supervisory board of the FootballAssociation, of the football game in the UK?Gordon Taylor: We’ll still work for the good of thegame 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 FootballAssociation. It’s just so obvious. They need theplayers for their cup competition and for England, andit’s just so obvious, it’s so self-evident, to worry aboutwhich independent people they should have when theycould have people from those sectors of the game andfor once claim to be at least all inclusive. By the way,all those bodies then would have a collectiveresponsibility to make the decisions work but thosedecisions would be better decisions because they

would encapsulate a lot more knowledge in makingthose decisions.

Q144 Damian Collins: I just want to touch on thefootball creditor rule which, as you know, we coveredin the last session, and ask first Paul Elliott, assomeone who has negotiated your own transfers, ifthe football creditor rule didn’t exist and therefore theclub went into administration, players might have agreater financial risk because they might lose salariesand monies that are owed to them. Do you thinkplayers would be much more careful about the clubsthat they sign for and whether the wage offers that aremade, attractive though they may be, are realistic andaffordable by their club?Paul Elliott: I think there would be generalconsideration 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 wouldlook at the aspirational levels of the club, whether thatis consistent with my own aspiration, and thenthereafter obviously you look at the financialconsideration to the club because I have a family, Ihave other people, I have dependants that I have tolook after. But that wouldn’t be uppermost in mythinking because first and foremost I’m a professionalfootballer, I have very big aspirational levels. Youwant to play in the best stadium, you want to optimiseand maximise your skills with the best players in thebest stadiums, playing around the country, nationallyand internationally. I personally would certainly lookat it from a very professional-minded aspect first.Thereafter, obviously I’d give consideration to thefinancial but ultimately there is a legislation. You havegot to think in terms of business, what is the fallout.If you’re not going to get paid, then there is legislationthat protects the players where the players can go ona free transfer. That is your worst situation but I havenever, fortunately, had to think like that or beassociated with a club that has obviously beenmismanaged in an inappropriate manner. But first andforemost I would certainly look at it from aprofessional perspective.

Q145 Damian Collins: Yes, because the footballcreditor rule is there to protect the interests of playersand other football clubs in that regard and a lot ofwhat we have talked about today—the higher ticketprices at the grounds, the difficult financial situationof lots of football clubs, the role of television in thegame—all of that is linked to money and most of thatmoney is going to players. The machinery of footballhas created huge amounts of cash and that cash isbeing used to pay players.Paul Elliott: Yes, and ultimately, if it wasn’t forplayers there wouldn’t be spectators inside the ground,that is the bottom line, and the players are the highestform of entertainers and we are in a supply anddemand business. If I’m a player and a club is offeringme something that I think is commensurate to myvalue—whether it be £100,000 or £50,000, whateverthe case is—I wouldn’t say no to that. If you were aplayer you would not say no to the same.




Q146 Damian Collins: I think it would be wrong iffootball was being run for the benefit of the directorsof football clubs.Gordon Taylor: May I just say, Damian, I rememberthere was a time when there was a limit on players’wages, up to 1961 since about 1888. There wasmassive crowds, multi-millions, 20, 30, 40 million;we didn’t see any great investment in stadiums orwonder where the money went then, from that pointof view.

Q147 Damian Collins: The purpose of the questionis not to say we should go back to that at all. Thequestion is, to what extent do footballers themselvesshare the risks that other people in the game do whenthey are the beneficiaries of the way the wagesystem works?Gordon Taylor: Footballers would have to share thatrisk if you decided there couldn’t be a football creditorrule, but what we would do, there would be no playerwould ever go to that club again. If it reconstructed,it would be at the bottom. The supporters would beabsolutely aghast. There would be a terrible loss. Most

of those players at that club would walk out and getanother club the next day but those supporterswouldn’t have a club to support and all the contingentwork that is created by that club, with the caterers, ifI go through it all it’s almost like match funding, ifyou like. There would be a massive loss and it isn’tsuch a bad rule.Reference has been made to the St John Ambulancenot getting paid. That I can’t believe because you seethese days they employ their own people. If St JohnAmbulance needed funding I can assure you there isenough millions going from the PFA and Governmentand from the Premier League to charities that anylocal St John Ambulance Brigade need not worryabout its future.Mr Watson: Thank you. Gentlemen, on behalf of allthe Committee members can I thank you for a veryentertaining session. Gordon, you shared great insight.Paul, can I also say on behalf of the constituents ofmine in the north-east part of my constituency in WestBromwich, particularly a Mr Adam Smith, I have totell you you are a living legend and I have to say helloto you. So, thank you very much.

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Members present:


Ms Louise BagshaweDr Thérèse CoffeyDamian CollinsDavid Cairns

________________


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 afurther session of the Culture, Media and Sport SelectCommittee inquiry into football governance. I wouldlike to welcome this morning David Gill, the ChiefExecutive of Manchester United; Peter Coates andTony Scholes, the Chairman and Chief Executive ofStoke City; and Niall Quinn, the Chairman ofSunderland FC.Dr Coffey:Mr Coates, why did you decide to becomea football club owner and what encourages you tokeep pumping money into your club?Peter Coates: I am a Stoke boy, I have supported theclub since I was a boy and I have had two comings atStoke—an early one in 1985, after which I sold theclub to an Icelandic consortium and then bought itback again in about five years ago this summer. Ibought it back again against my better judgment, insome ways, and my family’s, who all thought I wasdaft to do it. The club was in a mess at the time andI thought I could help it and do things for it, and Iwas a bit disappointed with my previous time, a therewas little bit of unfinished business about it and allthat sort of thing. But I thought it would be importantfor the area if the football club were doing well. Stokewas having a difficult time. It has lost the pot banksand the mining industry. I thought that if Stoke couldget in the Premier League it would give the place alift and would be good for it. I think that that hashappened, I am pleased to say.

Q149 Dr Coffey: Would you say it is a kind ofphilanthropy that you do as opposed to, say, puttingmoney into the Potteries Museum or—Peter Coates: There is an element of that, because Idon’t expect to make any money out of it. I do notthink you can make money out of football at Stoke’slevel. I think you can at a certain level, but not at thelevel of a club of our size. I think it is almostimpossible, but obviously I enjoy it as well. Obviouslyfootball is important to me and I enjoy it when wewin, yes.

Q150 Dr Coffey: Let me come across to Mr Quinn.What inspired you to get that consortium together toform Sunderland?Niall Quinn: I suppose that the potential of the clubhad not been reached. Having been a player there andhaving seen the journey going really well and thenhaving come to a shuddering stop, I felt something.“Unfinished business” is probably not the correct

Paul FarrellyJim SheridanMr Adrian SandersMr Tom Watson

term, but I felt at the time of my departure that thingswere not done properly. I bore that for a couple ofyears in my mind. I worked as a journalist and in TV,and the opportunity came to go back and—Peter saidthe same thing—to make the place go and reach itspotential and work, and therefore the spin-off was theregion would benefit. My belief was that the footballclub that I was involved with, which had won onetrophy since the war, was managing to have 47,000people at matches when it was about to be relegated.How good could that be if we got it up? Could webecome 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 goodtime as a player there. I had played for big clubs—Arsenal, Manchester City—but I never had the samefeeling of potential and collectiveness between fanand club as I did at Sunderland, so I am trying to pushthat on.

Q151 Dr Coffey: So for Stoke or Sunderland, whatare 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 onfrom there, obviously, but the truth is for us stayingup is a considerable achievement and that is what wehave 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 whatwe are there for.

Q152 Chair: Can I just follow that up? To whatextent 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 tobelieve that we will make progress. We started thePremiership journey a couple of years before Stokeand we are now beginning to feel, with the investmentand the policy that we have and the way the club isrun, that we can look at playing European football atthe Stadium of Light. That has to be the next realistictarget for us now. I would like a few more points onthe board this year. We are not mathematically safe atthis moment in time, but we are up in eighth place inthe Premiership. We are looking to a consistent run oftop 10 finishes which allows us to join the Evertons

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8 March 2011 David Gill, Peter Coates, Tony Scholes and Niall Quinn

and Aston Villas—Tottenham and Man City seem tohave moved on a level lately. I am of the opinion thatthere is a top half of the league. Initially, there wasthe top four, who everybody thought wasimpregnable, and City and Spurs seem to be doingsomething about that. Everton and Aston Villa werethe next clubs and we would like Sunderland to bepart of that group. That is a realistic target for us andif a cup competition came along—

Q153 Chair: That is not winning. It is playing inEurope, which is an aspiration. You say that your fanswant to believe, but do they actually believe that oneday Sunderland could win the Premier League?Niall Quinn: Win the Premier League? I guess theydo not. I guess they don’t, but what they expect of meand expect of everything that is drilled down to ourclub 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 giventhem a game. That is what keeps us going. There isonly one winner every year, but there are three peoplewho burn, and lots of disgruntled fans. We love thisPremier League so much. The world loves it.Sunderland itself loves it. It is vital to be in it, and initself that is good success.

Q154 Chair: Is that the same in Stoke?Peter Coates: We try to get better every year. Wethink that the longer we stay in, the better we will get,because knowledge and infrastructure will beimproved. Also I think that there is some evidencethat the longer someone stays in, the better chancethey have of staying in. We want to get better everyyear and I suppose the first thing would be to becomea solid Premier League club—one that does not haveto worry quite as much about relegation. The truth isthat probably 12 or 14 clubs have that concern at thestart of the season. If the number is 12, say, there willbe a 25% chance of being relegated. Those are quitehigh percentages, but equally we play some of the bestclubs in the world. We play Manchester United, andwe play Arsenal and Chelsea and other such clubs.They are world-class clubs. That is good for StokeCity and it is great to have them in the city. Playingwith them is great, and we like to give them a game—and usually we do. We do not play them thinking weare going to lose. We play them hoping that we aregoing to beat them and certainly give them a goodgame. I think that means a lot to the supporters.

Q155 Chair: But realistically that is the height ofyour aspiration, to stay up in the Premier League andto regularly play against Arsenal and ManchesterUnited?Peter Coates: No. We have a big game on Sunday;we play West Ham and we could get into the semi-finals of the FA Cup. It will be great if we do that.That is further progress. We have not done that for 40years, so it would be excellent. There are things forus to go for, and the higher up the better. One day wemight have a terrific season and play in Europe. Youdo not know, but we are trying to get better all thetime.

Niall Quinn: It is possibly worth noting that whenwe play Championship football, our fans are not asinvigorated and as in love with their club as they arewhen we are in the Premiership. When you make thecomparison you sound as if it is deflatory to not beable to win, but on being in the Championship orPremiership, ask our fans. There is only one placeto be.

Q156 David Cairns: Mr Gill, I have a generalquestion. What do you think are the biggest challengesfacing you as the Chief Executive of ManchesterUnited?David Gill: If you look at the level of the club, youwill see that we have always had the team as ourfocus. Everything we have done has been about howsuccessful the team has been. The challenge for us ismaking 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 businessdecision—David Cairns: Feel free to tell us who it will be nowif you like.David Gill: Those are the key things, but obviouslywe want to make sure that we play a role in thedevelopment of football generally. We need to havecompetitive games against Stoke and Sunderland, forexample. We need to ensure that it is a competitivegame. We need to make sure that the English gamedevelops and continues to be as successful as it hasbeen so that we can benefit from that. We play withina game. We cannot go and buy five other clubs so thatthere are only 15 in the Premier League every year. Itstarts with 20 teams. We start in the third round of theFA Cup, the opening stages in Europe and so on. Thebiggest challenge is to ensure that the team remainssuccessful, and our goal is to be the best team in theworld, both on and off the pitch—things which areclearly interrelated.

Q157 David Cairns: As Chief Executive, on a day-to-day level, how large does the debt loom in yourmanagement 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 £130million in cash in the bank at the moment, so there isa net debt of £370 million. We have gross interestcosts per annum in the order of £45 million, and ourcash profits are around about £100 million. So wehave more than two times interest cover. The bondsthat we have in place are covenant light—in otherwords, we do not have quarterly reporting in terms ofcovenants and so on—and we are very comfortablewith that. We have seen great growth in the last fiveyears in terms of our turnover. Also it is a profitablebusiness if you get it right and that has generated cashprofits. From my perspective, we know that the debtis there but it doesn’t impact on what we do. We lookat trying to grow our revenues and invest in thebusiness to make sure that we can continue to expandand be successful.

Q158 David Cairns: We are going to talk about debtfinancing in more general terms a bit later on. It does

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not impact on what you do, but surely servicing thatdebt, and interest payments and fees and all the restof it, are money that is not being spent on players orimprovements of the facilities or whatever?David Gill: No; let us look at improvements tofacilities. We have spent a lot on Old Trafford in thelast few years. We have just had approved a £13million improvement to our training ground, whichhas been open 10 years, upgrading it to reflect whathas happened in football in the last decade. There hasbeen no impact in terms of our transfers.

Q159 David Cairns: But you would rather you didnot have this debt, presumably?David Gill: Well, not having the debt is one thing, butthe other point to note is what the owners havebrought in terms of growth in certain aspects. Forexample, when they bought the club they saw lots ofopportunities on the commercial side. Our commercialrevenues 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. Sothey have grown that. We have invested in people. Wehad 460 employees then and we have 600 now. Yes,in answer to your question, simply the amount is £45million. If that was not there it would be better insome respects, but at the same time it is not hamperedus in developing the club. The net spend on playerssince the owner has taken over is greater than in thefive or six years before that.1

Q160 David Cairns: I am sure that that is true, butthere can’t be any ambivalence about this. Obviouslyit would be much better if Man United was notcarrying those levels of debt and servicing them,surely?David Gill: In isolation, yes, but there is no issue interms of asking whether Manchester United has beenhampered in terms of what we have had to do as aclub in respect of investing, as you quite rightly say,in facilities, players or player contracts. I personallybelieve that there has been no impact in that respect.

Q161 David Cairns: What kind of communicationdo the owners make with you in terms of setting outtheir strategy and so on? How do they communicatethat to you? How do they set out their vision for theclub on a year-to-year basis?David Gill: We have both annual budgets and five-year plans, and we have constant dialogue in boardmeetings, in calls and so on. That speed of decisionhas been very positive, and I think that they havetaken a view on longer-term investment whichperhaps we would not have undertaken if we had beena quoted company. Who is to say? But that is the view,so I think they are intricately involved. As I said toyou earlier, they clearly saw the commercialopportunities for Manchester United. They liked howthe Premier League was run. They thought it was avery well-run league in comparison, say, with someaspects of the NFL. They felt that they could use thestrength of the Premier League, but also the strength1 Witness correction following the evidence session:Excluding the sale of Cristiano Ronaldo to Real Madrid CFfor £80m in 2009.

of Manchester United, to push the club forward. Ithink that they have demonstrated they can do that.

Q162 David Cairns:Would you prefer it if they wereable to demonstrate that to the fans? There is clearlya breakdown in communication somewhere. The fanssay that the Glazers do not talk to them, and they arenot getting the positive message that you are getting.David Gill: The owners have delegated to me—to theteam that we have, and to Alex Ferguson and so on—the task of doing that. That is a model that otherowners have copied within the Premier League. I cangive you other examples where owners have notspoken directly to the fans. The sheer size and natureof Manchester United perhaps means that we get morecoverage on such matters, but as an executive team,on behalf of ourselves and the club, and so on, wehave extensive communications with our fans. Yes,we do not communicate with certain fan groups, butthey have an avowed aim to change the ownership. Itwould be slightly strange to enter into dialogue withthose groups who have that intention or that objective.I am not sure where it is going to lead. We have totake all those elements of fan communication veryseriously.

Q163 David Cairns: Why do you think so many ofthe fans just simply loathe the Glazers?David Gill: You say “so many.” They are wellorganised. They are very domestic. We have donestudies which show that we have 333 millionfollowers around the world. Our mailbags are large.We get thousands of e-mails; we had 36,000 phonecalls last month. Not everyone hates the owners. Thesuccess that we have delivered on the pitch in the lastfive years is significant. There have been seventrophies since they have taken over. A lot of the fanswant to ensure that there is money to spend on theteam. They want to come to a safe modern stadiumand see exciting, attractive football—and I think wehave delivered on those counts.But that has always been the case. Looking atManchester United pre the Glazers, when we firstwent public in 1991, a lot of fans did not like the clubat that time. We couldn’t understand why it was. Theshare price dropped. They didn’t buy the shares, thenit went back up. They loathed the Edwards family.There are a lot of examples, not only around this tablebut across the Premier League, of fans who do notlike the owners or management. That is one of thestrengths of football. It creates opinion.

Q164 David Cairns: The situation of Man United inrelation to the Glazers is no different to any otherclub?David Gill: I am not saying it is no different. The sizeof Manchester United and the coverage means thatperhaps it is magnified, but without doubt, there areissues at other clubs. You just have to read the papersor watch the television to understand that.

Q165 David Cairns: Mr Scholes, I have a similarquestion for you. What are the biggest challengesfacing you in your job?




Tony Scholes: The No. 1 challenge, as Peter has justsaid, is putting a team out on the pitch that is goodenough and competitive enough to stay in the PremierLeague—to stay in the best league in the world.Bearing in mind that we were out of the top leaguefor 23 years, when we got promoted in 2008 we weresome distance behind everyone else. By keeping theteam in the Premier League we were able to build theclub up, to build the support base and to pick up onthose lost generations, if I can put it that way, derivedfrom our being out of the top league for 23 years.Being in the Premier League gives us the opportunityto do that. The No. 1 objective is to stay in the PremierLeague, and doing that enables us to fulfil ourobjectives, which are to build a support base and theinfrastructure of the club, and ultimately to build asustainable Premier League club.

Q166 David Cairns: In day-to-day terms, whatwould you characterise as the main differencebetween being in charge of a football club in theChampionship and being in charge of one in thePremier League?Tony Scholes: I guess that running a football club isthe same as running any company in many respects.You have to know what your objectives are, and youhave to have good management to achieve thoseobjectives. That is the same in the Championship andthe Premier League. The differences, of course, comefrom the fact that we are playing in the biggest andbest league in the world and the money that that bringswith it. Obviously our income level went upsubstantially. That makes some things a lot easier, butit also brings some new challenges. Perhaps one ofthe key challenges is always managing the downsideas well, so that if things do go wrong, we are strongenough to come back.

Q167 Ms Bagshawe: What do you think makesPremier League clubs so attractive to foreigninvestors? Could we start with you, Mr Gill?David Gill: You are quite right; it is admired aroundthe world. The way the league is structured is a factor,and it has clear objectives. The collective selling ofthe television rights has clearly been a success and ithas made things more competitive.With regard to howthe league is organised, there is light-touch regulationfrom the centre of the league but also anunderstanding what the commercial parameters are.The clubs get on very well. We all support thecollective selling. We understand that strength behindthat. Within that we have seen a sport that is growing.The sheer interest of this Committee shows that, andwhat is happening in football around the world,whether in the World Cup, the Euro or the ChampionsLeague. 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 allthose people what their favourite league is, it is thePremier League, because the Premier League is oneof the best leagues in terms of selling those rights ona collective nature in those markets. You can pick upall the teams, all the games and it is a very positivething. So I think the time was right with the advent ofsatellite television. The league plays exciting football

and it has attracted a good mix of foreign players—top, top players. All those factors coming together ina growing industry has meant it has become attractive.

Q168 Ms Bagshawe: Mr Coates, you took a clubback out of foreign ownership. What do you thinkmade something like Stoke so attractive in the firstplace to foreign investors?Peter Coates: What?Ms Bagshawe: You took a club out of foreignownership by buying it back.Peter Coates: They wanted to go because they hadlost their money and that happens a lot in football.Ms Bagshawe:Whether they decided to sell it or theydidn’t, but what do you think they—Peter Coates: They were desperate to go.Ms Bagshawe: What do you think attracted them toit in the first place?Peter Coates: They thought they could make it work.They thought they could take Stoke into the PremierLeague. That was their objective. They thought theyhad a manager, an Icelandic manager, who could doit. They were confident. Iceland, if you remember, wasdoing rather well and growing and taking over theworld and one of the first things they took over wasStoke City. They found it was much more difficultthan they thought. Foreign owners come in and it isimmensely difficult. It is the best league in the worldand it is the most international league and that is whyit attracts foreign owners, because of its internationaldimension. It attracted even small Iceland, which is apopulation less than Stoke. They thought they couldmake it work and do well. I remember it very well.They had a bit of money to spend; they thought theywould have a bit of fun, enjoy it and make somemoney, because they thought they were going to getinto the Premier League. Of course, they discoveredhow difficult it was. It is an immensely difficultindustry to work in. You have immense pressure fromthe media, immense pressure from your supportersand it is a tough business.

Q169 Ms Bagshawe: Mr Quinn, what do you think?Niall Quinn: I suppose the example of Sunderlandwould be, again, one where the owner has bought intothe potential. One of the first things I asked him to dowas understand the emotion of our football club, andI think that is the area where foreign owners, throughthe lack of PR or whatever, sometimes have an issuewhere people do not understand where they sit interms of their love and affection for the club. I wouldsay one of the issues—it is not my issue butManchester United’s—is the people do not reallyknow how the Glazers feel deep down in their heartsabout when a referee makes a bad decision. Do theygo home really fed up after a game like we all do orare they taking the call from the golf coursewondering how the team got on today? I think that isthe thing that is out there.I know that is not true, of course, and in our case it isespecially not true. One of the great things about ourowner, which is appreciated by our fans, is he hasmore than bought into the emotion of it. He hasbought into it financially, but also in terms of his weekbeing a bad week, no matter what he is doing, if the




club has not done well. I think that is a measure ofhis involvement at the club.The other good thing is he lets football people run thefootball side of it. There is trust in the air, and it is toget the fans in Sunderland to believe that, whichmakes our team—which is fans, work force, players,and of course our owner, and our board—know thatwe are all pulling in one way. That is a tough askand nobody is more aware than me of how foreignownership is mistrusted. In our case it is not; it iswelcomed with open arms. In selling the club to MrShort and selling the idea of the club, for somebodyin that bracket as he was at the time it seemed a greatstory, a great adventure to go on. These people arewinners. They like to see can they improve it. If I canmarry that in with the fans’ approval, then we have agood formula.David Gill: I can assure this Committee that ourowners have had a very bad week.

Q170 Ms Bagshawe: In terms of restoring some ofthat trust with the public and foreign ownership andin terms of governance, do you as a panel think thatthe Premier League is making sufficient inquiries offoreign investors before they purchase a club? Do youthink there is enough due diligence going on? MrQuinn, we will start with you on that one.Niall Quinn: It is interesting. I can think of one ortwo cases in the past where there was a media outcryon people who were involved with clubs. It involvedfit and proper persons, as they were called, and theissues came into the public forum. Basically what Ican say is that in the period over the last few years—post Portsmouth’s demise, post other things that havehappened—that has really tightened up now. I thinkwe are confident and we know that the PremierLeague have tightened that up and shifted that to apoint. Without going too deeply into it, there is nowan international company that covertly will find outeverything they need to know about somebodycoming into the game.Ms Bagshawe: Associates, is it?Niall Quinn: We can’t tell anybody who it is. Thatneeds to be understood on the basis that if we were toturn around and stop somebody who can invest inother business in the country from investing in ourbusiness, could they sue us?Tony Scholes: One of the things that is worth saying,I think, is that in football most things get into themedia immediately. There is very little we do thatdoes not get reported on the following day. This is anarea that doesn’t. There have been a number of peoplewho have wanted to take over football clubs but havebeen prevented from doing so because of the PremierLeague’s rules that never get into public exposure.

Q171 Ms Bagshawe: Are you prepared to name oneof them?Tony Scholes: To be honest with you, I don’t knowthem either. That is the Premier League’s job. We areaware that there are a number but that is their job todo that; to have a look at them and to vet people whowant to take over clubs.

Q172 Mr Watson: Were the Glazers vetted?

David Gill: Were they vetted? They went through theprocess. Not to the extent that both Niall and Tonyhave said. I think there are two things here: one is thatthe Premier League has learnt from certain situations.We learnt from the Portsmouth situation and we, as agroup of clubs, all supported wholeheartedly therecommendations from the Executive to improve therules in terms of financial information and so on goingforward. As Niall and Tony have said, in terms of thevetting of owners, that has been improved. I think itis important for industry and for sport to learn frompast issues and to look them.I do not think that, regarding the attractiveness ofEnglish football versus other football and Englishbusiness perhaps versus British business and otherbusiness, passport is an issue. You can have very badBritish owners or very bad English owners. It is theability of the people coming in, their aspirations forthe club and the objectives of the club that matter. SoI think we should shy away from saying it is apassport issue and saying that you can only be Englishin order to be a proper owner of a football club,because I don’t think that is true. It is much moreabout the right owners than about their passport.

Q173 Mr Watson: Am I right in saying thatManchester United, the actual company that isManchester United, is now resident in Delaware in theUnited States?David Gill: That is one for the owners. ManchesterUnited Limited, is clearly a UK company. Thefootball club is a UK subsidiary of that. As to theultimate owners, that might be the case. Where is theultimate 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 theChief Executive of Manchester United is to run theclub according to our own financial structures, toensure we continue to compete at the highest level ofthe game. The ultimate ownership up there issomething for the owners. But what I would say isthey have confirmed—and the Premier League checksthis—the ultimate owners of Manchester United,100%, are the Glazer family.

Q174 Mr Watson: My point is, though, that don’tyou think there should be some nationalembarrassment that a great English club likeManchester United is owned in Delaware?David Gill: Not at all. Manchester United Limitedpublishes its accounts every quarter of every year. Iam not quite sure why they would be anembarrassment as long as the company is operatingproperly within a great competition. I thinkManchester United should be a source of pride forEngland, in terms of what it does and has done withinthe Premier League, and in terms of its performanceand importance to the economy. We understandfootball is very important to the economy of theUnited Kingdom, and to the social fabric, and we actresponsibly within that. So I don’t think it is anembarrassment in any way, shape or form.

Q175 Mr Watson: I am sorry to make this aboutManchester United, but just on the point about the due




diligence, the secret organisation that vets potentialbuyers—Niall Quinn: It is a law firm.Mr Watson: Yes, law firm. Can I just ask, would yoube confident that the Glazers would pass that new testtoday 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 thinkit is fair to your supporters that there is some sort ofsecret organisation that vets—Niall Quinn: It’s not a secret organisation. It is a lawfirm; sorry, I beg your pardon.Jim Sheridan: We are getting closer; it is now a lawfirm.Peter Coates: I think it is a specialist in that sector. Itis something I wanted them to do because I felt if wewere to improve the fit and proper person test, youwant to make sure it is properly vetted and I thoughta specialist company would be the best way to do it.

Q177 Jim Sheridan: Did you not think it would behelpful to share that experience, that information, withyour supporters?Niall Quinn: Just on that point again—Jim Sheridan: Aren’t they entitled to know what kindof person is owning the club?Niall Quinn: Yes. Where there are certain people thatthis firm did not want involved, we couldn’t make thatpublic, because those people could maybe have comealong and tried to sue us.

Q178 Jim Sheridan: Are you aware of any otherindustry discipline that behaves like this?Niall Quinn: In terms of trying to get to the bestpossible result for the fans?Jim Sheridan: People don’t know what kind ofperson owns the business.Niall Quinn: I think they do. We obviously pass.David Gill: The point here is that ultimately itbecomes clear what this process is. There might befive people bidding for a club, and I think what thePremier League has done is institute quite properprocedures to look at various things regarding theappropriateness of that takeover, whether it relates tothe actual person in terms of his past business dealingsor past issues, or to their business plans, which willinvolve asking whether they have the finances andobjectives to take the club forward. That will meanlooking prospectively from a financial perspective. Soout of that five—they vet five—three might pass thetest, and for them it then becomes a bidding situationin terms of who gets the club. The other two might befailed and we as clubs and supporters don’t need toknow who the Premier League has turned down. Ithink it is more appropriate for the organisationcontrolling the league to do that.Tony Scholes: It is a very positive thing because theleague in football has been criticised in the past forallowing people to take ownership of clubs which arevery important institutions, allowing the wrong peopleto do so. So they have implemented what started asthe fit and proper persons test and it has beenstrengthened as a result of learning from some

incidents that happened in the past. They have got anindependent firm in. Recognising they didn’tnecessarily have skills to do that themselves, they gotan independent firm in to vet those people. So thepeople who end up owning clubs are those people whohave passed. The Premier League and everyone infootball knows that they will be appropriate stewardsand good custodians of the football club; so it is avery positive thing. I would not see it as a bad thingat all.

Q179 Jim Sheridan: The point I am trying to make,perhaps rather badly, is that if you do not have thatopen transparency in sharing that information, you arethen left with the conspiracy theories—the speculationabout whether people owning clubs have an interestin laundering money, for example. That is the kind ofspeculation and conspiracy that opens up when youseem to be hiding or not sharing information thatshould be there.Niall Quinn: I don’t think there is any hiding there. Ithink what we are saying to you is as a group thisPremier League—Jim Sheridan: But you won’t even tell us who thisorganisation is, this law firm.Niall Quinn: That could change. Maybe I sounded abit too covert there. It is a law firm, a specialist lawfirm. It is up to the Premier League in a meeting toagree whether to make that public. I can’t make thatpublic on their behalf. What I would say to you is theissue that you want is the issue we want, and we wantto make sure that fans have a say about that. Do theyneed to be told about somebody who probablychanced their arm and came along and we saw comingearly? I think it only creates a little bit of instabilitywhere people think that we even would speak to thosekind of people. We have to do the thing right, Jim, toget 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 thePremier League and say, “Should we make it clearbecause people have a doubt about this?”Jim Sheridan: In terms of the fans, it is a need-to-know basis.Niall Quinn: I am here to take that on board and I willbring it back and we will look at that on your behalf.Peter Coates: But the UK does have open borderswith business, and football is partially a business aswell as a sport, and we have lots of foreign ownershipof many of our companies around the UK. It is a fairlynormal thing in that regard. They do not necessarilytell you who the people are who might have wantedto buy a company and who did not buy it for whateverreason. They only focus on the people who havetaken it.

Q181 Chair: It has been suggested in the past that,given some of the people who have ended up owningfootball clubs, it is difficult to see what you have todo to fail the test. Are you saying to us there arepeople who have been told they are inappropriate toown a football club?Niall Quinn: Yes.Chair: Do we have any idea of how many?




Peter Coates: We don’t know the numbers but we dounderstand that there are people who wanted to buyand failed to buy because they did not pass the test.That is our information from the executive of thePremier League, but we have no numbers for you.Chair: We will pursue it with the Premier League.

Q182 Mr Sanders: What role, if any, shouldsupporters’ trusts play in the governance of yourclubs?Niall Quinn:When it comes to fans and their love forthe club, I could just tell you about Sunderland andwhat we do with groups of supporters. We have ameeting every four weeks with our supporters’ liaisongroup. We have a meeting every six weeks with thebranches. We have senior management attend thosemeetings. We take into account their fears andrequests, and their desire for the club to do better—their side of the story. We bring it in and that reachesboard level and we look at ways of comforting themthat their club is being run properly. I think that isprobably the issue. Just last night, for instance, I hada forum of 400 fans; I have another one tonight with500 fans. Every so often we do this; we go out andwe give them a state of union address. We hear theirfears from the floor and not through the media, whichis a much better way of getting to the problem. Look,there are problems out there. The Premier League isthe most incredible thing. The world loves us, but inour own back garden everything isn’t so perfect andwe are not here today saying it is. But what we haveto be able to do is to listen to people and hear whatthey have to say, and feel that we can behaveappropriately and give them the comfort that we runthe clubs properly. In terms of fan representations andstuff like that, I am the fan. I am their person in there.

Q183 Mr Sanders: I think there is a certaindifference in north-east football being just that muchmore passionate and maybe even that much morelocal compared to Manchester United, whose fan baseis perhaps not just located in the Manchester area.How does Manchester United communicate with itsfans, given that its manager will not evencommunicate with the world at the moment?David Gill: We communicate with our fans on anextensive basis. We have invested in our fan relationsteam heavily over the last few years to improve thatarea. As I said earlier, we had 36,000 phone calls lastmonth. We have thousands of letters and e-mails,which we respond to appropriately. In terms of formalprocesses, we have a fans’ forum that I sit on withfour other senior executives where we meet arepresentative 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 branchnetwork, both in this country and overseas, and againthere is regular dialogue between the branches andthe team responsible for managing those relationshipsthroughout. Then I went to a meeting just before ourCity game and answered questions in an open forumwith other members of the team. So we communicateall 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 andwe work with them, but I think we do communicateappropriately and sensibly with our fan groups.

Q185 Mr Sanders: But somewhere communicationmust have broken down for something like FC Unitedto have been created. Have you tried to improve yourcommunication with fans since the creation of FCUnited?David Gill: There are two groups: FC United andMUST. As I said earlier, MUST’s objective is tochange the ownership. So I think it would be ratherstrange, unless they change their objective, to open adialogue with those fans. But there is nothing to stopa member of MUST or a member of IMUSA or amember of FC United sitting in the Fans’ Forum ifthey choose to apply. There are elections every year—half changes one year, half the next—to our fansforum. They can apply if they are a season ticketholder or a junior member and so on. They can applyto go on and appear through that. We are happy forthem to be on those forums. Clearly, at the same time,we are not going to engage in structured dialogue withorganisations like that. I do not think it is appropriateor sensible.

Q186 Mr Sanders: I am just bemused because NiallQuinn has perhaps given a model on how you wouldcommunicate with supporters—individual meetingsinvolving lots of people on a regular basis. Nodisrespect to Sunderland but they have not won theleague or the cup or been European champions, andhere you are, a premier Premier League team, and yetyou have all these supporters’ groups you will noteven talk to because they are at war with you. Whatis going on?David Gill: They are at war with us? They are at warwith the owners. There is a group there, weunderstand that. But I am not going to sit here and saythat we are going to suddenly open the dialogue. Weunderstand the importance, like any business and anysport, of the fans and we do have those regulardialogues with them. We have many, manycommunications, as I have outlined. We take those onboard when we are making decisions, whether onticket pricing, concourse catering or the shape of theprogramme. Digital media is a great feature that we’reusing, the internet. Particularly we have a number ofsponsors overseas and we are developing products forthem; for example, in Saudi Arabia for our fans therethrough Manchester United content. So we understandthe importance of communication and we don’t takeit lightly. We discuss at our management meetings, atboard level, what we are doing with that. If we aregoing to be castigated for not speaking with one ortwo groups who have particular very clear agendasthen so be it, we will take the castigation. We are verycomfortable with our method of communication andwe would be naive and stupid if we did not understandwhat the fans think and what they want, and reflectthat in our business policies. We are comfortable thatwe do that.




Q187 Mr Sanders: But don’t you see a pattern herethat when you disagree with somebody you stoptalking to them?David Gill: No. Okay, I will ask you a question. Theirintention is to change the owners. Do you think it issensible to sit down and change the owners? Thisbody came out of Shareholders United AgainstMurdoch, which was formed in 1998 when Sky triedto take us over. They have evolved since that. Theywant to have a situation where they have otherowners, or they can own the club or whatever. Sounless they change their situation I do not see a reasonto sit down and talk to them.

Q188 Ms Bagshawe: Let us just go back for onesecond to the last question on the issue of foreignownership. Fully half the clubs in the Premier Leagueare now foreign-owned and there is quite a lot ofconcern out there that that was going to affect thedecision-making capabilities of the Premier League,particularly in ways that relate to support for thenational team and for training young players up to beEngland players in the national team. Do you haveany concerns at all that vast swathes of the PremierLeague being under foreign ownership may have aknock-on effect on our national team and ournational game?Peter Coates: I think that improvements have beenmade on that. There has been an argument, and it maybe a good argument, that perhaps the balance had gonetoo far; there were perhaps too many foreign players.But the introduction of the new 25-man squad haschanged things. Every club does want to produceindigenous players, obviously. There is nothing likeyour own players. We would love to have at Stoke—and I am sure Sunderland and Manchester are thesame—boys who come up through the system and arelocal to the area. That is a very important thing. Wepour millions of pounds into development. One of thearguments against the Premier League is that theyperhaps don’t get enough opportunity, but with thedifference in squad size, I think that is a positive thingand has improved the opportunity for young playersto come through.

Q189 Ms Bagshawe: Of course you are a Britishowner that took the club back out of foreignownership, and I suppose the concern that fans haveis that foreign owners are looking at the club as asuccessful investment, something where they want tomake a bit of money. They have no skin in the gamewhatsoever if the England team does well or doespoorly, 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 pyramidsystem and I think if the national team does well thereis certainly a knock-on impact to the Premier League,and to the attractiveness of it. We have seen what ishappening in Spain at the moment with their teamdoing very, very well and I think that trickles down.So I don’t agree with that. As Peter said, we are veryinterested in developing our own talent. We putmillions in and there is a big review going on now interms of youth development, which is a tripartite

process, involving the FA, the Premier League andthe Football League to see what has happened. Theacademies have been in existence now for 13 or 14years. We are now looking to see what changes andimprovements need to be made. We are putting a lotof money in and perhaps the players are not comingout, so how do we improve that? Around the PremierLeague table, there is great support for the nationalteam in making sure England does well. There areissues to be worked on, for example the matchcalendar, but it has never entered any discussion Ihave either had with the owners or around the PremierLeague table that there is lack of support for theEnglish team, because I personally think it doesbenefit the game.

Q190 Ms Bagshawe: What about you, Mr Quinn?Niall Quinn: I suppose one of the proudest momentswe had both as Sunderland fans, as the owner, asmyself and the board and our manager, was whenJordan Henderson, who was at our academy since hewas eight years of age, made his England internationaldebut this year. I think to us that justified everythingwe have tried to do in the last few years aboutbringing our home players through. It is funny howthings go. When I came back to the club five yearsago even local kids in Sunderland didn’t want to cometo Sunderland. We were losing them to Middlesbroughand Newcastle because our academy was not working.With the owner’s help we have been able to put morefunds into that academy and, as I say, Jordan is thepicture postcard this year. But the great thing is thaton Saturday we were at the Emirates in a game thatwent all around the world—a fantastic game againstArsenal—and four of the players stripped out of ourplayers and subs had come through our academy. Wethink that should augur well for English football inthe future.

Q191 Dr Coffey: Debt has come up several times inthis conversation and although my colleague MrCollins is coming on the aspect of financial fair play—and it is interesting to hear your comments, MrCoates—I wanted to ask Mr Gill, in terms of thefinancing choice for Manchester United, how muchwas driven by tax aspects, such as interest relief offsetagainst tax and similar? How is it used potentially asa loss making vehicle to offset other tax? Is that themain driver for the reason why you financed that way?David Gill: That is an owner issue really. It is true tosay that interest expense for any UK corporate is a taxdeductible item and they have used that. But I thinkif you step forward, we still pay significant amountsof tax. Our tax payments to the Exchequer last yeartotalled about £75 million; over the last five years ithas 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 andcorporation tax. So, yes, our corporation tax chargehas clearly gone down as a result of that interestexpense, but as to whether it makes sense to use that




in terms of the overall planning of their finances, it isfor them to answer.

Q193 Dr Coffey: I recognise that, but if you goacross the other side of Manchester, Sheikh Mansourcame in and made an equity investment. Do you thinkwe should be changing the financing laws toencourage that rather than allow debt finance toleverage?David Gill: I think if you are going to change it—andit goes back to Peter’s point, sport is a business but itis also a sport—you are going to have to change it forall UK corporates. I think companies should operatewithin UK corporate law, company tax and so on. Ifthe Government do not want to operate that way, fine;but I do not think it will change for football’spurposes.

Q194 Dr Coffey: I do not want to steal Mr Collins’question so I will try not to, but with the forthcomingregulation is there not a case for you already makingchanges to how you operate financially in order tocope with what is coming?David Gill: No, we are very comfortable withfinancial fair play, if you are talking about that, andhow it operates and we understand the impact. Ourinterest expense is an operational cost to the businessand it will be, quite rightly, included under financialfair play. It should not be excluded. We are verycomfortable with that and we will operate within it.Peter Coates: I think there is nothing wrong with debtso 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 iswrong when you cannot afford it and you areirresponsible. As for the tax aspect, there is anargument which I know is doing the rounds, and it isfor UK legislators to decide whether interest shouldbe allowed or not. But that is a matter forparliamentarians, not for football clubs.

Q195 Dr Coffey: Could you clarify, Mr Quinn: areyou debt financed or are you equity owned?Niall Quinn: Five years ago when we took over theclub we inherited a quite sizeable debt. A group ofIrish investors came in and invested themselves in theclub, maintaining the level of debt. Ellis Short thencame in and took all the shareholding and we haveworked consistently over the last three or four years,since Ellis has come in, on the club’s progress. Whilewe have made progress, we have also reduced thatdebt by about 25% and other money that he has putinto the club he has capitalised. So he has been amodel owner.

Q196 Damian Collins: Following on the questionsabout financial fair play, do you have any concernsabout the structure of the UEFA fair play rules? MrGill, does that pose any problems for ManchesterUnited? For the representatives of the other clubs,could you live within those rules if you qualified forEuropean competition next year?David Gill: We were involved through the EuropeanClub Association, as were other clubs, such asChelsea, for example, who were on the working group

to develop those proposals with UEFA and make surethat what was being put in place was workable, madesense and was for the benefit of football; whether itbe the benefit in terms of making sure, on Peter’spoint, that clubs could operate within their ownresources, in terms of ensuring, potentially, a limitingeffect on player cost, or in terms of transfers andwages, so there are benefits coming out of it. We arecomfortable with it. The critical issue will be aroundimplementation and the sanctions around that, andmaking sure that it is appropriately applied. But I donot think anyone can criticise the objective ofensuring that clubs operate within their ownresources, personally.Peter Coates: I think it would be a good thing forfootball. My only concern will be its implementationand I want it to apply to Italy and Spain just asrigorously. We will play by the rules, as we shouldand as we would want to, and we have to be confidentthat UEFA will see that other clubs in other countriesdo the same. Even in the Bundesleague, it is not quiteclear where everybody fits. They have lots ofproblems, lots of debts, and they have the kind ofissues that we have been discussing today.Niall Quinn: I suppose, from our point of view, at thevery start when this first came into being a couple ofyears ago, when it was first heard of, we wonderedwas it an attempt to bring the Premier League back tothe other leagues. I think there was a little bit of thatat the very start, but we have worked our way throughit now. It has been quite extensive in terms of theresearch and where we are all trying to get. A lot ofpeople have put a lot of effort into this and I wouldback up exactly what everybody is saying. We arevery comfortable. We think it will be very good forthe game. I think the important thing is that fans feellike that and they feel that it is a good thing comingin, too. But can I also point out that I put petrol in mycar yesterday and a fan told me to get my bloodychequebook out and sign Danny Welbeck fromManchester United? So while we talk this game weare under severe pressure to keep doing what the fanswant. Hopefully, if they learn that FIFA fair play is agood thing too, then we can all make progress.

Q197 Damian Collins: I suppose Welbeck mighthave cost about the same as the cost to fill up yourcar as well?Niall Quinn: A little bit more.Tony Scholes: Spiralling wage costs at one club affectthe rest of us, so financial fair play is an importantthing to bring in. In its first guise, though, it wouldhave been damaging to us. A club like Stoke Citywould have fallen foul of financial fair play becausethere was no latitude at all. But with the latitude thathas now been negotiated into it, which does allow alimited amount of losses each year or a limitedamount of owner investment, then I think we as a clubare happy with it and as a league we are happy withit. Peter’s point is the crucial one. This country, ourPremier League, our FA, will apply it rigorously. Ourconcern and our request is that every other countrythroughout Europe does the same.




Q198 Damian Collins: Given the positive responseto it from you all, why shouldn’t we ask the PremierLeague to adopt this as a form of standard practice sothat any club competing in the Premier League wouldbe eligible to compete in European competition ifthey qualified?Niall Quinn: That is a journey we hope to go on andwe would welcome being brought into that ifeverybody else was. I think some people would turnaround and say, “But, Niall, you have had a couple ofyears of investment and you have had a leg up to getto a point now where you want to narrow the rules”,and I have to accept that. But again, for the generalgood and the greater good of the game, I think itwould 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 atthe moment adopt the UEFA licensing process. We doas a club. We have done since we have gone into thePremier League. You could argue quite reasonablythat our chances of qualifying for Europe in the firstcouple of years were very slim, but as a club wethought it was the right thing to do. We are in thecompany of the vast majority of clubs in the Leagueto do that.David Gill: I think, if you look at it over time, as weunderstand how it operates, I think you can see thathappening. We referred to an earlier example. ThePremier League voluntarily agreed last year tointroduce squad sizes, put the 25 in with the home-grown limit within it. As Tony said, a lot of clubswho apply for licences—they are operating anyway—would operate, if they got into Europe, within that. Ithink you move over time and I can see thathappening.

Q199 Damian Collins: You could see that?David Gill: Yes, over time I think that would be thecase; as people understand it, how they operate. AsNiall said, people get into shape for it and prepare forit. I think you will see that happening.Damian Collins: Mr Chairman, I want to move on tomy next question on the football creditor rule, but Ithink Mr Farrelly is going to come in.

Q200 Paul Farrelly: Clearly, I think that experienceacross sport shows something about the issue of salarycaps: they only work when you have a communityof interest—for instance, as in rugby—and there isarguably not a community of interest between theManchester Uniteds and the Chelseas and the Arsenalsand everybody else who just wants to stay up in theleague. I am sure, David, that many clubs operate anindividual cap, even if it is not formalised, becauseeverybody will want something else, if somebody getsanother 10 grand a week, and then there will be nodoubt in the interests of running a club an overallwage bill. But then you come along and you pay anoutrageous amount to Wayne Rooney and you musthave them all tearing their hair out, and any parent orteacher because you are also rewarding bad behaviour.How can you justify that if you have any feeling foryour wider responsibilities to the game?David Gill: We do have feelings for the widerresponsibilities of the game. You said it is outrageous;

that is your view. I do not think it is particularlyoutrageous and we have acted very sensibly inManchester United. I agree with you 100% that awage cap will not work. You use an example; yes, thatis English Premier rugby but a lot of the players go toFrance where there is not a cap. These sort of thingshappen. Personally, I think a salary cap will not workbut I think financial fair play will help within that. InManchester United we have our own self-imposedcap. Ever since I have been there, we have imposed acap whereby 50% of our turnover can be used on totalsalaries. A lot of that is players, clearly, and staff, butwe have done that.Within that, we believe that we can both retain thebest players and attract the top players, and competeagainst other teams both domestically and European-wide, but at the same time retain money to invest backinto the club, whether it be the training ground Imentioned earlier or revamping our boxes and so on.So we think that is the best way to do it and we arevery comfortable with that. I think we look at it in theround. We are very careful in terms of what we payour players; we make sure we do it and understand it.As I said in response to the first question, the businesspolicy and business objectives of Manchester Uniteddepend on what happens on the pitch. We have to beout there playing attractive football, competing andmaking sure that we can do that, and we will do thatby paying players appropriately.

Q201 Paul Farrelly: Just a brief supplementary,Chairman. Tony from Stoke commented on the knock-on effects of rising settlements. With Wayne Rooney,one could take the view that from a businessperspective you have simply protected the value of anasset in what you have done; so fair play to you. Butat the same time you have given a message, haven’tyou, that bad behaviour pays off? Players makingstatements against the club will have agentsencouraging them to carry on, because they will justsay, “Look what we did in the Wayne Rooney case.”David Gill: Wayne Rooney is a great player both forthis country and for Manchester United. They are rolemodels, players, and there are examples of behaviourthat is inappropriate; I would not disagree with that.But at the same time he is there, we want to keep himand I think it has not had a knock-on effect. We havedone certain deals with other players, which we haveannounced recently, and the impact of what we paidWayne—not that they know that—never came up. Itwas about what they believed they should be gettingfor playing for the club and we have actedaccordingly. I do not think we should hone in onWayne Rooney in this particular situation. He is agreat player for the club and country and will continueto be so.

Q202 Damian Collins: There has been somediscussion in our previous hearings about the footballcreditor rule, and I think concern has been expressedin the written evidence we have received as aCommittee that this is an outdated practice and that itis unfair for football clubs to give each otherpreferential treatment while other creditors, be theythe taxpayer, the taxman or even St. John Ambulance,




potentially lose out. I would just like to ask yourcomments as people running clubs as to whether youthink it would be good for football if we moved onfrom the football creditor rule. Mr Gill first, please.David Gill: I can understand why it was in there inthe first place. We have not formally adopted a boardpolicy on it, but I think the general view ofManchester United is that it is a rule that has had itstime. I think we have had to address it in certaininstances in the Premier League whereby we now putin quarterly reporting—I believe the Football Leaguedoes as well—to certificate that we are not in arrearsin 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 offairness in administration or liquidation or whateveris that everyone should be treated the same. Oneargument for it has been that it ensures that a club thathas overtraded does not then get back into the League,albeit with a points deduction, or perhaps into a lowerleague, having gambled without its having come off,to the detriment of another club in that league. I canunderstand that argument. The positive benefit wouldbe that clubs would not get into that situation. Theirdue diligence in terms of their dealings with anotherclub, whether it be on transfers or whatever, would beperhaps more rigorous and, therefore, they should notfind themselves in that situation. If it does occur, it israre. On balance, we would favour its beingwithdrawn.

Q203 Damian Collins: When you talk about thedealings between clubs being more rigorous, are yousaying that if a club was selling a player to anotherclub they would be much more cautious aboutreaching that agreement until they were convinced theclub had the money to pay them?David Gill: I think so. I think you have seen in thelast few years that there has been a trend for transferfees to be paid over a long period. Previously, the rulewas you had to pay within the year, which again Ithink is a better discipline. I think it could lead to thatrule being scrapped, personally.

Q204 Damian Collins: Just to pick up on one thing;in terms of the transfer payments, are you saying thatyou think because transfer payments are spread ininstalments that has an inflationary pressure ontransfers and encourages clubs to make commitmentsthey may never have to fulfil?David Gill: Well, I am not sure they will never haveto fulfil because I do not think anyone would enter alegal agreement knowing they do not have to fulfil it.But there may be an opportunity to use other clubs asa funding mechanism as opposed to if you have to goto a bank or a third party institution to make thatpurchase; then perhaps they would look at it from adifferent perspective. That is what I am saying. I donot know; it could do, it may not do. But I think thatis—Peter Coates: I am ambivalent about it. I am not surewhich way I want to go on this. I understand fullyDavid’s arguments. We have improved and tightenedthe rules, both for the Premier League and theFootball League, whereby clubs have to report if they

have not paid the Inland Revenue. So we have madean improvement there. I am very surprised the InlandRevenue allow it to happen. That has always surprisedme. It is a difficult argument. It may help clubs lowerdown the leagues maintaining it and retaining it, sothere is an argument both ways.

Q205 Damian Collins: But as Chairman of StokeCity—heaven forbid that Stoke should ever be in asituation like this—how would you justify it to thecommunity that you might have to pay a football debtto a club, say like Ipswich, before paying a localsupplier in Stoke?Peter Coates: I would find it very difficult but I havebeen in business all my life; I have never not paidInland Revenue. You pay your bills, it is normal. I justdo not do things like that and never have. I would notdream of not paying bills that I know are due andhave to be paid. It is not in my mindset to do it. Iwould not store up debt in that way, it is wrong. Theclubs should not do it and businesses should not do it.Tony Scholes: I think that the main issue with thefootball creditor rule has been with HMRC over thelast few years. The Premier League has taken actionin that regard, as David and Peter have already said,in making sure that clubs cannot get into arrears withHMRC. I think it is also fair to say that we havedebated this around the table many times and I donot think anyone feels comfortable with the fact thatanother football club may get paid but a small localsupplier in that community does not get paid. No onefeels comfortable with that.There is another side that needs to be weighed in whenconsidering the football creditor rule and that is thatit does help to maintain sporting integrity. When ateam is playing another team, team A may have solda player to team B and not been paid for that playerand as a result of that may have been unable to goand strengthen their own team. If they then play in agame there is an imbalance in the sportingcompetition. The source of the football creditor ruleis to do with sporting integrity, but I think it is fair tosay that where we are now there is probably anappetite 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 ifa club is competing at a level beyond that which itcan reasonably financially sustain simply becauseother clubs are prepared to sell players to themknowing that their risk is protected, how is that goodfor the integrity of the game?Tony Scholes: It is the club who have sold the playerand not been paid and would reasonably haveassumed they would have got the money to go out andstrengthen their team as well as a result of paying thatplayer. This is the original argument for the footballcreditor rule. If they cannot rely on those paymentscoming to them, then that club has been weakened asa result of it.

Q207 Damian Collins: But wouldn’t it be better tohave a system where the transfer was not made inthe first place if it was clear the club couldn’t makethe payment?




Tony Scholes: That is David’s point. If the footballcreditor rule was changed it would put the onus onclubs to do more due diligence over thecreditworthiness of the clubs buying players.Niall Quinn: Yes, and I suppose there are 17 otherchairmen around the country who I am conscious willwant to have a view on this before we put this rule inthe dustbin. From our point of view, the fan in thestreet meets the guy who printed the programmes whodid not get paid and he sees the player driving out inthe big car who was paid. I think that is damaging andwe have to look at stuff like that and say, “Yes, tidythis up and give that guy who printed the programmesas much skin in the game as the big players.”

Q208 Damian Collins: Can I ask just one finalquestion, Mr Chairman? You heard what David Gillsaid about transfer payments. Sunderland and Stoke,would you concur that there should be tighterguidelines on the period of time over which transferpayments can be made?Niall Quinn: Not all payments are Premiership clubto Premiership club; so there is an outside force therewhen you are buying foreign players and that becomesa minefield, too. But certainly with club to club in thePremiership I think we are all of the opinion that thereis enough money in the Premiership kitty to hold backto protect anybody and then punish somebody whodid it the wrong way. I think we could handle that in-house ourselves.

Q209 Jim Sheridan: Could I perhaps ask about therole of players’ agents in the game today? Theevidence that we have taken so far seems to suggestthat there is a general consensus that players’ agentsare a necessary evil, that there is no alternative. Is thatan accurate assessment?Niall Quinn: I would think from our experience, yes.It sounds about right. I never had an agent. I cameback into the game and I had this great idea that atSunderland we would not allow agents at the trainingground, we would never engage with them, and thenall of a sudden you realise to make progress theseguys were getting their players to go somewhere elseand were laughing at us because they had power. Thebig power came with the Bosman ruling and the wayEuropean law supports them; then you throw in thetransfer system that allows a window of time. It wasmanna from heaven for the agents who squeezed usand who continued to squeeze us in all those periods.The game is heavily stacked in their favour. One ofthe big problems that that causes is that while, okay,they are getting too much money because they aresqueezing us all and we all want to stay in thisbrilliant league, the man in the street, the football fan,feels ever more distanced from it when you talk aboutthe wages.Let me say what I would like if there was anythingthat could be changed in our set-up. We have ourmedia, we have the Premier League, we have ourfootball club, we have our fans here and we have ourplayers here. If there is anything I could change itwould be that any improvement we could make wouldgo directly here and satisfy that and repair the gap. Ithink we should all look for something that says,

“How can we help this group of people out to stillstay in love with the game?” If we send the matchesabroad with empty stadiums, it is over; the PremierLeague is over and these are the lifeblood of the game.So how do we protect these? Every revenue thatcomes in, the agents have the upper hand to squeezeit out of us. That is the case; I think you would agreewith that. How can we stop that? How can we find abetter way of these people to love the game?Now, these are the same people who tell us, “Get yourchequebook out, I want us to be top six.” They arealso saying now, “You are paying too much money;this is wrong”, and at the same time saying, “Can wego to the matches a bit cheaper?” The big thing weare getting from the forums is about ticket prices; forthe guy who wants to go and bring his two or threechildren, it is impossible. In the old days it waspossible; it is not possible now. Obviously, incomeshave changed and the economic situation is as it is.But what I would love from any group, whether it isthis group or any group of significance that reallycares about the game, is consideration of how we canbring them into the stadium cheaper without theagents cranking it all up again and causing a bigproblem for the club.I think we would all agree here; if we stayed with thesame net amount of money each year on the basis thatwe were giving them a discount on tickets and we didnot lose it somewhere else, we would all go for that,welcome it with open arms and fill the stadium out. Ithink we can talk about a lot of the fan issues, and thefederations and the sports trusts will bring uphundreds of things, but the big thing is they want tocome into the grounds cheaper and I think we shouldlook at ways of accommodating that. The players arebig winners here in this; the players and the agentsare big winners. Inland Revenue is a big winner inthis. 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 thinkthat that is coming—not to all go in their way as itdoes now? Could we give something back herewithout affecting our business going forward? Itwould be suicidal for us to let them in half price now.The agents will still press the crank on, the Revenuestill take their take, but could there be a way, if wetilted it back this way, that would benefit them? I thinkthat is something we should all aim for.Peter Coates: I think agents are a fact of life and Ithink I should be free to do what I want in terms ofwhat I pay them. It is up to us to negotiate sensiblebusiness with them. One of the things you could dothat might improve it is transparency; in other wordswe have to say what we have done in terms of agents.You can’t divulge a player’s contract—obviously thatwould be completely wrong—but you could havetransparency in agents’ payments. We all want todrive agents’ payments down. On the other hand, it isa marketplace and we should be free to deal in thatmarket. It is up to us to be smart enough to make surewe do not pay too much, and that when we pay ahigher fee, we are seeing whether there is possiblysome reason for it.Tony Scholes: It is fair to say, though, that someagents perform a very valuable role. They are part of




the industry now and they do perform a valuable role.But agents are paid a disproportionately high amountof money for any deal that they are involved in. Thatis a fact and I think we would all accept that.

Q210 Jim Sheridan: They can also be used asscapegoats as well. When a club wants to transfersomeone they can then blame the agent. But puttingthat aside, everyone we have spoken to in footballduring this inquiry, when we talk about agents, moreor less says the same thing as yourselves, whichsuggests to me that there could be a role for FIFA ifthey act collectively. It seems to me that FIFA haveabdicated any responsibility whatsoever to try andregulate this part of the game. At the end of the day,whether it be in England or anywhere else in Europeor the world, agents take money out of the game. It isnot going back in again; it has gone out of the gameand it is never seen again. Why is FIFA or UEFA nottaking a firmer role?David Gill: It is interesting to talk about taking it outof the game. I am always interested by that statementbecause accountants take money out of the game, andit does not go back in. Lawyers take money out of thegame, 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 aspecific role. It is like any walk of life; the actualterm “agent” has a bad connotation, but there are goodagents and bad agents. But the players do need themfor 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 sensiblebusiness, we look at the player wages, the agent’s fee,and we determine whether that is appropriate for ourbusiness, and we do that on the transfer fee. I am notsaying there is no issue, but I agree with you in termsof FIFA. FIFA have been looking at the matter. I thinkthat there are a number of cases with respect to agentsin which they are looking to see whether the termshould be changed to intermediaries. That certainlyhas many more syllables, but we will still call themagents, and they will still be there. They are lookingto do something whereby they put the onus on theclubs and the players to have responsibility.I think Peter makes a very good point in terms oftransparency and understanding. As long as in anyparticular transaction if a player is aware what hisagent has received from the club or from himself andeveryone is aware of it, I do not see a particular issuein it. It is another way of using the club’s resourcesand making sure we are responsible for how wedischarge those club resources. I think it is a veryinteresting issue; it has been there for many years, andwe cannot change it domestically. The PremierLeague tried a few years ago to make the playersresponsible 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 arepaying twice now, are they not? They are paying theirplayer 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 necessarilyincremental. It is part of the overall investment. So Ido not think it is true to say, “That is it, you can justpay the player X and forget about the agent.”. One ofthe reasons it failed was the tax implications. UnderUK tax rules, if the payment that the club paid onbehalf of a player was not a tax-deductible expense,he had to gross it up. That was a key point, and webecame uncompetitive versus what was happening inSpain, in Italy and in Germany. Again, we operate ina worldwide market for talent. As part of this earlierdiscussion, it is not just about players developed inEngland; it is a worldwide market. So we have tooperate against that if we want to attract those playersin with what the regime is in other countries. Yourpoint is exactly right; FIFA has to take the lead as aworld governing body to make sure it is managed andappropriately controlled.

Q213 Jim Sheridan: Just finally—still with you,Niall—do you think it makes you a better player ifyou are paid £1 million or £10 million?Niall Quinn: No, I do not. I can’t stand here anddefend where wages have gone. It is the greatest showon earth, the Premier League, and we want it so badlyand the agents have manoeuvred themselves tomanipulate that whole situation brilliantly. To be alittle bit fair to them and to ourselves as to why wetolerate it at times, we would at times as a footballclub be carrying wages on a player who is of no useto us; he is sitting on a long contract, it is really toughand we get a phone call from an agent who says, “Ican get him to wherever”, some part of the world. Forus the big thing is that, “Okay, we might be exposedto £1.5 million wages for the next year, what do wedo? 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 thepressure we are under sometimes as football clubs andthey 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 theFootball Association, but first can I just ask a coupleof questions about your own house, the PremierLeague? Is there merit in the Premier League shakingup its structure and having more independentdirectors? Is the board too small? Should the PremierLeague’s governance structure be more representativeof the different shades of opinion and the differentambitions of different segments of the league?Peter Coates: I suppose you have to say, and it isonly our third year, the Premier League is very wellmanaged. It has, I think, probably a quite outstandingChief Executive who has done a great job for thePremier League. As a model it has worked very welland it has been a big, big success. You do haveshareholders; you have 20 shareholders all with a votewho you meet four times a year and, therefore, youare able to have your input. I can understand youthinking it is perhaps Richard Scudamore and DaveRichards, but it does not quite work like that becauseall the shareholders have a vote, you meet four times ayear and you are able to have your views represented.




David Gill: I agree. I think if you look at it, the actualPremier League is a success story without anyquestion. You are just adding people because of a needto add them. I think the remit of the Premier Leagueis relatively narrow. It runs the actual game, thecompetition. It is responsible, quite rightly, for theselling of the television rights and other commercialaspects of it, whether it be the ball sponsorship, thetitle sponsorship and so on. I think it is well run andI think the way that it works, the voting structure with14 votes required to pass a resolution, means theobjective and discussions and debates and issues aretaking place in the forum of the shareholder meeting.In adding an independent or another non-executiveperson, I think you are just doing it just to say youhave ticked the governance box as opposed to addingvalue to what is a very well-run league, very wellrespected around the world.Niall Quinn: Yes, I feel the same. This is our fourthyear. What I found interesting was that every Saturdayyou have 20 clubs who want to beat each other up andthen we go to a room to find ways of making it all asone. It was unusual and I sat back and I watched andlistened for quite a long time before I got involvedand felt that the good work it is doing is not publicisedas well as it might be. It is an extraordinary successstory, the Premier League, in theory. I am not sayingit is perfect in our back garden, but we do have theforum there to alter things as they occur.

Q215 Paul Farrelly: Can I move on to the FA? Wehad a very strong picture of the FA painted to us byLords Triesman and Burns in the opening session. Iam sure you have read the reports. The FA is picturedas operating with the chairman and the chiefexecutive; with representatives of the professionalgame meeting the day before, agreeing, in good oldMarxist/Leninist/Trotskyist fashion, the line. Whenthey say no they mean no. The representatives of theamateur game do not always agree with them but theynever vote against them and if the chairman and chiefexecutive have some interesting ideas, they are left upa creek without a paddle if the professional gamesimply says no. We have seen the Triesman report,which was going to be a submission to questions by aformer Secretary of State as why the FA did not puttheir own submission in. Was that position adopted bythe FA and the professional league and the premierrepresentative reflective of all shades of opinionacross different clubs in the Premier League or arethere clubs in the Premier League that would be moreprogressive in accepting reform?Peter Coates: I think that it has a recent very badrecord, the FA, with lots of own goals and lots ofthings that have gone wrong, which were frankly verybad and reflect very bad on the game, and I think itdoes need reforming. The Burns Report is not a badmarker for that. I am strongly in favour of two non-executive directors. I think we have made anappointment of a good chairman. Like any goodorganisation, I think you need a good chairman anda good chief executive, and he will get the peoplearound him.But he does have to be able to do his job and youreferred 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 verygood for the governance of the game. I think alongwith that you would need to reduce the size of theboard. It would become too big. I think the chairmanneeds help and I think two non-executive directors ofthe right calibre would be an enormous benefit to him;so that is something I would like to see. We have nothad support for that in the FA. I am hoping perhapsthat is going to change and there will be a move inthe direction of that and some of the other things thatI have just referred to.

Q216 Paul Farrelly: Niall, was the “just say no”brigade reflective of the position and opinion ofSunderland?Niall Quinn: I do not think so. First and foremost, weare in a tough place in Sunderland and it is a hardjob. Concentrating on your own world 16 hours a daysometimes does not give you the space in your mindto map out a perfect road plan for your thoughts onthe FA and where it goes. What you try and do is tosee the big picture and hope that you can contributeand that we would not block things; just blocking forthe sake of blocking something. David sits on theboard. I think David would be in a better position tospeak clearly on this, but we would take the view,each of our shareholders of the club, we take thePremier League’s view on everything that comes upabout the FA. I thought it was really good in my timethat the FA had representation at our meetings, thatthere seemed to be something happening between it.Now, obviously that came to a shuddering halt and itneeds to get going again. Instead of looking back, Iwould be all for finding a way that is transparent, thatwe all feel we are doing our best for the game,because without the kids playing football in theirrespective amateur clubs, without this great love forthe 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 termsof where it is going I would support it wholeheartedlyand I want to reiterate what Peter said because I thinkhe articulated why independent executive directorswould be helpful. That needs to be done inconjunction with trimming the board. I think that theFA has a very broad remit from grass roots through tocoaching, through to the England team, through to theFA Cup through to the professional game and so on,and then goes on to discipline. Another area I wouldlook at seriously, which Burns sort of advocated, wasseparating out the disciplinary side and making thatsemi-autonomous under the rules and regulationsstipulated by the FA, but then with the actual bodydispensing that discipline being separate. I think thatwould assist the FA because a lot of bad press comesout through the FA not acting on a particular issuebecause of this, that and the other. I think that wouldhelp.Before I went on the board I thought on the nationalgame and the professional game we would be atloggerheads. I do not see that. I think the debate anddiscussions at the board have basically been aboutmoving in the same direction for football. If it is




particularly just a national game issue, then we wouldsupport what they are recommending; they are expertsin that area. That also works the other way around. Itmakes eminent sense to me. Without doubt the FA isnot completely broken, but there are issues and theturnover of staff at the top, whether it be at thechairman, chief executive or general secretary level,cannot help. It cannot help any organisation for thatto happen, and I think we have to bed it down, havesome stability. In order to do that we also need to givethe new chairman some support and some assistanceat that level, and that makes eminent sense to me.

Q217 Paul Farrelly: Which representatives, whichsectional interests, should be trimmed or cut back?David Gill: At the moment that would take it up to14—five national game, five professional game, thegeneral secretary, chairman and two non-execs—so Ithink you can do it pro rata. I do not think anyone isthat desperate necessarily to be on it. I think what wewant to do is have a proper body there because thatwill determine the strategy of the organisation,monitor the implementation of that strategy, the day-to-day running of the FA, so whatever is best for theFA. I do not think people should just hang on becausethey have been there for ever. It is what is best forthe organisation.

Q218 Paul Farrelly: The German FA has adopted adifferent approach. It has what you might callsectional interests on the board, which has evolved. Ithas representatives of women’s football, which is verybig here as well as in Germany, and the director offootball for the national team, because they feel thenational side should have an input. Is that a route thatwe should be considering as well?Tony Scholes: I think you probably need to be a bitcareful. David is talking about reducing the size of theFA board, and if they are going to be effective theyneed to be small enough to be able to make goodand clear decisions. If you start adding on sectionalinterests it makes it more difficult. But there is astructure below the board, of course, where suchinterests could and should be represented.Peter Coates: We have two boards below the board;we have a national game board and a professionalgame board. There is no reason why the structurecannot accommodate the right balance and I think itis very important that the chairman and the chiefexecutive are allowed to get on and run the businessand are not stopped by the board from carrying outtheir role. Going back to earlier, I think two non-execswould be a very big improvement.

Q219 Paul Farrelly: You have been quite outspokenin our local press and for anyone who wants to listen,really, about the failings of the FA on a much broaderfront, from the turnover of chief executives, which hasbeen mentioned, the way Wembley was handled and,indeed, the World Cup bid. What do you think theFA needs to do to improve its international standingoverseas and its reputation here? Are there anyorganisational weaknesses that contributed to ourdismal failure to get more than two votes in the WorldCup bid?

Peter Coates: Well, it was pretty shocking, really,wasn’t it, whichever way you look at it? Now, who isresponsible for that? Well, I am surprised that we didnot know more. We have guys out there, we have arepresentative on FIFA and we had no idea all wewere going to get was one vote. There is somethingwrong if we cannot do better than that. We shouldhave known, for example, and maybe this is acriticism of FIFA and the chairman—if he has anagenda that he wants to spread football around theworld that is a perfectly reasonable agenda in myview. If he wants to go to Russia, there is nothingwrong with going to Russia if he wants to spread thegospel, or the Middle East for that matter so long aswe can play it in the summer. But things like thatought to be known and we say, “We are out of it, wehave no chance”. It surprises me that we are not smartenough to get a feel and get a flavour for what is goingon and end up with egg on our face with one vote.So, yes, I was very upset about it. I wanted the WorldCup in England obviously and I thought we had achance from all that people were saying, but weseemed to have no chance.

Q220 Paul Farrelly: Niall, you have seen a fewructions in your time between the blazers and theplayers in Ireland. What is your perspective?Niall Quinn: Well, I was heavily involved and I ledthe campaign in Sunderland. We got a greatcamaraderie going not just in Sunderland but theregion. We called it a regional bid. We were thrilledto be called out first as the first city that was going tobe hosting a game if it did come our way. We got veryexcited. But looking back now that it is all done anddusted and where it went, what I would say is if wewere back again there was a lot of good stuff, but alot of that good stuff got drowned in arrogance. Ireally believe that. We did not hear anything fromRussia in those 18 months. People heard from us allthe time. I am not saying that that would haveannoyed or upset the people, but it did really takeaway from a lot of the real gilt-edged stuff that wehad done. The next person who would dare venture totake on something like this in the future, I would pleadwith them to keep your good stories and keep yoursuccesses wrapped up and roll them all out in the lastcouple of days.

Q221 Paul Farrelly: David, in Germany we heardfrom a very senior, respected and reliable source thatSir Bobby Charlton was told a year prior to the failurethat England had no chance because the numbers,were not there. Are you aware of that? Has that passedthrough? Does the game share this conviction?David Gill: I am not aware of that situation.

Q222 Mr Watson: My interest in the governance offootball is about how you protect players. Aschairman, can you tell me if you know of any currentor past players who may have had their privacyinvaded through phone hacking?David Gill: I am not aware of anyone at ManchesterUnited, no.




Q223 Mr Watson: Niall, you played against SolCampbell a few times. Were you aware when youplayed against him that his phone was being hacked?Niall Quinn: No, I did not. Thankfully, nobody hasany suspicions around the club. We do not feelthreatened at all.


Witnesses: Lord Mawhinney, Former Chairman of the Football League, and Henry McLeish, author of recentreview of Scottish Football, gave evidence.

Q225 Chair: First of all, I thank Lord Mawhinneyand Henry McLeish for having sat patiently throughthe first part of this morning’s proceedings. I welcomeLord Mawhinney, a former Chairman of the FootballLeague, and Henry McLeish, obviously a former FirstMinister but also the author of a recent review ofScottish Football. Could I start by asking LordMawhinney whether he thinks the introduction of thePremier League weakened or strengthened what isknown as the football pyramid?Lord Mawhinney: It strengthened it, but I will comeon to the present in a moment. It is a phenomenalsuccess. I have sat in Beijing and watched PremierLeague games. I have sat in Boston and watchedPremier League games. The future income of thePremier League is more and more shifting towardsoverseas media rights and whenever they launch theirown television channel that will have anotheradditional effect. It is a great success.I think the difficulty is that it has created a problemabout the handling and distribution of money. It hasgenerated so much money that it has skewed, or is indanger of skewing, the system. The Premier Leagueis one of the country’s great advocates for a freemarket and I pay tribute to it. The problem is that thePremier League is not a free market; it operates in aclosed market. What happens at the Premier Leagueaffects the finances of not just other Premier Leagueclubs but clubs right down through the FootballLeague, and what happens in the Football Leagueaffects what happens in the Conference.Going back to the earlier questioning, every time MrRooney or Mr Torres gets a salary settlement, thatcranks up the whole system. Agents note it and theyadd a little bit to the value of their player. Other clubsnote it. Whether that is good for the medium-termfootball pyramid I think is very debatable.

Q226 David Cairns: Henry McLeish, you havewritten this football review. It is a big review; it has89 pages and makes lots of recommendations. Canyou just encapsulate what you think are the key oneor two recommendations that you would really like tosee implemented from this review?Henry McLeish: The position in Scotland is in somerespects very, very different, especially in terms ofscale and the financing of the Premier League inScotland, and in terms the fact that we have 5 millionpeople rather than 60 million. In that sense, I would,first of all, say that the context is very different. Thatsaid, as someone who has a passion for the game andwho has played the game, I found that the football

Q224 Mr Watson: You do not know whether AlexFerguson’s phone was hacked?David Gill: He has not mentioned to me, no.Chair: Right, I think that is it. Can I thank the fourof you very much?

authorities in Scotland were really not fit forpurpose—and I will be as sweeping as that at thestart—because in a sense in both England andScotland we are looking at two of the oldestassociations. We are talking about history and aboutlegacy, about a preciousness and exceptionalism thatI think you only find in football, and about aninsularity that is safeguarded in some respects fromthe outside world. In that sense, they were not fit forpurpose—this is the SFA.Then you take the Scottish Premier League and theScottish Football League, as the two other institutions.I could find no good reason, for example, why theyhad been separated, because our SPL operates at avery 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 clearlyaccumulated over decades without anyone from theoutside suggesting that things should be changed andwithout any momentum from the inside suggestingthings should be changed.After the review, and after speaking to an enormousnumber of people, the first thing I wanted to do wasto improve significantly the governance of the gameas exhibited by the Scottish Football Association. Thisinvolved a major overhaul of its committee structure,which was fine for the start of the last century, but notfine for the start of this century. They had too manypeople on the boards and a whole breakdown andfragmentation of their approach. Of course, there wasalso a severe lack of confidence in their ability tooversee the game and regulate the game. I suspectthat, in terms of the FA in England, part of this isgoing on.What I recommended was, first, sweeping changes tothe structure, composition and modus operandi of theScottish Football Association; secondly, thereintegration of the Scottish Premier League and theScottish Football League, in no way stepping on thetoes of either but bringing them together tocollectively take the game forward; and then, thirdly,an acknowledgement—I think this is one of the issuesthat I think is interesting in England—that the gameis bigger than the Premier League. Now, we can saythat in Scotland because I think it is a more modestPremier League. That said, it was to talk about thefact that, in terms of the gap between nationalaspiration and national achievement, the gap wasenormous. We were asked: should we reduce ournational aspiration? Now, in Scotland that would havebeen heresy because we are a passionate country,although not always successful. We wanted to keep



8 March 2011 Lord Mawhinney and Henry McLeish

the aspiration alive, so what we had to do was to raisethe expectation.What I think has now come forward is a growingembrace of change and a growing of confidence thatthe game needs to move forward together, whichmeans that football as a sport has to be resurrected asa game. Therefore, the whole emphasis should not beon the Premier League in Scotland and what it wishesto do. That can be accommodated and, of course,within our Premier League structure we have twoclubs—maybe they do not need to be mentionedtoday—which are certainly the subject of much debatein Scotland in terms of dominating the PremierLeague. All in all, there was a recognition that thegame is enormous and that the SPL has a part to play.As in England, however, you may have the bestPremier League in the world, as we have heard thismorning, but your national side does not reflect thatin any particular way. Our effort in Scotland was tolook at this in a more integrated way from the verygrassroots talent elite development right through tomake sure that we have the best Premier League thatwe can muster at the present time.

Q227 David Cairns: Talking of Celtic and Rangers,then, isn’t the problem that we are trying to organisea league in Scotland that has two great behemoths,two massive world cups, a few teams in the middlethat are perfectly respectable, well-run clubs that haveintermittently done quite well in Europe, and then thisvery long tail of amateur clubs or part-time clubs thatwe do not see in England, but we are still trying tokeep the whole panoply of a structure as though wewere in the same scale as England? This is not one ofyour recommendations, but wouldn’t it just be betterfor everyone—and it is not going to happen—if theOld Firm were playing in the English PremierLeague? You would have a much more rationalstructure than Scotland and the Old Firm wouldn’t beas constrained as they feel they are by the pitifulamounts of TV revenue that they are getting comparedto what is happening in England.Henry McLeish: I suppose the simple answer is no,and that is why it was not a recommendation. Therealities are that Rangers and Celtic will continue toplay in the Scottish Premier League. I think you areright to suggest that we have great difficulty nowsupporting the four divisions involving 42 clubs. Thatsaid, part of the recommendation was to acknowledgethat, in terms of the community interest andcommunity development, some of our clubs would belooking more at that than they would be in terms of anormal business model for development.Secondly, within the structure of the SPL with the 12clubs, which may go to 10, Rangers and Celtic areaccommodated, although they are huge. 65% of all theattendances over the last 10 years in Scotland havecome from Rangers and Celtic. We are aware of that,but on the other hand, even if you wanted to think thatRangers and Celtic could be involved down south, Ithink you are up against UEFA rules because it wouldallow you, for example, as a separate association tohave the people from the German Bundesleague orothers seeking to join your Premier League as well.

I think it is impractical. The politics and thepossibilities are certainly to see Rangers and Celtic asa major asset in Scottish football but to ensure thatsome of the excesses we have seen recently arecurbed. But that said, we have a very particular set ofproblems that in some respects, Chairman, do notreally reflect what is happening down south.

Q228 David Cairns: Your key recommendation,then, is to merge the SPL and the Scottish FootballLeague and to tackle the labyrinthine committeestructure of the SFA and the blazer brigade there. Howhave these recommendations been received and howconfident are you that they will be taken forward?Henry McLeish: They are being taken forward andthe board of the SFA has accepted most of therecommendations and, in fact, they have beenapproved by the board. One of the problems is tryingto make sure that change does take place in other areasof the game. For example, we are keen to make surethat we work with other sports; with a bit of modestyacknowledge that while it may be the top game inScotland we have a lot to learn from others. I wasinterested by the submission the FA made to you thatbecause of their uniqueness it was very difficult forthem to learn from others. That is flatly not theposition because one of the problems your FA hascompared 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 inwardlooking.Change and specific recommendations, I think, aregoing forward. But what we are up against in Scotlandis a huge financial problem; not some of the issuesthat were raised earlier in the evidence session, but interms of broadcasting, fan base and sponsorship.These are the three key issues in which we are tryingto keep involved to generate more cash.

Q229 Dr Coffey: Just to each of you, how importantare the solidarity payments coming from the topdivision down to the lower divisions, Premier Leagueto Football League in a particular case, and, inparticular in England, how important are the parachutepayments and do they end up distorting competitionin the Championship?Lord Mawhinney: The help that the Premier Leaguegives in a variety of ways to the Football League issignificant and, up until recently at least, has beenmuch appreciated. The parachute payments wereinstigated because the salary levels in Premier Leagueclubs were so much greater than in Championshipclubs that, without some transitional funding, PremierLeague clubs that got relegated would simply justhead straight into administration or just tumble downthe Football League and that did not seem to be fair.There was an agreement, which we supported, that acertain amount of money should be made available bythe Premier League to Premier League clubs that weregoing to be relegated.Chairman, can I just, if you will forgive me, make itclear that Mr Clarke and Mr Williamson spoke onbehalf of the Football League? I am expressing myown view, albeit as Honorary President of the league.In my view, the present level of parachute payments




are going to undermine the integrity of competition inthe Football League. They are going to do thatbecause the amount of money—£16 million, £16million, £8 million and £8 million over four years—bears very little relationship to the salary issue thatwas the original case. I tried to persuade the PremierLeague at one point to link the parachute payments tothe specific salaries of players that came down and asthat player got sold or moved on, so that bit of themoney could drop out. That seemed to me to becoherent with the original philosophy. That was totallyrejected. We now have a set of circumstances wherethe Premier League will tell you that they are beingvery generous to the Football League and at one levelthey are being very generous, but the strings attachedand the effect on the integrity of competition are bothissues that cause me concern.

Q230 Dr Coffey: Roughly how much does theFootball League now get from the Premier League?Lord Mawhinney: Well, that is really quite acomplicated question, if you do not mind me sayingso.

Q231 Dr Coffey: Ballpark figure, is it £50 million?Lord Mawhinney: We get solidarity payments. If thePremier League were here they would include all ofthe parachute payments that go to their clubs—Dr Coffey: Just the solidarity—Lord Mawhinney: No, I am trying to be helpful. Thefigures here are very easily misunderstood because thePremier League, up until the time I left, were sayingthey gave about £120 million a year to the FootballLeague; but two thirds of that were parachutepayments to their own clubs, they were not to us.About £25 million is what is sort of estimated comesto the Football League through the involvement ofPremier League clubs in the Carling Cup, for whichwe are enormously grateful. There is some generationof money to Football League clubs from PremierLeague clubs in the context of transfers, though thathas dropped off as the Premier League has shifted itsgaze more toward Europe and the rest of the worldthan to the league below it. It is really quite hard toanswer that question and I do not want to mislead you.You might want to ask each of the two leagues, add ittogether and work out an average.

Q232 Dr Coffey: The only reason I ask is that surelythe Football League had come to its own arrangementby not including the parachute clubs in certain otherredistribution of income within the League. Iunderstand Middlesbrough is about to restructurebecause it has come to the end of its parachute, but isthere an ongoing implication for viability of clubsleaving the Football League?Lord Mawhinney: Dr Coffey, that is exactly the pointthat I was making about integrity of competition. If,in the Championship, you have two clubs each seasongoing in with £16 million extra against the amount ofmoney that goes partly from solidarity payments fromthe Premier League of about £2 million and theFootball 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 £2million and, if you believe what you have beenhearing, money is what makes a football clubsuccessful. Personally, I think fans want sustainabilityas well as success but there is no doubt that thefootball industry mentality links money with successand that raises questions about integrity ofcompetition.

Q233 Ms Bagshawe: This is a question that appliesboth to England and Scotland respectively. On thedistribution among the individual Premier Leagueclubs, and down to clubs below them, do you thinkthat the situation is fair and equitable in terms oftransfer payments and youth development payments?Do you think those individual payments have beenhandled properly, respectively?Henry McLeish: On the last question, there areproblems with parachute payments, as they are notsufficient. There is a different scale of costs, adifferent series of financial problems, so in Scotlandthe current reconstruction proposals are about creatingan SPL2 or a kind of Championship type of league.That is going to involve more money coming from theSPL into that. Also they are seriously looking at asignificant increase in parachute payments.Overall, because of the lack of broadcasting incomeand the difficulties of sponsorship, we are dealing withmore meagre budgets. So in that sense there isn’treally a dispute between the Scottish Football Leagueand the Scottish Premier League about distributionalaspects. It is more a joint league or a joint effort totry and get more money coming into the game overall.But what we have done in my recent report is makesome suggestions about the elite talent/youthdevelopment side, because in many senses we do nothave the young players coming through. It is quiteclear that within the SPL and within the SFL, the SPLin particular, the investment of young people is notbearing fruit to the extent it should. What we arelooking at then is a wider pooling of bothresponsibility and resource across all the authorities,including the SFA, to try and tackle that particularproblem. In that area, we are also seeking furtherinvestment from the Government as one of theleverage points, the very few leverage points theyhave, to do something for elite, talented young people,which would be in the national interests as ajustification for involvement as well as to the benefitof the clubs.Lord Mawhinney: As far as England is concerned,frankly you pay your money and you take yourchoice. The Premier League have a ladder system buttheir clubs voted for it. So I guess those who aretoward the bottom end of the league don’t feel thatthe differential is so big as to create a problem. In theFootball League there is equality of distribution withinthe division. Within the Premier League the effect ofmoney generated through playing in the ChampionsLeague has a significantly more distorting effect in thecontext of your question than the ladder arrangement.

Q234 Mr Sanders: On these parachute payments,given the sort of scale that you have set out, thenumber of clubs that would be in the Championship




with that financial backing, it occurs to me that if youare a League 1 club and you get promoted you areautomatically at a disadvantage within that new leaguethat you have entered and that there is then anincentive to overreach yourself if you are in theChampionship, having come up rather than havingcome down. I am wondering if there isn’t a direct linkbetween those parachute payments and the situationof Plymouth Argyle, at the moment in administration,who possibly overreached themselves, having gone upinto the Championship and unable to compete withclubs that have those parachute payments.Lord Mawhinney: You will forgive me if I don’tcomment about a specific club. There are probablymanagement and governance issues and all sorts ofother things, so forgive me if I don’t do that. But asto the core question that you raise, it is a good onebut, Mr Sanders, it is not just when a League 1 clubgoes up to the Championship. As part of the latestwhat is called solidarity package, I told you about theparachute payments and the just over £2 million a yearto the Championship clubs, the other part of thatpackage is that the League 1 clubs get £300,000 andthe League 2 clubs get £200,000, give or take a fewbob.The very solidarity packet enhances the differentialeven before you get into the position of what happensto the promoted clubs. It is a real problem. If I had toidentify one thing that I learned about football, Iwould talk about two things: I learned it wassometimes quite tricky to get all 72 chairmen pointingin the same direction at the same time, but the mainlesson I learned was that if the Football Leaguedoesn’t defend the integrity of competition, absolutelynobody else will. The integrity of competition is, forme, easily the most important issue. It relates tosustainable debt; it relates to the behaviour of agents;it refers to transfer windows. There is a whole rangeof things that fall under the broad heading of“integrity of competition” and I very much hope,Chairman, that this is an issue that will commenditself to the Committee in fairly robust terms whenyou produce your report.Henry McLeish: Can I just add a postscript? I thinkLord Mawhinney is right in describing it as a closedmarket. You can take the clubs that occupy thePremier League in Scotland and say they arebusinesses, they are in a marketplace, but theoperation of the League is not in a marketplace. Ithink that whether you call it solidarity orprotectionism then you do find that there is a lot ofproblems peculiar to football that have developed overdecades into the situation we have got. I don’t think,certainly in Scotland, they are anti-competitive in thatregard. On the other hand, the precarious nature ofrelegation and promotion is such that there is no greatoutcry in Scotland about some of the excesses orperceived excesses of that process. As I said, more ofa concern that if we can generate more cash from abetter product on the pitch that would be the biggestobjective to be pursued.

Q235 Mr Sanders: Can I ask you for a quick answerto this? You mentioned Celtic and Rangers, and thatone 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 teamsplaying in English leagues—possibly one of themgoing into the Premiership this year—and yet there isstill a Welsh professional, semi-professional league,and a Welsh national team?Henry McLeish: We have Berwick Rangers playingin the Scottish leagues as well, so we are quitefriendly with our English colleagues on that. I raisedit in reply to David Cairns’ point merely by sayingthat if two clubs of sufficient stature were to seek tomove between international associations then I thinkit might ruffle a few feathers and, quite frankly youdon’t have to do a great deal to ruffle the feathers ofeither UEFA and, in this case, it would be FIFA. Ithink there is a more serious point, which is that whileDavid Cairns has quite rightly outlined the issue forRangers and Celtic in a small league whereattendances are not good, their competition is notsharpened every week. This is just the historicalreality we find ourselves in. In terms of not agonisingin a report or in discussions and dialogue about whereRangers and Celtic are going, they are part of Scottishfootball and I think that is how we want to deal withthe problem.

Q236 Mr Sanders: Lord Mawhinney, can I ask aboutthe Football League and whether it ought to be doingmore to support and reward youth developmentprogrammes run by Conference clubs?Lord Mawhinney: I have to be honest and say I don’tunderstand what the basis of the question would be.Most of the clubs that I had the privilege to representthink that they have a major task getting their ownyouth development programmes up and effective anddefending, as is now commonly and widely reportedin the media, the increasingly good youthdevelopment programme in the Football Leagueagainst the sort of comments that you heard from therepresentatives of the Premier League who gaveevidence earlier. On the whole, I think it would bereasonable to say that most of the Football Leaguechairmen think that those two things constitute enoughof a challenge on youth development without takingon the job of trying to handle youth development forthe Conference.

Q237 Mr Sanders: So you think it ought to just besomething for the league clubs to do? I mean leagueclubs have, as you hint, a difficult enough jobmaintaining a youth development programme. It is thefirst thing they tend to cut back when they are inmoney trouble. But shouldn’t it be something thatLeague ought to look at right throughout the pyramid,that every club that is professional or semi-professional ought to be encouraged to have someform of youth development?Lord Mawhinney: The answer to that question isundoubtedly yes. Thirteen of the England team whoplayed recently against Denmark received most oftheir 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 Leaguefor youth development. It is now under challenge bythe Premier League—that will be a matter for the two




leagues to sort out among themselves—but I am proudof the strides that have been made over the last sevenyears as far as youth development is concerned andthat is not a bad English statistic.

Q238 Paul Farrelly: I want to just come on brieflyto finances, but just on that strand on youthdevelopment. One of the things that has struck whenI went to Germany was not so much the 50 plus onerule, because that can obviously be negotiated around,but it was a sense that they had an ethos in Germanythat seems to be missing here, particularly vis-à-vis,the Premier League and the FA and the FootballLeague. They said that when they lost very badly inEuro 2000 they decided collectively to do somethingabout it and, in particular, youth development wasstrong. They put a strong emphasis on youthdevelopment. You have seen the results now with theyoung German team and their performance in theWorld Cup. Is there any sense that we can learn fromGermany in youth development and developing thatethos, sharing some money in the game but making itin the national interest as well as the game’s interestand home-grown players? Is this a fruitful line ofinquiry for us?Lord Mawhinney: Yes, I think it probably is; perhapsin the context of whatever you may choose to sayabout the future of the FA. It is a matter of record thatTrevor Brooking and I didn’t see eye to eye overyouth development for years and we didn’t see eye toeye because our clubs were putting £40 million intoyouth development, the FA was putting in a minimalamount and they simply wanted us to hand over our£40 million and our young players and they woulddecide what to do with them. That never struck me asan attractive option but, in an attempt to be helpful, afew years ago I had Sir Trevor here for lunch and Iinvited him to take a clean piece of paper and writedown what he would like from the Football Leagueand I would do my very best to persuade the Board todeliver. I am guessing that was three years ago, maybefour years ago, and I was promised a reply within aweek and it still hasn’t come.Paul Farrelly: Maybe we can follow that up.Henry McLeish: Can I just make a postscript, becauseI think this is one of the most important issues facingcertainly Scotland and I have no reason to doubt thatwithin the FA structures it is the same problem inEngland. We had listened to the SPL talking aboutyouth development. We were clearly talking a goodgame but the delivery element was missing. What Ithink we had to rationalise there was that if we’relooking for young Scots to be nurtured, the talent theyhave, so they can appear with the clubs orinternationally or with the Scottish team, we virtuallyhad to remodel what we were doing. One of the thingsthat we tried to do in this report was ask, if you lookat everyone concerned in the game, what is thepurpose of football in 2011? What is the nationalmission? Why should a Committee of the House ofCommons want to be involved?I think that the Chairman said when he launched thisinquiry that he wanted some strategic involvement andto strengthen self-regulation, and essentially I thoughtthat he was talking about the FA. If there is one broad

area where there should be a growing consensus it isthat we are not doing enough. If you look at some ofthe figures on coaching, and qualifications forcoaching in either country, and then look at Portugalor Spain, you can see why at international level weare not doing well. At least you guys qualify; werarely qualify these days. But, on the other hand, asto youth development, Germany is the classicexample; they took it upon themselves to say thismustn’t happen again. So, therefore, in terms ofprocedures, finance, co-ordination and an integratedapproach to youth and talent development, that iswhere we are now heading in Scotland, and it seemsto me that that argument might be applicable here.Lord Mawhinney: Our young people should go intoproper training at a far younger age and the FA shouldshift away from making them play on full-size pitchesand make them play on much smaller pitches, so thatthey can develop their skill base.

Q239 Jim Sheridan: Can I just ask a supplementaryabout youth development, particularly in Scotland?You did say earlier that the youth developmentprogramme has more or less failed. We are no longerproducing the Billy Bremners of this world. Theremay be a simple or significant reason for that, I don’tknow. One of the issues I have picked up, which isprobably applicable to England as well, is that whenyouth clubs play the Old Firm in Scotland and a youngboy shines, the Old Firm then take them away. Whilesuch a boy might shine in a moderate club, in amongthe Old Firm—with “superstars” as we call them—hemight not shine, so he loses the game, the game loseshim, and he just fades away. I wonder if there isanything that can be done to stop big clubs in Englandand, indeed, Scotland, from poaching these youngplayers away.Henry McLeish: I am sure the simple answer to JimSheridan’s comment would be no. On the other hand,however, what we have looked at again in Scotlandunder the duty of care issue is that—again looking tostrengthen the capacity of the FA down here—wewant to strengthen the capacity of the Scottish FA tohave a duty of care. Therefore, we understand thecompetitive nature and if the youngster is excited bythe prospect of going to Rangers or Celtic or ManUnited, parents often get involved and it is difficult tostop the process. On the other hand, the great wastagerate is approximately 95% of young people at the agethat Jim Sheridan is talking about will go to a cluband will never make it.The tragedy about that is you could argue that peopleare not picking talent properly but a lot of these youngpeople, children, youths, are lost to the game. Also, ifthey had been dealt with differently and moreeffectively 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 therecommendations on the duty of care issues, want theSPL, the SFL, the SFA to get together with also thewider youth development to make sure thatopportunities are still available for children andfamilies but—“constrained” is not the right word—they are conditioned by a better framework, whichmeans there is more success and less wastage.




Lord Mawhinney: As far as England is concerned,the danger is if it is going in the opposite direction. Ifthe new youth development proposals are enactedthere will be four categories. The biggest clubs in thePremier League will be in the top category and theywill be allowed to set up training arrangements intowns and cities all around the country, sometimes incompetition with Premier League or, more likely,Football League clubs in the same town. So thedirection of travel is being promoted as a new elitestructure for developing kids but the danger is that itis going to go in exactly the opposite direction, MrSheridan, to what you have suggested.

Q240 Paul Farrelly: Let me just cover financebriefly. The figures are stark. In the last 18 years overhalf of Football League clubs have been subject tosome form of insolvency and, Lord Mawhinney, underyour tutelage, division 2 introduced some restrictionson wages. Do you think those have been successfuland, if so, is there any prospect with such differingagendas that these or similar forms of financial controlcan be implemented up the pyramid in Englishfootball?Lord Mawhinney: The problem with football is notlack of money. It is lack of cost control. You heardthe Premier League chairmen talking about agents inthe Football League a few years ago initiated thepublishing of how much money each of our clubsgives every six months to agents. That has had aneffect. We did the first ever deal, the only deal so far,with HMRC to ensure that we could work withHMRC and insist that our clubs pay their NationalInsurance and PAYE on time each month and stopusing the Treasury as an unofficial bank. You weregiven some evidence earlier that I suspect is nottotally right. It was right inasmuch as I think it was MrScholes who said the Premier League have a similararrangement. They don’t. The clubs have to tell thePremier League but my understanding is the PremierLeague have not followed our lead in terms of comingto an arrangement with HMRC itself.That was hugely important but there are other costcontrol issues. One of them, I guess, would be footballcreditors. I hate to say, Chairman, that I inherited afootball league policy very supportive of the footballcreditor rule and when I left the football league policywas still very strongly in favour of the footballcreditors rule. We did debate it a number of times andI got outvoted every time in the Board, but mypersonal view is that it is not defensible. Mr Collinspursued my successor on this issue. If you will forgiveme, I think you are absolutely right. I do not knowhow you defend the local community where localbusinesses that you are supposed to be the footballclub of don’t get paid for services rendered while afootball club hundreds of miles away gets protected.There is no doubt that the football creditor rule cranksup expenditure and you are right again to say that itwould make far better due diligence if it didn’t existand you persuaded my successor, while defending thefootball creditor rule, to say that he could see no moralbasis for it. I share that view. I don’t think there is anymoral 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 charitydonation to St John Ambulance of more than £40,000,purely as a charity donation, which covered all of theadministration losses that the St John Ambulance hadon its books that were outstanding as a result of clubsgoing into administration.Henry McLeish: In Scotland the creditor rule applies,but it is not a major issue because there have been noparticular problems with it at this stage.

Q241 David Cairns: Just on this issue in relation toScotland you have a situation where one of the OldFirm clubs is essentially now controlled by the bank,not owned by the bank, and found itself in a situationwhere, in the transfer window, they had to sell theirbest player—possibly scuppering their chances ofwinning the league; of course, let’s hope they’re stillin it—essentially because the bank told them to. If thisisn’t a sign that there is a fundamental problem in howwe are structuring the game then it’s hard to think ofa bigger sign where the oldest, biggest, mostsuccessful club in Scotland is having to sell its bestplayers because the bank is telling them to do so. Ifthis isn’t making a case for fundamental change,what is?Jim Sheridan: How bad is the indebtedness inScotland?Henry McLeish: The problem of indebtedness issignificant, but let me put into context both points.The creditor rule is separate, in a way, because it’s anissue that is more closely linked between HMRC andthe Scottish Premier League, in particular, and to howwe deal with things. There has been a much closercoming together in dealing with financial issues andSPL itself under its new chairman has been veryactive in trying to make much more sense of thefinance. But I have made no effort to try and disguisethe fact today that the financial condition of Scottishfootball is not a good thing. In that sense, there aremany, many examples that I could put forward. Butwhat I think I would draw the Committee’s attentionto as a piece of evidence is thePricewaterhouseCoopers’ annual report of financingof the Scottish Premier League, which is publishedevery year, and 2010 was particularly interestingbecause I think it celebrated the 21st anniversary ofthat publication. So there is a lot of data going backover the period and reinforcing some of the concernsthat have been expressed on both sides of theCommittee room this morning.

Q242 Damien Collins: Lord Mawhinney, you haveanticipated the question I was going to ask about thefootball creditor rule, so I won’t go to that ground;your answer to the Committee is very clear. I justwanted to pick up on what you said earlier about theintegrity of competition with regard to the financialstanding of the clubs. Do you think the FootballLeague requires greater scrutiny of its member clubs,their financial performance, and maybe even movingto a scheme similar to what you see in Germany whereclubs have to have their books effectively audited bythe League to make sure that they can meet theirobligations for the season ahead?




Lord Mawhinney: Mr Collins, the first thing we didwas to recognise that when a club goes intoadministration, which the law of the land permits, itwipes out a whole bunch of debt and that gives it acompetitive advantage over the other clubs in thedivision because, while they are having to use theirresources to pay interest, the club that has gone intoadministration doesn’t. That is an integrity ofcompetition issue and we addressed that byintroducing the sporting sanctions and 10 pointpenalty, which the Premier League subsequentlyfollowed by nine points and the Conference followedas well. There is always a debate as to whether 10points is the right amount or whether it would bebetter just to relegate a club; that is an ongoing debate,but we took serious action.We have also, over the years, strengthened thefinancial reporting requirements of our clubs to thecentre, and that is of some significance; as long as youbear in mind that the Football League, of which I canspeak with some authority, is a trade association. Wedon’t run the clubs. It is the clubs that decide whatthe regulations will be and they have so far respondedto providing more financial information, I guess.There may be a point at which they baulk and say weare going too far, but that hasn’t been reached yet.Henry McLeish: I think reporting arrangements havebeen hugely improved in Scotland over the last threeor four years. There was a period 2007/2008—and thisis in the PricewaterhouseCoopers report—where someof the ratios, for example, of wages to turnover werejust simply remarkable. A lot of effort has gone intotrying to reign that back in. Reporting arrangementsare much, much better and both the Scottish FootballLeague and the Scottish Premier League have taken amuch more hands-on approach to the individual clubs,especially if they are facing jeopardy or if there is asuspicion that there are concerns. The other interestingpoint in Scotland is that there is a better rapportbetween HMRC and the clubs than there has everbeen. Slowly there is a realisation that a number ofthe issues that have been raised by yourselves todayhave been taken seriously because it is a protectedmarket; but, on the other hand, you still have to haverules and regulations and parameters and all of theclubs now have acknowledged that has to happen.

Q243 Damien Collins: Lord Mawhinney, we haveheard from other people, people in the PremierLeague, who concur with your observation that theproblem with football is not lack of income but toogreat a level of expenditure. Most of that clearly goeson players’ salaries and transfer payments. Has theFootball League ever discussed internally the structureof the competition and whether it would be better interms of the financial viability for smaller clubs to goback to the old structure of a north and south bottomtwo divisions?Lord Mawhinney: Yes, from time to time; but I haveto say that there is no positive strength of feelingwithin the Football League to go back to that. I thinkpartly because that would be perceived to bediminishing the status of the clubs. That is how theclubs would see it. So I don’t think that is going tohappen.

Q244 Damien Collins: I just wanted to ask a finalquestion relating to the structure of the FA and, withinthat, I would like to touch on the youth developmentquestions that were raised earlier. Lord Mawhinney, Iwould be interested in your views on the structuralreforms you think the FA should consider undertakingto make it a more effective governing body. Withregard to youth development, there is the ongoingdebate about the role of youth development. But somepeople would see that there was, I think, 2007 theLewis report on youth development, which produceda lot of interest in it and it sort of went nowhere. Wasthat a failure of the structure of the FA to take thatforward or was it the wrong report?Lord Mawhinney: It was a failure of the structure ofthe FA. On the broader question, I think I was the firstperson in the management hierarchy of football in thiscountry to say on the public record that I thought theFA was dysfunctional and that remains my view;though I want to put a caveat in by saying that Iwelcome the appointment of David Bernstein. I thinkhe has the potential to initiate change across a widerfront and I have made it clear to him that, although Iam not actively involved anymore, if I can help himin any way I would be happy to do so.But for the last few years the record of the FA is prettyterrible, to be honest. I know that the new chairman—there was an element of common ground in the earliertestimony, although there was a good deal of hedginggoing on—would like to have two non-executivedirectors appointed to the Board and I would supportthat if it was to happen. If Lord Burns had taken theadvice of some of us before he produced his reportwe wouldn’t be here today, we would be having adifferent conversation; but he didn’t and he has nowtold 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 thatappointing two non-executive directors to the FABoard is going to solve the problems of the FA. TheFA’s problems are much, much deeper and moreradical than that. Lord Triesman was right; there is apoor relationship—and I use my diplomatic languagebecause I am testifying before Parliament—betweenthe FA and the Premier League. The council is amongthe more conservative bodies with which it has beenmy privilege to work in the last 30 years. There needsto be change in both of those areas and the FA needsto reassert its authority as FIFA’s representative in thiscountry. It hasn’t for years, and I hope it will, but noneof those three issues are going to be resolved byadding a couple of non-executive directors andmaking the board 14 instead of 12.Henry McLeish: Just on the structure, some of thepoints I made earlier. Again I concur with LordMawhinney about the structural change but I thinkwhat we also do—and this was the Chairman’s initialcontext about improving self-regulation—you have togive the confidence and the capacity to the FA to dothat. They have to win it back, in my regard. It is asimilar problem in Scotland because the real questionwithin the SFA was, “Well, what is our role?” APremier League that is kind of there and doing areasonably good job; an SFL, all the youth. I think




they have grown in capacity, grown in confidence,they want to move forward.The other issue is that it is from top to bottom. InScotland what we have suggested, and hopefully youwill read the report in detail, is to take things from thevery council, on which I agree with the commentsmade, right through the Board structure, and we aretalking about 12 to seven; we are talking about ninecommittees to two. In a sense, that is the structuralissue; that is the armaments that they can use todeploy what they want to do. But the other thing isjust changing the ethos and to me the confidence issueis absolutely sound because in Scotland now it is club,it is community and country. For far too long it seemsto be the emphasis has been club, understandably.That is where the big players are, this is where theissues are. But in Scotland I think we are trying tosay, “Okay, but there is a country issue,” which is thething we have talked about in terms of youth, and alsoto acknowledge that there is a community issue aboutgetting some of our clubs on to different businessmodels 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 communityclub diminishes that; it is something they frown upon.You have got be careful in that.

Q245 Jim Sheridan: A major part of this inquiry isabout the relationship between the support roles, theauthorities, clubs, and so on, and you would haveheard the Premier League’s response to the questionabout club ownership and should the fans know or notknow who owns a club. I’d ask if you concur withthat. Secondly, still on the question of supporters, if Ican ask Henry, in particular, I know that thefootballing authorities in Scotland are doing their bestto try and improve the game, improve the product.But the popular press obviously the move to attain ateam in a league is not very popular, so I wonder howthe authorities in Scotland will square that circle ifthey are to genuinely listen to the fans?Henry McLeish: On the latter point, there is thisongoing battle between what would be the best leaguestructure financially. I mean in the report that Iprepared I said that 10 made sense if you looked atthe financial context, because what that means is 12goes to 10, 10 take on board what 12 were getting andit is all about the broadcasting; it is all about the fanstripping down the league.On the other hand the fans instinctively want biggerleagues because they are sick and tired of other clubsplaying each other too many times. I am not sure howit is going to work out in Scotland because the SPLare still debating that particular issue, but I suspectthey will probably end up with the 10. It still begs thequestion of what is the best model for Scottishfootball. Clearly, in the financial context, I think thatmay be the right one but it certainly doesn’t solve thefans’ problem.Can I just say before Lord Mawhinney comes in, onthe wider issue of fan base, I think things haveimproved in Scotland but for a lot of clubs the fansare welcome because they come through the turnstilesand they pay and they watch, and that is the fan base.

But there has been a bit of a reluctance to involve thefans in a much more dramatic way. There areproblems with that, especially if it is about fantakeover in terms of ownership of the Board. What Isee in Scotland is that the Scottish Football Leagueclubs, the 30 of them, will move to different models,as some of them are doing with community interestcompanies and so on. So there will be a biggerinvolvement of the fan base. They will be part andparcel of developing the club and, if they have accessto resources, that might help that out. On the otherhand, the clubs are desperate for resources anyway.So I see there are prospects there, but currently not alot of progress has been made.Lord Mawhinney: Football, in one respect, is quitebizarre. It is very difficult to keep a secret. I have hadbusiness appear on the media while the board meetingat 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 ofthe most skilled exponents of that in the media aretaking an interest in these proceedings. At one level itis very hard to keep a secret and yet there is, runningthrough football, a huge secrecy non-transparent core.I remember, Mr Sheridan, when I went to see GeoffThompson, then chairman of the FA, to tell him thatthe Football League was going to introduce a fit andproper person test, he told me I couldn’t do it becausea fit and proper person was the remit of the FA and itwasn’t a league issue, and so I couldn’t do it. We had,what I guess is known even in here, a full and frankexchange of views and we did it. Then the PremierLeague followed us and then the FA did something.But the instinct is not to be open. For Members ofParliament 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’tafford to, it doesn’t have the money. I was surprisedthat you weren’t simply told, “We are not going topublicise it because if we do we would have topublicise the rejections and that would openeverybody to legal challenge and law suits and all therest of it”. That is a serious issue in the world offootball. But we have been moving to transparency;publishing agents’ fees as I mentioned earlier was anexample of transparency. My guess is that more willcome over the years. I think this is unstoppable, butfootball is a very, very conservative—small “c”—industry and it moves slower than the average.

Q246 Dr Coffey: Building on what Mr Sheridansaid, Lord Mawhinney and Mr McLeish, it is aboutthe supporter and community ownership of footballclubs. There haven’t been that many examples ofwhere it has led to great success in terms of movingup the divisions. Do you think that the sentence thatwent in the coalition agreement was just, “Why is itthere?” It is an interesting one and we are trying tooffer something for the Government to respond to, butdid we all just jump on a bandwagon last March,Labour party included, when they said they weregoing to arrange for everybody to be able to buy astake in their club?Lord Mawhinney: I can’t tell you why it is in thecoalition agreement. I have no idea why they put it




there and they certainly didn’t consult at least someof us who might have had a constructive thought. Justas, if you will forgive me saying so, I don’t think yourmanifesto probably was the result of deep consultationwith the members of your party who might have beenable to make a contribution. I don’t know why it isthere.York City was extremely important because thesupporters trust in York City deserve an enormousamount of credit for saving that club from going outof business. I think that created an emotionalenvironment and I think I am the first senioradministrator in football who went and spoke at thesupporters annual conference. But, given the presentbusiness model where so many clubs depend on thebenevolence of rich people, supporters clubs areprobably not the answer. But if and when football getsitself on a more sustainable basis without having todepend enormously on the beneficence of rich peopleor rich companies, then the supporters trust mightbecome a more effective model—except that as MrWilliamson pointed out to you—and it has been ourexperience—supporters trusts pick a director, put himon the Board and then expect him to tell them or herto tell them what is going on at the club and, ofcourse, fiduciary responsibilities stops that happeningand it all ends in tears.Henry McLeish: From my point of view, I think Iagree with the latter point about the degree of

tokenism that goes on in a very secretive footballarena. That said, if you take Scotland, it seems to methat big progress will be made with the ScottishFootball League clubs. There are 30 of them and thereis a lot of enterprise, a lot of initiative. There isactually quite a lot of investment by the chairman insome clubs. But the main thing is they are trying totake the clubs forward in the sporting context.I went to see the Sporting Club Lisbon just as a visitand what we are trying to get football to do, especiallyin those leagues, is to make sure they are interfacingwith other sports as a community focus, as acommunity hub, as a sporting hub; again watchingthat they don’t feel they are being squeezed out offootball, but at the end of the day, the differentbusiness model—and as I said, one of the businessmodels is this Community Interest Company, the CIC,which allows, because of the structure and status ofthe organisation, for them to obtain finance andpossibly obtain some grant funding that they wouldn’thave been able to get in their old classification as apublic liability company. There is a lot on the move,but I think it needs encouragement. It is happeningbut it is going to happen very slowly.Chair: The Rt Hon Lord Mawhinney, the Rt HonHenry McLeish, thank you very much indeed foryour evidence.

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Members present:


Damian CollinsPaul Farrelly

________________


Witnesses: Shaun Harvey, Chief Executive, Leeds United Football Club, John Bowler, Chairman, CreweAlexandra Football Club, Barry Kilby, Chairman, Burnley Football Club, Julian Tagg, Vice Chairman andSporting Director, Exeter City Football Club, gave evidence.

Q247 Chair: Good morning, everybody. This is ameeting of the Culture, Media and Sport SelectCommittee as part of our inquiry into footballgovernance and I would like first of all to again thankBurnley Football Club for hosting us this morning andlooking after us yesterday evening.I should also say that I have received apologies fromthe Chairman of Leeds, Ken Bates, who is unable tobe with us since he is suffering from bronchitis, but Iam grateful to Shaun Harvey, the Chief Executive ofLeeds who has agreed to take his place on our panel,and I would also like to welcome on the panel JulianTagg, the Vice Chairman of Exeter, Barry Kilby, theChairman of Burnley, and John Bowler the Chairmanof Crewe Alexandra, and I am going to invite DamianCollins to start.

Q248 Damian Collins: Thank you. The first questionto Barry Kilby; could you tell us why you gotinvolved with Burnley Football Club and what is yourmotivation for being Chairman?Barry Kilby: It’s where I come from, it’s our club. Mydad brought me here as a lifelong supporter I supposeis the correct answer, and also in a town like BurnleyI think the football club really is one of the centralpillars of the culture that I come from, so when I gotthe chance to take over and strengthen that and moveit on that’s what I chose to do. It’s as a super supporterthat I took over as Chairman.

Q249 Damian Collins: Mr Harvey how did youbecome involved with Leeds United?Shaun Harvey: Leeds United is my third job infootball, having previously worked at my professionat Scarborough and Bradford City, so every failedfootballer’s dream. I was an amateur player at school,always loved football, so what better way of earninga living than actually being involved in theprofessional game.

Q250 Damian Collins: How long have you beenwith 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 onbusiness, had a young family; what to do atweekends? So we thought we’d go and support thelocal football club. I probably then made the mistakeof suggesting how they could run it a bit better andwas invited to join the board and ultimately asked to

Mr Adrian SandersMr Tom Watson

take over as Chairman, so it started as a supporter andwent on from there.

Q252 Damian Collins: Mr Tagg?Julian Tagg: My involvement started as a coach inyouth football at Exeter. I started off the Centre ofExcellence from nothing and built that up. When theclub got into trouble, as a born and bred Exeterperson—and I’d seen the trust beginning to evolveinto something that was credible—I saw the footballclub getting into such a terrible situation andcondition, owing so much money. I’m not sure I knewthe full details when I got involved, but the footballclub was very pressured. But it’s more important; it’snot just about football, it’s about providing somethingfor the city, and that was probably my mainmotivation—whether that might have been the rugbyclub or the football club—providing something for thecity alongside those people. I thought the trust werebeginning to become organised and looking likesomething that could help us; that’s the primaryreason I got involved.

Q253 Damian Collins: Barry Kilby, you are theChairman of Burnley Football Club. Could you tell ussomething about the ownership structure of the club?Barry Kilby: Yes, essentially there are fourdirectors—five directors—on the club. Between us,we have about 85% of the share capital. I’m thelargest shareholder with about 35% of the company,but we have over 200 shareholders, many holding oneor two shares. Some have been held since 1936 andheld in families, so we have a wide shareholder baseand essentially the directors of the club control thecompany with the majority of shares.

Q254 Damian Collins: The other directors, are theypeople like yourself, so local businessmen?Barry Kilby: Yes, certainly four were born here. Twohave businesses down in London, but they stillremember their Burnley roots and want to support it.Two others live up here, but all of us have beenBurnley supporters since we were boys. Our fifthdirector came up here in the 80s and he has been adirector for 25 years as well, so essentially we arelocal people who support the club.

Q255 Damian Collins: Mr Harvey, could you tell ussomething about the ownership structure of LeedsUnited?

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15 March 2011 Shaun Harvey, John Bowler, Barry Kilby and Julian Tagg

Shaun Harvey: Leeds United Football Club is ownedvia a holding company. The majority shareholder is acompany called FSF Limited who are based in Nevisand own 73% of the issue share capital.

Q256 Damian Collins: Could you tell us somethingabout the majority shareholding?Shaun Harvey: FSF Limited is owned by threediscretionary trusts that are all managed by trusteesout of Switzerland. There are two management sharesissued that are held and it’s those people who areresponsible for Leeds United Football Club.

Q257 Damian Collins: Who are the individuals whoare the major investors in those trusts?Shaun Harvey: The question is the discretionarytrusts. The trustees have appointed two members torun the trust’s interest in Leeds United Football Club;Mr Patrick Murrin and Mr Peter Boatman, who asksMr Ken Bates to chair the board and look after theirinterests in Leeds United Football Club.

Q258 Damian Collins: So is Ken Bates answerableto those two trustees?Shaun Harvey: That’s correct.

Q259 Damian Collins: So they would have thepower to remove him as Chairman or put a newChairman in?Shaun Harvey: They must have by definition.

Q260 Damian Collins: Do you know that?Shaun Harvey: Well they must do. They are theshareholder or the trustees to the shareholder, so thatmust be a power that they have.

Q261 Damian Collins: You know who the trusteesare, but do not know who the shareholders are.Shaun Harvey: Correct. They are discretionary trusts.

Q262 Damian Collins: So you cannot point to anamed person and say those people are the owners ofLeeds United?Shaun Harvey: No, and that’s why the ownershipstatements that have been made are made in the waythat they are because they are a true and accuratereflection of the ownership structure behind LeedsUnited Football Club.

Q263 Damian Collins: Do you know personally whothey are?Shaun Harvey: Do I know personally who thetrustees are?

Q264 Damian Collins: No, do you know who thetrustees act on behalf of? Do you know the peoplewho are the owners?Shaun Harvey: No, I don’t.

Q265 Damian Collins: You do not. As ChiefExecutive, you do not know who the major investorsin that trust are.Shaun Harvey: I don’t know who the beneficiaries ofthe discretionary trust are, no.Damian Collins: Okay.

Q266 Damian Collins: You have worked at otherfootball clubs, so do you not find that slightly strange?Shaun Harvey: Not particularly. If I was the ChiefExecutive of a football club that was quoted on thestock market I wouldn’t expect to know every singleshareholder.

Q267 Damian Collins: Does Ken Bates know?Shaun Harvey: Not to my knowledge.

Q268 Damian Collins: Right, well he obviously hasnot told you. Do you have any relationship with thetrust other than through the trustees?Shaun Harvey: No, my responsibility is to deal withthe trustees who represent the trusts.

Q269 Damian Collins: But is that something peoplein Leeds are concerned about?Shaun Harvey: It depends on your definition of“concerned about”. At the moment, we’re fifth in theChampionship, everybody seems to be relativelycomfortable with how the club’s proceeding. We’vegone from a very low point and are ascending theladder of success. That’s not to be translated as we’veachieved anything yet, because there’s still nine gamesto go this season, but the reality is, it’s the Board ofDirectors that are responsible for running the footballclub, not the shareholders.

Q270 Damian Collins: But so long as the team aredoing well the fans don’t care.Shaun Harvey: I wouldn’t be quite as bold as to makethat statement, but if things are going well and thereare positive results, then that’s what a Board ofDirectors are there to try and ensure, within itspowers.

Q271 Damian Collins: But is there any sense ofcommitment for the trust for their investment in LeedsUnited? Could they withdraw it at any time? Are theycommitted for a number of years?Shaun Harvey: The football club has got no debt, sothey hold the shares and, yes, they are committed.There’s no indication that they have any desire tomove away from their investment.

Q272 Damian Collins: Given the financial problemsLeeds United have had, do you think there is alegitimate concern about the transparency of thefinancial organisation of the club and its ownership?Shaun Harvey: It depends how far you want to goback in time. If we go back to the year 2000–01 whenthe club was owned by a plc and competing in theChampions League European semi-finals, then therewas a vast array of owners of the club run by itsdirectors. Yes, the club got into trouble under the plcboard first and foremost, and sold through a group oflocal businessmen, which is the model that you’veheard Barry Kilby explain to a certain extent as tohow Burnley’s arranged. Without speaking for JohnBowler I think, Crewe was the same basically, buthe’s capable of confirming that himself.That got into trouble very quickly. They bought itfrom the administrator of a plc, so it was in troublevery, very quickly, because they didn’t have sufficient

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funds to run the business. So, yes, there has been apotted history and a concern, but I’m convinced nowthat the light of the Elland Road tunnel is in fact theway out, rather than a train coming in the otherdirection.

Q273 Damian Collins: Yes, I understand that, I thinkthere will be a concern with the nature of the footballclub. In the case of Burnley, it is very simple tounderstand where the money comes from, who theinvestors and directors are, and with a club like LeedsUnited the majority shareholding is owned by a sortof mysterious trust and we don’t know who theinvestors are, and I think that’s a legitimate concernfor a football club.Shaun Harvey: You’re entitled to draw thatconclusion.

Q274 Paul Farrelly: Just one question, because weare looking at the application of fit and proper rulesand I don’t want this to be dominated by thecontroversy of the Leeds mysterious shareholders, butdoes the Football League know who the beneficiariesare?Shaun Harvey: The Football League have exactly thesame information that has been made public, and thestatement that has been made complies with everysingle part of the Football League’s regulations, asindeed every single football league club has to do.

Q275 Paul Farrelly: Just one follow-up. If you arefortunate enough to get promoted to the PremierLeague, do you expect the Premier League to ask youthe same question about the beneficiaries?Shaun Harvey: We expect to be able to comply withthe terms of the Premier League’s rules at the timeand the statement that we’d be making is no differentfrom the statements made public now, because it is atrue and accurate record of the ownership structure ofLeeds United.

Q276 Chair: True, accurate and also ratheruninformative.Shaun Harvey: Well, you can’t answer a questionthat’s not got a direct answer; there is no individual.That’s the nature of discretionary trusts, which are aperfectly legal and a much used ownership structurein many different industries, not just football.

Q277 Mr Watson: I’ll allow Mr Harvey time to takebreath. If I could go on to John and Julian; how farup the English football pyramid do you think yourclubs can realistically go?John Bowler: We would hope to certainly playregularly in League One, and we would hope to beable to challenge to get a place in the Championship.To stay there is difficult because of the financialpressures that come along with running aChampionship club.Julian Tagg: Our journey started in the Conference,and we got ourselves to League One, which was ourtarget, in five years. In ten years, our target now is toestablish ourselves in that league, which in our secondyear seems exactly what we’ve done—we avoidedrelegation on the last game last season. This season,

we’ve probably already established that, so we’vemade that progress. Our target will be to get in theChampionship and do the same. I think that’s thecompelling thing about football; it’s always possiblewith the right kind of management, with the right kindof—I mean Crewe particularly and ourselves—withthe right kind of youth policies behind us, it ispossible, I believe it is. If I didn’t think it waspossible, I don’t think I’d be sat here, unless there’ssome purpose. If we got to the point where anybodyin our club said that, you know, we’re happy where weare, that’s the time I think my involvement would—Iwould always support the youth side—but I wouldprobably stop unless there’s some target. That targetis the Championship, the next stage then will be, aseverybody here knows—pardon the vernacular—it’sbums on seats that count.If our ground gets to the point where that stops usgoing any further, say in five or ten years’ time, thatis where we look again for the next step. I believe ourcity is big enough to take a club that will go evenhigher. Blackpool have done it, and as I say, footballis compelling in that sense. So, yes, I think it’spossible. It may take a little bit longer to get there andI would be looking once we did to take the next steps.

Q278 Mr Watson: Okay, Barry and Shaun could Iask you, is the measure of success for Burnley andLeeds a Premiership place? Staying in thePremiership?Barry Kilby: Yes, we’ve tasted it once. I think wewant to go back there again, to be in the top tier ofEnglish football. So I think our supporters’ aspirationsare that we should see Blackburn, Bolton as clubswe’re on a par with. So I think it is realistic for us, ifwe could just set ourselves right, to think we couldcompete in the Premier League. How far we couldclimb up that ladder is open to question, but certainlyI think it’s realistic that we could on that level performin the Premier League, and that’s our aim.Shaun Harvey: Yes, Leeds United’s objective on thefield is relatively simple—it is to get promoted asquickly as is practically possible.

Q279 Mr Watson: Shaun, I don’t want to revisit themysterious trust question, but your Chairman is quitea remarkable character in the sense that he tookChelsea from the Third Division to second in thePremiership on a sustainable budget and appears to bedoing that with Leeds, whatever the financialarrangements. Do you know what the secret of that is?Shaun Harvey: Hard work, dedication andexperience, I suspect. There’s no magic formula. Ifthere’s a magic formula of how to make a footballclub successful, there’d be a lot less clubs who havesuffered financial problems and there’d be a lot moresuccess around. It’s about maximising every possibleelement of income and hopefully surrounding yourselfwith a manager and coaching staff who have got theability to maximise a return from players.

Q280 Mr Watson: You said earlier that you are asort of professional Chief Executive in football.Would you like to outline what the difference is




between working for the Chairman of Bradford andthe current Chairman of Leeds?Shaun Harvey: I actually said it was my profession.Others are probably better placed to judge whether it’sprofessional or not. The answer is the Chairman ofBradford City and the Chairman of Leeds had somesimilar traits. They had very small boards with theability to make answers quickly. The one thing forcertain is the quicker you’re able to make decisions—and effective decisions—in the knowledge of the fullcircumstances that surround the issues you’re dealingwith the easier it is to be effective.

Q281 Mr Watson: So would you say a strong agileboard 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 footballleague clubs gone into administration in recent years?Who would like to have a stab at that?Julian Tagg: I can only talk from personalexperience—and I would imagine it’s the sameelsewhere—it’s all anecdotal across the board,because every situation is so different. I believe ourclub was in quite considerable difficulty and thepeople in control at that point then wanted anybodyto take it from them, and they passed it to some peoplewho put it into a ridiculous state of problems and debt,and that’s part of the danger. When a football clubdoes get into trouble the people who are responsibleat that time are very keen to, as you can imagine,offload that responsibility to anybody.The fit and proper person is very, very sensible frompersonal experience. Hopefully that’s beginning tosolve that problem to a degree. It’s usually, in termsof Shaun’s point about managers, about wages in theend. Getting the success with a wage bill that youcan’t maintain means you go down a league, get lowernumbers, and so the whole thing escalates. Usuallyunderpinning it is a wage problem.Certainly in our situation, we were paying wages inthe Conference because of the football creditors rulethat you wouldn’t even considered having to pay—itwas probably commensurate with two leaguesabove—and I think there are a number of clubs thatare in a similar position. They suddenly drop out fromthe Championship for instance into League One andthat is a big gap. Same all the way down. If you’repaying players from the division above or perhapseven the top wages for players who could play in thedivision above that and then suddenly you findyourself two leagues down but with a contract in placeyou’re pinned to that. There’s probably moreexperience at the other end of the table, but that’s whatwe are so very, very careful of avoiding; that’s wherewe think the major pitfall is.Barry Kilby: I think they are different, but there arethe more spectacular ones. Last season, Portsmouth, aPremier League team with their revenues coming inwell 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. Ithink there is a danger sometimes with the foreignowner who can walk away if it doesn’t work out.

Really, it didn’t cost them that much—it was the clubthat suffered and there was no responsibility.There are other examples, and I believe that whenLeeds went to administration that all stemmed back toan extremely ambitious set up that was all gearedtowards being in the Champions League and at thetop of the Premier League. When that kicked in, therewere problems there. So really it is clubs getting intotrouble and being saddled with debt that they can’t getout of.Shaun Harvey: There is a combination of two things.There are two common denominators—relegation orfailure to reach the levels at which you’re budgeting;and players’ wages. If the incomes you’re expectingfrom your success on the field aren’t realised, theplayers’ wages have to be reduced accordingly,otherwise those are the factors that get football clubsinto trouble.Julian Tagg: There’s one other factor which isprobably in capital investment. Often, people willstretch to build a stand. The capital aspect issometimes something that stretches people too far, andwhen you’re trying to do both things, you’re trying tomaintain the pitch or gain success on the pitch andyou’re trying to reinvest capital, then certainly fromexperience I believe that was another indicator of whythey got into trouble.

Q283 Mr Sanders: So what lessons have you learnedfrom the Exeter experience?Julian Tagg: Don’t build another stand for themoment. That’s what we’re trying to work out; theway forward without taking those risks. Everybodyhas a different background in terms of theirownership, and our model and how we raise thecapital that goes with it is the one that’s taxing us atthe moment. But at the same time, it’s about having amanager who understands the nature and ethos of theclub, which he does very well, and has good controlof what is actually happening, not necessarily just ona one-year basis but perhaps on a two or three-yearbasis. You need a budget if this happens and a budgetif it goes in the other direction, and that’s how wetend to plan. We try and plan in the middle by beingpro-active rather than retro-active and it’s when youget into that retro-active situation it sometimesbecomes a spiral that you can’t get out of, so as Shaunwas saying, it’s about planning and hard work.

Q284 Mr Sanders: Have you passed any of thisadvice down the A38 to Plymouth?Julian Tagg: We have an excellent relationship withPlymouth. We’re always there. We will specifically behelping them to try and raise money, so even thoughthey’re our major rival we’ll help them. I personallyhaven’t been asked but certainly members of our trusthave been down there to help their trust to try andform something. So yes, we have helped wherever wecan and we’ll continue to do so even though they area bitter rival.

Q285 Mr Sanders: What’s been learned from theadministration that Leeds went into in 2007?Shaun Harvey: The 2007 administration fortunatelyis traced back, as I spoke about earlier, to the time of




the plc board, who raised circa £60 million by thesecuritisation of ticket seats. The 2007 administrationwas the final action of a board trying to resolve thefinancial issues with which it was left, but the sourcegoes back to those days. The answer is we alwaysstated from the start that we believe Leeds Unitedcould trade profitably if it wasn’t saddled with thefinancial burdens of the past and the trading since2007 is proof of that.John Bowler: The other issue is that—and this hasbeen referred to—we have to recognise that running afootball club as a business is not a difficult task incomparison with other businesses. One of the bigissues I think that a lot of football clubs face is thisdemand for success, and the demand for goingforward and getting results. We live in a very results-oriented environment today. It’s not a long time agowhen a manager of a Premier League club said to me,“John, you do realise that coming third in the PremierLeague is failure”, and it’s this balance betweenrunning a tight ship and yet trying to satisfy thedemands and the wishes of the supporters to take theclub forward, be ambitious, try to get up to that nextrung up the ladder. The problem is if you do outstretchyourself then it’s very difficult and you’ve got a roughperiod if you come back down again.

Q286 Mr Sanders: Is financial prudence rewarded inthe football league? Should it be rewarded in thefootball league? Is the emphasis too much on placesor positions in tables and trophies in cabinets? Shouldthere 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 allfootball league clubs are working hard. Theyrecognise that with the various salary cappingmechanisms, the reporting that we do is encouragingthat well-run football club, and I think that is the wayto approach it. That won’t in any way offset what I’mtalking about and that is the demands and theencouragement that supporters give to their footballclub to go on and to be even more ambitious and that’swhen the trouble starts.

Q287 Mr Watson: Just a supplementary; sorry tocome back to you, Shaun, but you talked about theplc days. When Mr Ridsdale was living the dream atthe turn of the century is it your contention that theclub failed because of the plc structure itself, orbecause of poor financial management, or both?Shaun Harvey: I think it was poor financialmanagement. The gamble was too big in essence andit’s that that saddled the club ever since, until theadministration in 2007.

Q288 Mr Watson: So you wouldn’t actually argueagainst a plc structure per se.Shaun Harvey: Not at all, it’s the management insideit that’s actually the key issue.Mr Watson: Okay, thank you.

Q289 Chair: Can I just ask Barry; you’ve tastedPremier League success, but you’ve also kept yourfeet firmly on the ground and you didn’t go out andspend huge amounts of money on players. You said to

me that you did invest in a pitch, but did you come infor criticism for not doing so? Did your fans suggestto you that actually if you’d gone out and bought acouple of really star players you might stop in thePremier League?Barry Kilby: Yes, that’s always there. The word“ambition” always crops up—lack of ambition is oneof the usual ones you get in the phone-in programmes.You’ve just got to be careful you don’t bet the ranchon this and I think it is easier in the Premier League. Itwas easier if somebody came up with a Championshipteam, so you could improve the wages, and it was stillvery manageable. If you get to a second year that’swhen you start swimming in the waters of establishedplayers in that league, and the costs do tend to start torise. Fans want you to win matches. We all shouldhave prizes for good government—we don’t, andthat’s what sets the theme and the pressure isenormous.When we got up, it was a bit easier at first. We werenew, we hadn’t been in the Premier League for 30-odd years, so perhaps it was easier to keep the fans’expectations; we are being sensible, we’re clearingour debts, if we do go back down we’ll be able tohandle it. I think they did understand, but I’ve afeeling if we had been in another year or so thepressures would have built to spend more. We’ve justlost five-nil to Liverpool at home, Match of the Daysays you’re a load of clowns and jokers, and that’s thesort of pressures you come under. The big problem isthat players’ contracts don’t just last the season youbuy them. You have a three-year commitment, andthere’s a big difference between the two divisions. Sowe did opt for prudence and I think the fans more orless did realise that, being our first season in there,but I know the pressures would have built up as timewent by.

Q290 Chair: You are a very successful businessmanwith a good business brain, and ultimately you havethe final say. Other clubs would have been lessprudent. Essentially would you say that their problemsstem from poor management?Barry Kilby: Yes, poor management or a reluctance tolook ahead; maybe not face facts and thinking it’ll beall right on the night. I think that subtle bit is pushedinto the future—“We’ll deal with that when it comesround”. Unfortunately it does sometimes come aroundand you’ve got to keep a weather eye. Essentially it’syour players’ wage bill, it’s 80% of your costs orwhatever you want to make it, but it can get as highas that and you’re committed to that. It’s just knowingto keep a weather eye on where we might be in twoyears’ time.

Q291 Damian Collins: Just a follow on from thatquestion; if you wanted to keep a club like Burnley inthe Premier League, become a kind of Wigan or Stokeor a club like that that’s broken through and stayedthere, how much money on top of what you get fromgate receipts, prize money, TV money, do you thinkthe directors would have to put in every year to a clublike this so you could compete?Barry Kilby: In the Premier League you’re nowstarting to get into really big money, £40 to £50




million on top, and even that doesn’t make a bigimpact. So I think with a Championship Club it isdirectors’ loans and so on. Once you get into thePremier League it is getting exceptionally rich peoplewho can put their own personal money in so you tryand work it within the revenues that are therenormally and commercially.

Q292 Damian Collins: So for a club of Burnley’ssort of size, and there are other clubs that are similar,unless you’ve got benefactors putting tens of millionsof pounds every year on top of the income the clubcan earn, you can’t sustain being in the PremierLeague.Barry Kilby: Certainly most clubs do have quite bigdebts. Clubs of our size in the league now havebenefactors who are owed quite a lot of money. I thinkyou can keep within that. It’s more the problem if youcome down. You can afford a wage bill of £45 millionto £50 million, the way the Premier League is set upwith the TV money and the normal trading of the club.The big problem is if you come back down—how todeal with it; that’s the real thing. It is difficult, becauseessentially in the Premier League you’re competingsometimes against people who don’t care. They don’teven care about the economics of the thing. If I’mJoe’s Corner Shop, and Marks & Spencer’s is nextdoor to me, at least we both have to make do andmake sure our income’s in front of our expenditure.In the Premier League, you come up against peoplewho don’t care, so that’s really difficult to rationalisein a way, and how do you compete with that.

Q293 Damian Collins: In one of our previousevidence sessions, the Chairman of the FootballLeague said that he could find no moral argument infavour of sustaining the football creditors rule. Do youthink he’s right?Barry Kilby: It does seem unfair on the face of it thatsome people are protected within the industry andsome people aren’t, but it is a difficult one. It is almostlike the rules of a private members club, and certainlyI know if there had been no protection—the footballcreditors rule—clubs would have disappeared becausethey could only survive with the league members. Ithink it’s quite fair to say, “Look, if you want to playin our league you’ve got to pay your dues”. Sonobody’s comfortable with some people beingprotected and others not, but there’s a proper reasonfor it in the football family. You know players needto be paid, transfers paid. If that went, I think thecompetition would be in great jeopardy and everybodywould shrink into their shell and it wouldn’t happen.

Q294 Damian Collins: Heaven forbid that Burnleywould be in this position, but what would you say toyour local suppliers—you know, the caterers, printersand their staff; local businesses that would not becovered by the football creditors rule—if the clubwent into administration, and you are paying thefootball debt say to Charlton Athletic. However, a firmin Burnley won’t get paid or will only get pennies inthe pound. What would you say to a local businesslike that?

Barry Kilby: I don’t think you’d be comfortable, butfor creditors to get anything we need to remember thatthat club would be worth nothing if it couldn’t play inthe leagues. It needs to have credibility and to be ableto play, for anybody else to come across and have aCVA. Maybe they might get some more money downthe line if it’s worked properly. I think if you’ve gotto 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 situationwhere a lot of people weren’t paid—a lot of thosepeople are within our business now and major partsof that business. They realise what it brings to the cityand they would rather have 10p in the pound, andhave the money that’s come over the last 10 years andthe trade that they’re able to do because the footballclub is still there. So there is that side to it. The secondside is that if it weren’t there probably some clubswouldn’t exist in the end.I can’t justify it. You’re quite right, I’m not going tosit and justify it; I’m just going to say that there arereasons. The point is that lots of those companies thatyou’re talking about are major sponsors of ours andare still involved as suppliers, whereas if that clubweren’t there they wouldn’t be supplying. So nobodycan sit and say that that’s right; not paying anybodyis wrong. I think the rules as they’ve tightened areclosing in on that, but those companies that have beenstung, for want of a better word, or have not beenpaid, are still integrated in the football club. We’vegone a long way to make sure that they were lookedafter at that point for those very reasons.

Q295 Damian Collins: But in that case football clubsare effectively using local businesses like a bank andusing that money to artificially sustain their levelwithin the league to the detriment of the clubs theyplay against.Julian Tagg: Bad ones are; you’re correct—I’m notarguing against that.

Q296 Damian Collins: Mr Harvey, if you would liketo comment on that I would be grateful for yourviews. I just want to ask, as you’ve been at Leeds fora number of years, Brian Mawhinney told us that hetried on a number of occasions to accept or ask forleague clubs to end the football creditors rule andcontinually failed. I would be grateful for any insightyou can give on that.Shaun Harvey: Just to deal with the issue of footballcreditors to start with. Football creditors exist infootball and don’t just crystallize in the period ofinsolvency. The football creditors principle runsthrough every club throughout its membership. So if,for example—and using people round the table—Leeds United owed Crewe some money on a transferfee and didn’t pay it, then Crewe have the right tocollect that money from money that would otherwisebe sent essentially to Leeds United Football Club. Iunderstand the rationale for why to focus on the end—i.e. the insolvency situation and why it appears thatone set of creditors are being treated preferentially—but the football creditors principle is of football clubsthat are working day in, day out, allowing each otherto sell tickets, which is massively important. If Leeds




defaulted in this example on a payment to Crewe,which meant Crewe had to sell their players to keepin business, that cannot be a fair and rational positionfor Crewe to be put into, particularly when it’s aclosed industry. The only people we can trade with ona 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 sellan asset. The only people a football club can sell theirasset to is another football club, so that’s why I thinkthe principle of the football creditors is massivelyimportant.I will come back to the comments and the reportyou’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 itspreferential status with the advent of the 2002Enterprise Act. There was preference as well asfootball creditors, so it’s only recently with the changein law that this has become an issue, and the law saysthat businesses do go insolvent and the Enterprise Actis there to bring them back. Why do I think he wouldhave been unsuccessful in bringing the mattersforward? Because the integrity of the competition andnot gaining an unfair advantage over the clubs thatyou are competing with on the field on a Saturdayafternoon was of paramount importance to all thoseclubs.

Q297 Damian Collins: But do you not think the ruledoes help artificially to sustain competition for clubs,because they can be involved in transactions withother football clubs and those clubs have got thesecurity of knowledge that they will get paid even ifother people won’t?Shaun Harvey:Well, they’ll get paid in an insolvencyprovision when the club re-enters the football league,which is usually via a new company. So it means thatthey can’t gain an advantage over the other clubs, andthe justification is difficult. St. John Ambulance areoften quoted as the party that has been affected, andthat case is usually cited because, whilst it’s still verysignificant, the amount is usually small in comparisonto the overall debt. When Leeds went intoadministration, 49% of the debt at the time was tothe investors.

Q298 Damian Collins: When the Premier LeagueChairman and Chief Executive gave evidence to uslast week, their view was that without the footballcreditors rule, clubs would be more responsible aboutbuying and selling players to each other; they wouldtake a greater interest in the balance sheet of otherfootball clubs because they’ve got more commercialrisk, and in terms of business practice that sounds likea sensible thing.Shaun Harvey: Yes, and I think that’s borne out of aposition of looking down on everybody else from alofty height. The ability to say that also comes fromthe fact that the majority of the transactions are forplayer transfers; it’s not just player transfers, there isday to day trading between football clubs as wellwhich often gets glossed over—a lot of that’s goingoverseas. If you sell a player to an overseas club, you

take your life in your hands sometimes in relation togetting paid and certainly getting paid on time.John Bowler: Yes, I was just going to say the otherimportant issue is that transfer fees very often are ameans of, if you like, trickling funds down to smallerclubs. To use Shaun’s example, we sell a player toLeeds, but if we’ve bought that player from anotherclub there is often a sell-on clause for the other club,and so the transfer fee mechanism does in actual factfeed other clubs rightly with money and with fundsavailable to them. My belief is that if that creditorsrule was not allowed, then there could be a number ofoccasions where a football club might go intobankruptcy, but it would also take probably two orthree other clubs with them because of the fact thatthe transfer money that ought to have come down tothose other clubs hasn’t come.

Q299 Damian Collins: We are going over the sameground, but in a world without it, clubs might be morecautious about entering agreements where they’retaking payments from another football club if they’renot certain whether that football club can afford tohonour them or not and that might help spread bestpractice.John Bowler: I accept that point, but on the otherhand, I think that the information available to a clubwhen it’s selling a player to another club makes itdifficult to decide whether in fact the club that you’reselling to is as financially sound as it might be.

Q300 Damian Collins: Perhaps getting rid of the rulewould create an incentive for clubs to be much moreup front about their money, and where it comes from.John Bowler: I don’t think it would. I think in actualfact the information there is often not available foryou to assess just how financially sound the club isthat the player is being bought from. Don’t forgetsome of this trickling down of funds could go on fora number of years. Players move on from one club toanother. All I’m saying is don’t underestimate thevalue that the creditor rule does provide as a meansof feeding funds down through the football pyramid.Julian Tagg: Really the rules that the Football Leagueare putting in place—they have done it with LeagueTwo and are attempting to do with League One—areabout that due diligence that you talk about. TheFootball League are trying to do it on our behalf tostrengthen those clubs up for that reason, which, ifyou were expecting clubs to do that every time youdid business you’d spend a lot of time doing that duediligence. It seems to me that that’s what the footballleague clubs themselves are signing up to. CertainlyLeague Two have done it and I think League One hasan appetite to do the same.

Q301 Paul Farrelly: Not to get hung up on this, butsurely the football creditors rule rewards poorfinancial management. If you are not a member ofthe club, it discriminates against Nantwich Town orStafford Rangers does it not?John Bowler: Why?

Q302 Paul Farrelly: Because they find it far harderto get into the club.




John Bowler: I wouldn’t have thought so. I think theother thing that the football creditors rule does interms of the fact that those football debts have got tobe paid off is that the people probably coming in totake over a club that’s gone into administration dotheir due diligence, and in fact recognise the rightfuldebts 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 verydifficult one—is the risk of what you might lose. Aswe said, a company might lose the opportunity totrade, whether or not they are one of the ones thathave been defaulted against. You also leave a largehole in the community, and I think that’s huge. Whatfootball clubs do across the country for thatcommunity; that’s the risk of what you may lose. Ifthat club does disappear for that reason becausethey’re no longer allowed in the family, as Shaun hasexplained, that is the risk. I see those two thingscertainly from a personal point of view and frompersonal practice as hugely, massively important. Iwould be worried about supporting what you’resuggesting because of the risk, whether it be my clubor whether it be Leeds or anywhere else. Knowing asI do what happens, what those clubs mean to and dofor the community, it would be a big risk to start tolose some of those.

Q303 Damian Collins: I hear what you say. On thatbasis, any kind of rule, any kind of practice that allclubs employ which people might question can bejustified on the basis that while the club might go intoadministration the community might lose their club.Therefore let us do almost anything we can to avoidthat no matter how “morally dubious”—to use theChairman of the Football League’s words—thatmight be.Julian Tagg: But certainly from a personal situation,it is the people who came in from outside who werewilful in what they did and how they did it, and thatwas nothing to do with any supporter, nothing to dowith anybody in that city, and it’s perfectly feasiblethat it could happen again. So a couple of individualscould do something to a football club, rip it out of themiddle of that community and the rule would nolonger be there to protect that community. So Iabsolutely take your point and I don’t feel good aboutit at all, but in terms of the balance between the twothat would be something I would hate to seesomebody else lose, knowing how important it is.Barry Kilby: If a club went out of existence there isno football creditors rule—we all lose the club; if itdisappeared, that’s it. It’s surely right for us to say tothe new club coming back in, which wants to get backinto the league and play alongside us again, “Listen,you’ve got to make sure that you honour thosecontracts if you want to come back and play in ourleague”. That’s the real reason there. I mean certainlyif it disappears, if Burnley Football Club is owed amillion quid if that club goes, that’s it, full stop. It’sonly when the new club that’s coming back in its placewants to take its place in the league that we can say,“Well if you want to come back into the league it’sonly right that you make sure your players were paid

and you were dealing with your debts before we allowyou to come back in”.

Q304 Damian Collins: I think we’d all agreed withthat, it’s just a question of whether it should be at theexpense of other creditors.Shaun Harvey: Chair, I sense you’re keen to moveon and I think one or two over here are happy for youto move on as well, but I think the biggest elementof football creditors that is carried forward to a newcompany is actually the players’ wages. It’s theplayers’ contractual obligations. They’re employees.Employees are preferential creditors certainly forarrears, usually to, I think, about an £800 limit. Butthat’s the biggest liability that is taken on by a newcompany. If players don’t have that level of securityof contract, then I suggest the asset value of theirregistration and the arrangements that are in placewith the PFA could well be put into question. It’s abigger question for you to take up with others but it’sjust worthy of leaving you with.Chair: Right, thank you. Paul.

Q305 Paul Farrelly: John, a question for you. Creweare legendary. I think Dario Gradi took over from thelate and great Tony Waddington as the longest servingmanager in football history and he’s renowned forspotting players and youth development. Do you thinkthere’s a lesson that we can learn in footballdevelopment from the likes of Crewe that theGermans have learned and the French have learnedthat might involve the bigger clubs sharing a bit moremoney out for what might be at the end of the day inthe national interest?John Bowler: Yes, but I think every football club hasgot to decide how it’s going to run its business. WhenI first got involved with Crewe 30-odd years ago, wehad a record that we’d applied for re-election morethan any other football club in this country andtherefore we were still in existence but only just, andwe took a long hard look at, as a business, what thefuture held for us. We don’t have a large catchmentarea. We have a lot of very well known clubs aroundus that attract traditional family support outside ofCrewe and therefore despite whatever we could thinkof, one thing became apparent and that was wecouldn’t generate the commercial revenue and thesupport that would sustain us going forward anywhereother than in the bottom league.You’re quite right, Dario joined us at that time andhis passion was youth development, and therefore ourbusiness strategy was simple. It was, look, the onlyway we’re going to kick on here, the only newrevenue that we can find is to concentrate on youthdevelopment and developing young players; firstly topopulate our own team and secondly for those whowere going to play at a much higher level than wecould play at, then hopefully that would generatecommercial income. Through his success we’ve beensuccessful there. Over those 30 years that he’s beenwith us, he’s been responsible for generating transferincome that redeveloped our stadium. That built ouracademy and has got Crewe to where it is today. Therewas always going to be some calculated risk, but wewere prepared to support a budget loss situation on




the basis that we would have sales coming through tooffset that and that’s how we balanced the books.We have been grateful for the support that we havereceived from money handed down to us from theFootball League, the FA and so forth. It is a struggletoday and I think that if we want to have the kind ofcommunity clubs Exeter is talking about, and if wewant to sustain community clubs and smaller clubs,then there is no doubt that against the competition thatwe have, yes, we would welcome more centralfunding being provided to us and through whatevermechanism there is. It doesn’t tend to feed its waydown as efficiently today as it used to do.

Q306 Paul Farrelly: Is there anything we can learnfrom other countries—perhaps the legalities of beingable to contract young people, which would mean thatsmaller clubs got a fairer crack of the whip or is thattoo esoteric a question?Julian Tagg: I think the system actually as it stands atthe moment, like anything, can do with improvement.Everything can be improved, everything can bebettered, but I think the system is there and across theboard, pretty much every club is involved in it andwhat I see from first hand is a lot of people strivingconstantly to improve and to do that, and I think thesystem is very much in place. I think the focus at anational level often is the England team and why isn’tthe England team winning everything. I think if youlook at the under-17s, under-19s, under-21s, you’ll seethat a lot of the boys who have been developed, notonly in the League but also in the Conference, andthat’s where players have come from. There’s a lotof very, very good work going on, which again I dounderstand can be improved, but the systems that arethere I believe are working quite well. They can beimproved upon, but I don’t think there’s a massiveamount that needs to be fixed. Perhaps the coachingand the levels and ability of those coaches can beworked on, and certainly the focus that there has beenrecently on the number of hours and so on, withoutgoing the whole way of what is being suggested, Ithink there’s mileage in that too.

Q307 Paul Farrelly: How does it look fromYorkshire?Shaun Harvey: Youth development policies aredifferent at every single club, and again there’s no onemagical formula that says do this, this and this andyou generate a professional footballer at the end of it.For me, the system only breaks down when clubs losethe opportunity to develop the players in theiracademy to the full potential, and that means whereanother club’s come and taken them out of youracademy at a young age to place them in their own.If that happens, by definition what you’re actuallylosing are the best players, because a Premier Leagueclub would not come and scout a player from anotherclub’s academy or centre of excellence unless theybelieved they are going to better the players thatthey’ve already got in their systems, who are supposedto be the best anyway.So I think the biggest challenge that we all face isensuring that there’s an adequate compensationsystem in place that actually protects the interests of

the clubs that are developing players from theyoungest age. Statistics prove that each club can bringthrough one player per season who becomes a regularfirst team player—and this is defined as being 25 firstteam appearances by the age of 21—but becausethere’s no magic measure, if new systems are put inplace for compensation that doesn’t accurately rewardthe investment that’s made in the whole system bythat club, many clubs will stop their youthdevelopment policy because it is no longereconomically viable for them to have one. Johndescribed the model at Crewe, and a lot of clubs havelived on running the senior team by the proceeds ofincome generated from the sale of younger players,and there is absolutely nothing wrong with that.There are two measures; getting players to play inyour first team and producing players to sell to moveon for a transfer fee. Both are equally valid arguments,and if we aren’t careful and that particular mechanismis affected negatively, what we will see is a lot ofclubs stopping youth development, runningcommunity-based schemes and then picking upplayers who have been cast aside by bigger clubs andPremier League clubs at the end. The sort of socialeffect that has on the players that are released isanybody’s guess, so we are playing with dynamite atthis moment in time.Julian Tagg: There is a deeper effect as well whenyou develop your players and you have three or fourin your team, you know by definition as they’ve comethrough, their wages are lower. That’s been the focusa lot of the time about the wages, so if you havedeveloped two, three or four players that have comethrough, if you were a club that wasn’t developingand you’re bringing in players from outside theywould cost you probably three or four times as much.When you have one that’s a significant saving but ifyou get two or three into your first team, never mindwhether they’re sold or not, which of course hopefullythey are, that’s a significant saving which would makelife much more difficult for the lower end clubs.

Q308 Paul Farrelly: Barry, maybe you can help meon this, without being naïve and taking everything thatwe’re told at face value, we did get a sense inGermany that there was more of a collective ethosabout their game that’s perhaps not evident here, inthat there was a very strong statement from lots ofpeople we talked to that the German performance inEuro 2000 was absolutely rubbish and was a nationaldisgrace and they needed to do something about it,and they did it with youth development. We’ve seenthat with the young German team that ran Englandragged but got caught out with the maestros fromSpain, but still they are where they are. Bayern inparticular said, “Okay, we can’t just not pinch playersbecause otherwise Arsenal will come calling and nickall the best talent”, but there’s a gentleman’sagreement to not be aggressive about it. Where are wefailing in our game?Barry Kilby: What we’re talking about is the successof the national team, and I think on the whole theFootball League does very well in nurturing its talentand coming through. One of the problems for theEngland team as opposed to Germany is that the




Premier League hoovers up the very best talent. Thebig problem the Premier League has is that once theyget to 19, 20, those real vital years of footballdevelopment, there are so many foreign players inhere—and it’s even imported foreign young players—that players are not getting that chance to develop asthey would do in Germany, where they would have amuch easier chance. Those are really vital years whereyou get match intelligence and a strong mentality. Idon’t think it matters that much if we spend even morehours on trying to trap a ball or whatever—it’s thosevital years that are being missed in the national team.I don’t think you can go back and say the youthsystem’s failing. I think the players are there, it’s thatvital competition that they’re missing now. Thefamous Manchester United—Beckham, Giggs, theNevilles; the famous one when Alex Ferguson in theearly 90s put those lads in and they came through tobe top players for twenty years—wouldn’t happennow. It’s so foreign dominated. We can’t say we mighthave one season where we will finish tenth and thenwe’ll pick up again; success has to be there and thebest way is to import ready-made talent. I think that’smore on the national team than what you start doingby messing around with what the clubs are doing inthe football league, which I think is an excellent job.Julian Tagg: I think I mentioned before, you’re doingexceptionally well at under-17, under-19 and under-21 from a European perspective, so something’s notgoing terribly awry. I’m worrying whether some ofwhat’s suggested is going to exacerbate what Barryjust describes; players getting to the top end andgetting frustrated with no situation or no opportunityto play in real football. It would seem that the clubsat the very top are actually bringing them back downinto our divisions—the Championship and One andTwo—to, whether you call it blood them or educatethem. They’re going to take them away, yet they wantto bring them back, so unless there’s anotheropportunity where they can get that kind of experienceI think what’s being suggested, that’s going to be itsflaw.As I say, you get the 17s, 19s and 21s. The othercomment you made about was that there seems moreunity, and of course even with the process that’s goingon here—and I’ve been part of the Youth WorkingParty—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 FootballLeague and the Premier League all sat around thetable. All those people have interest and so itbecomes—you’re quite right, Paul—disparate ratherthan a unified group of people trying to achievesomething. It may have been a faster process and amore effective one were that not the case.John Bowler: I think my own personal perspectivetoo is that, yes, we are concerned about the growth offoreign ownership in the Premier League, and will thatforeign ownership have as much interest in the futureof the national game and all that goes into thiswonderful sport that we’ve got, which is our nationalgame, and the wellbeing and development of it. I thinkwe’re in a changed process, with new ownership andforeign 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 concernsabout how will this relationship nurture itself anddevelop in the future, so I think the concern that youraise is a fair concern.We’ve got to be sure that we want the finest PremierLeague in the world. We want to be sure we’ve got avery strong and successful national game, but we haveto try to ensure that we don’t lose the family offootball, because the family of football really doesdepend on making sure that the grass roots are takencare of, so we must make sure that as many of thelocal communities nationally spread throughout thiscountry have their own football team and hopefullytheir own league football team. That’s what we needto ensure.Julian Tagg: Many of those England footballers arecoming from Conference Two, One, all the way up. Ican’t quote them specifically but that broad base,which is what’s happening in the footballingcommunities, is hundreds and hundreds of childrenstarting off. They go into development centres,advanced development centres, into the centres ofexcellence. There’s a massive amount of work thatgoes on before these children get to 12 years old, andthe depth and breadth of that is hugely important.Some of the proposals might close that off and thepyramid at the bottom wouldn’t be so stable, and, ifthat wasn’t there and those children weren’t doingthat, they would be doing something else. Hopefullythey’d become a great rugby player or a swimmer orsomething else, but if we’re concerned about football,it is that base—and keeping that base strong—offootball in the community that raises all the waythrough with the football clubs’ involvement, and willultimately 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, themost successful players or the players who have hadthe most success that we’ve developed have actuallyleft us during their first two years as professionalsafter playing in our first team, rather than those whohave left us during their academy years. That is animportant issue that we mustn’t lose sight of.

Q309 Chair: We need to move on because we arelagging behind. Can I ask you a quick question? Itappears likely that the sale of exclusive broadcastingrights on a territorial basis within the EU may bedeclared illegal. That’s obviously going to have a hugeimpact on the money coming into the game but it alsomay mean that the existing three o’clock blackout canno longer be maintained. How serious would it be foryour clubs if that blackout at three o’clock no longerapplied?Julian Tagg: Just from seeing what happens on aTuesday night when Manchester United or Arsenal areplaying, we feel that direct effect on our gates. Everytime we lose a Saturday game and it comes back as aTuesday one, we know that’s quite a considerabledrop in income, because nine times out of ten there’sa football match on the TV that people would want towatch, and I don’t blame them in a way. If that wereto happen on Saturdays it would have serious




ramifications from a financial point of view to everyfootball club.Shaun Harvey: It’s the floating fans. A Crewe fanwill always be a Crewe fan, a Leeds fan will alwaysbe a Leeds fan and they are going to hopefully go andbe able to turn up and watch their team play live atthe stadium of choice. The floating fans are theproblem, those who want to go and watch football andpick and choose a game. Why pay to go and watch agame through any stadium turnstiles if you can watcharguably a higher profile, greater quality, higherdivision game on TV? So I think three o’clock on aSaturday afternoon has to be tried to be keptsacrosanct for the purpose of getting people throughthe turnstiles at their local clubs.From a financial point of view and the value of theloss of exclusivity to the TV companies, whether welike it or not, Sky effectively acts as paymaster generalto the world of football as it stands. The TV rights arewhere income is mainly generated and anything thatfundamentally affects that will have a bearing onevery single club. As I said earlier, what causes clubsfinancial problems is loss of income, usually createdby relegation in the examples that we’re talking about,but with a significant loss of centrally distributedincome without sufficient time to adjust, we will seeproblems. ITV Digital proved that when it went bust,at football clubs. With a loss of income that clubs hadbeen told realistically they could expect and plan for,you saw a spate of administrations. It was also anexcuse in some circumstances but it is a real fear thatfundamentally it could affect the very fabric offootball.John Bowler: And don’t forget that really the drivethat a lot of clubs are making now, particularly smallerclubs, is to encourage the new supporters, encouragefamilies. As Shaun is saying, for the die-hard Crewefan, he’ll come and it doesn’t matter what’s ontelevision, but we’re really interested in encouragingschoolchildren to be coming, families to be coming,and to have that competition when we’re playingcould not only have a serious impact today but it canhave a serious impact for the future.

Q310 Mr Sanders: You’re familiar with the idea oflimiting clubs’ spending on player wages to 60% ofturnover, which is now the practice in League Two.Do you think a similar rule should be brought in toother divisions?Julian Tagg: I’ll give you a quick answer; yes. Weexperienced it in the Conference, experienced it inLeague Two and not in League One, but, yes, I wouldinvite it and there’s already a lot of discussion, a lotof work and analysis that’s going on with financialcommittees within the football league to achieve thatand 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 Ican but with an example; 60% of our turnover wouldmean we could spend approximately £16 million ayear on wages. We spend nothing like that.John Bowler: I was originally against it, because Ifelt that football clubs have really got to takeresponsibility for running their own businesses and

running them prudently and profitably. I’ve changedmy position on it because I think it’s just part of apackage of things that the football league is lookingat to try to ensure that we do have good financialgovernance and to encourage best practice, andtherefore I accept that that is one of a number ofmeasures with which the football league is putting itshouse in order to ensure the wellbeing of the sportoverall.Barry Kilby: I’m slightly wary of it somehow—justthat little bit of straightjacket coming from above thatyou must do this and do that. The season we went up,when we were getting close, we increased ourspending a bit and that was directors’ loans. We knewwhat we were doing and how we’d cover if it didn’tcome off, so there’s a little bit of flexibility there. Itjust seems very rigid to me for somebody to say,“Whatever your circumstances you cannot do X”. I’ma little bit worried by that. It’s very sensible, 60%, Ithink it’s a decent percentage of your wage bill thatthe club can handle, but everything by diktat, I’m justa bit uneasy with.

Q312 Mr Sanders: Do you think it’s morecomplicated between Championship and Premiershipthan perhaps between Leagues One and Two?Barry Kilby: There has always been that thing wheresome benefactor might come in and give a club aboost. It’s a bit rigid. Leeds—that’s £13 million, butfor us it would be a lot less, and that would be forever.Whereas sometimes you might get a son of the city orthe place who decides to give money, and that’s goneon in football since time began, with somebodyfunding the new centre forward and so on. I’m just abit wary of it being in all circumstances astraightjacket and it’s imposed from above. It wouldtend to reinforce the status quo.

Q313 Mr Sanders: It’s interesting that two membersof the panel who have experienced this are in favourof it but the two who have not fear it, and of the twowho’ve experienced it one of them said he feared itbefore it came in.Shaun Harvey: Yes, I think just to support what Barryis saying, it’s not how much you’re paying that’s theissue, it’s your ability to meet that debt, and as longas you’ve got the ability to do it and the football clubisn’t in a worse position as a result of it, then thatshould be the measure. That is more along the lines,shall we say, of a financial fair play model that UEFAhave got than a fixed salary cap. If you can fund it, ifyou can manage it, if you’re prepared to spend it thenyou should be allowed to do so as long as the patientat the end of the day is not the football club.

Q314 Mr Sanders: It’s been suggested to us in thisinquiry that the Premier League’s parachute paymentsfor relegated clubs distort competition in theChampionship. Do you think parachute paymentsshould be reduced or even abolished? They are at theend of the day a reward for failure.Shaun Harvey: You can either view them as a rewardfor failure or a mechanism to try and self-adjust youback into normal life. We talked earlier about theplayers’ wages, which I think we’ve all identified are




probably the single biggest issue that you have tomanage, and coming down from the Premier Leagueit takes time to adjust with those players.

Q315 Mr Sanders: Well, why don’t you havecontracts that say, “In the event of us being relegatedI’m afraid you’re going be paid less”?Shaun Harvey: In principle, there’s nothing wrongwith that statement, but I’d challenge anybody to sitin front of an agent and a player and say to them,“We want to sign you for three years. We’re a PremierLeague club. We’re going all out to stay at thisdivision. However, if we fail we want to reduce yourwages by half”. To which the player and his agent say,“Well you’re not really that confident that you’regoing to stay in the Premier League then are you?”“Well, yes, we’re going to give it every go.” “Butthat’s contradictory to what you’re asking my clientto sign up to, and Club B down the road will do this,this and this”, because it’s a competitive market. Nowthe model is fine. I understand it and it’s somethingwe all try to do. In practice, it isn’t as simple as thatand those players do get injured periodically.Barry Kilby: I think it does distort the market, but theanswer is that the gap is massive, and as I said beforeaverage teams now in the Premier League have awage bill of £50 million. How do they handle thatwhen you come down? I’ll back up what Shaun saysthere; it’s competition, isn’t it? They say, “Well, wewant you to halve your wage if we come down”. Ifsomebody else is in the market for a player, theymight drop that, and they don’t operate that clause.It’s terribly, terribly difficult in the market place toforce that through.

Q316 Mr Sanders: But isn’t this actually all linkedback to this creditors rule that the reason they do thisis because they’re on a no-lose situation?Barry Kilby: Again, I just come back to the PremierLeague, and sometimes you’re competing againstpeople who don’t care. They’ve got billionaires whoare prepared to lose £600 million about that. You’recompeting in those circumstances. They won’t careabout the relegation clause—it’s very difficult. Lastseason, we came up from the Championship and theplayers got an increase. It’s easy to say, “Well, if wego back down it comes back down.” That follows alogic that is easy to enforce. If you’re trying to get anestablished Premiership player, it’s very difficult tosay, “You do know if we go down we halve yourwages”. That’s not an easy one to pull off. But I agree,I think it does distort the competition somewhat, butI would say it’s not always guaranteed that the onesthat come down with the parachute payments with thatadvantage are able to go back because invariablythey’re shedding players, still with the parachutepayment, and they’ve got to try and get their house inorder and get back on an even keel.Shaun Harvey: If you get relegated from the PremierLeague or any league, the only players other clubswant to take off your hands or your books are thosethey believe represent better value for them. Bydefinition, you end up with the players in your squadthat nobody else wants to take off your hands and

they’re not arguably the ones who are best equippedto get you back out of the division that you’re in.

Q317 Mr Sanders: So it didn’t pay offering themcontract in the first place did it?Shaun Harvey: It didn’t, and if we all had hindsightwe would be a lot better off.

Q318 Mr Watson: Just to wrap up—and I will takeyou 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 thinkthe best model is a small dynamic board that’s able tomake decisions quickly and on that basis, that’s theview that I would support. Consultation’s fine butwhen it comes to the decision-making process, for meit needs to be left in the structure that I describedearlier.

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 thatprobably relates to the difference in size of clubs. Ithink that smaller clubs like ourselves that arehopefully making a major contribution to the localcommunity and have a big community involvementwould 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 thesupporters, it’s not been easy to put into place. Wehave regular meetings with our SupportersAssociation and we have good relationships withthem, so I started with them, but we couldn’t find agroup of people who wanted to take it forward,because it’s no mean task setting up an efficientSupporters Trust and there are a lot of bodies in thecemetery already where it hasn’t worked.So my recent approach has been to try to get a groupof local business people and the local professionalpeople to work with supporters to see if that’s a wayof putting it together, on the basis that we think it willhave a good chance of success and getting established.So the answer is yes for us, but we’ve got to be surethat we do set it up properly and it runs properly ratherthan paying lip service to it.Barry Kilby: We have fans on the board—that’s ourdirectors with their own money, quite a lot of it—andwe have the Clarets Trust. If you buy enough sharesin the club you can have a seat on there. I do agreewith Shaun, but I must come back when you say, “afan on the board”. There are some tough decisions tobe made that most fans wouldn’t like, so where do westand on that one? If we do any guarantees for afinancial deal, is the fan going to put his house on theline and say, “Yes I’ll join in that one”. I think there’snothing better than people having a big financial stakein it. We do have the Clarets Trust, we have meetingswith them, quite often very interesting and they makegood points, but also we must remember the wideshareholders thing—we’ve got over 200 shareholders.We are responsible to them and they do criticise, butwe are talking about an actual somebody imposed on




the board who’s not there on the same footing, whichis essentially the shareholding in the club, and himputting his money in there. If he’s a representative ofthe Trust, who is he and what’s he like and does hewant to tell everybody what the team is the next day,do we sack the manager, do we all go back and havea vote on that? There have to be quick decisions made,and with the responsibility of money there’s nothingbetter that makes that decision.

Q321 Mr Watson: Julian, Shaun takes a slightlydifferent view from you on this, I suspect. He’s happyfor the fans to be shareholders in a mystery trustrunning out of Switzerland—I’m joking Shaun, I’mjoking—but you’ve got a slightly different model.You’ve heard criticism from Shaun and Barry thatessentially if the wrong kind of fan ends up on a boardthey can reduce the ambition of a club. Would youshare that view?Julian Tagg: I submit that it’s very possible frompersonal experience that the advantages anddisadvantages are at the other end of what Shaun’sactually described. Of course the disadvantage is theslow decision-making and taking everybody’sopinion—with the bigger decisions, sometimes thatmakes things very, very slow. You need to evolve asa football club as you improve what you’re doing; youevolve on the pitch all the time. The analogy is a goodone that is understood, and beginning to be understoodbetter by the fans, and it is that we need betterpeople—more experienced, with the right kind ofskills—as the football club progresses and the boardneeds to evolve. Certainly the club board and theboard of trustees as we call them, which is where theownership of the club stands, are also important.The other thing that becomes a disadvantage is theconstant need for information. If you give someinformation then it means there’s another question forsome more information and so it goes on, so that’ssomething that we do our best to handle. We havefinancial groups that meet, we have trust groups thatmeet, so those three things are the upside of it. It givesus particularly long term security, and I think one ofthe things that attracted me in the beginning was thatit’s not going to come along later on, something’sgoing to go wrong and it’s going to fall into differenthands. All that work and effort of the community, withlots of volunteers involved, gives us an ethos whichis a very useful one to have—a lot of people want tobe involved. I think there is a culture in football thatwe talk about all the time; the fans want you toimprove, they want the best centre forward, but theywant the prices at the gate reduced, and it is abouttrying to find the balance.Our model in our club is changing the culture a littlebit in the sense, as the fans sing proudly “We own our

football club”, and there are fans who literally cancome off of the terraces and can go into that board.Ultimately, if they’re the right ones, they can come onto our board, and there are two of them. That’s theway the flow goes, and the closer they get to theresponsibility of it going wrong, the more realismthere is. There’s still a long way to go; there are stillthe fans’ forums saying “We want to do thisimmediately”, and are vociferous about it, but themajority and the wider change in the culture of whatwe’re actually beginning to achieve, it would seem, isthat you can lose a game and it’s not the end of theworld and we don’t want to sack the manager, and thatwe need to be prudent financially rather than gamblingmoney that we don’t have in the hope of moving upthe league. So there’s still the same thing that runsunderneath it but I believe the nature of the club isbeginning to change.

Q322 Mr Watson: So you’re describing a situationwhere you have to explain your decisions morethoroughly to fans but it doesn’t seem to me slowingyou up in making tough decisions when you need to.Does that characterise your argument?Julian Tagg: It has slowed us up and there are anumber of things that we’ve tried to change. It’s beenreally difficult to make those changes—something thatbecomes very obvious because you’re in a boardroom.These things need to be changed and you have to goback via the trust board—we’ve got a large board of16—and convince them, so we’re far from perfect, Ithink everybody realises that. There’s no blueprint forthis. We’ve made it work. Sometimes those twoboards come to a head and they clash. We have amechanism which we call the Joint Boards. We havefour from each side if you like—I never used to callit sides but I do now—we have a group of four andthere are no minutes to that and we try and thrash outwhat the club really requires. At that point, if you canget some kind of agreement that we need to change acertain aspect, whether it be the Chairmanship orwhether it be who sits on the boards or whether thatbe the club board, then that’s where you really makethe real progress.Then of course the rest cascades out in the normalday-to-day business, but a lot of the time, I’m takinga lot more care to make sure people know what’sgoing on in advance, as opposed to the decision-making. They want to know that it’s happening beforeit happens rather than necessarily, “Why didn’t I knowabout that? Why don’t I know?” That’s probably themost difficult thing because they’re keen fans and it’sa good job that they do care that much about it.Chair: I think that probably leads us neatly on to oursecond question session, so can I thank the four ofyou very much?




Witnesses: Dave Boyle, Chief Executive, Supporters Direct, Malcolm Clarke, Chair, Football SupportersFederation and member of the FA Council, and Steven Powell, Director of Policy and Campaigns, FootballSupporters Federation, gave evidence.

Chair: Right, let’s continue. Can I welcome DaveBoyle, the Chief Executive of Supporters Direct,Malcolm Clarke, the Chair of Football SupportersFederation, and Steven Powell, the Director of Policyat the Football Supporters Federation? Tom Watson isgoing to continue on his theme from the previoussession.

Q323 Mr Watson: Perhaps if I just open this up toyou, Malcolm, to start with, and then the other twowant, if they want to take it. Is it your view thatEnglish clubs communicate enough with their fans?Malcolm Clarke: Thank you very much, Chairman,for the invitation first of all. Could I just explain atthe start that my colleague, Steven, has got a bit of ahearing problem at the moment, so if I have to briefhim on a question that will explain that. I think theanswer to your question is a mixed one; some clubscommunicate better than others. I noticed that in theFootball Association evidence it says that the majorityof Premier League clubs and Football League clubsare exemplary in the way that they communicate withtheir fans. I’m afraid that I beg to differ with that asa generalisation. It’s a relevant question, becausetoday we have published a league table of ourassessment of club charters, which all clubs signed upto right back to the days of the Football Task Forceand we scored them on seven characteristics, and thatleague table doesn’t really bear out the propositionthat they are exemplary. Only one Premier Leagueclub scores more than 24 out of 35—we scored themseven characteristics up to five. So I think it varies,but of course the other issue is it’s not just a questionof communication. You can communicate to asupporter very clearly that ticket prices are going upway beyond the rate of inflation, that’s goodcommunication, but it doesn’t necessarily mean thatit’s good practice in terms of the way that they areresponding to their customers.

Q324 Mr Watson: Good, I’m glad you’ve publishedthat, I haven’t had time to read it yet. Can you tell mewhich clubs are good and why and which clubs arebad and why?Malcolm Clarke: The club that comes top out of thePremier League is Tottenham Hotspur, which is theonly one that gets what you call a really top score.The club that comes bottom is Everton, who got ascore of nil because nobody could find their customercharter. The club that comes second bottom isManchester United with a score of eight, and I thoughtthat was interesting after hearing your evidencesession with David Gill last week when he actuallysaid that there are certain groups of supporters whothey simply refused to speak to. When I attended theCarling Cup Final last year and saw Wembley awashwith green and yellow as opposed to red and white, itdidn’t exactly come with the image of a club which iscommunicating terribly well with its supporters. Theother thing to say of course is that that is scoring thepaper charters, and the next thing we’re going to do

is talk to their supporters and see what theirassessment of the communication or the customerservice is to see how it tallies with the charter, becauseyou can have it written very well on paper or on theinternet but the performance may not be as good.

Q325 Mr Watson: So will you have that evidenceby the time we finish our inquiry? Is that due soon?Malcolm Clarke: I’m not sure what timescale you’reworking to. Whether we’ll have the supporterresponse by then I’m not sure. The actual league tableis released today, so we can certainly let you have acopy of it and submit it formally to the committee.

Q326 Mr Watson: One thing David Gill alluded toin his evidence was that it was difficult—maybe I’mbeing a little unfair to him—to characterise whichsupporter groups were truly representative of the fans.Is there a way that you can identify the kind of basisof support that each of the groups carry? Do you helpinterpret that to the clubs?Malcolm Clarke: Supporters groups are democraticorganisations and obviously the greater success theyhave in involving members the greater credibility theyhave—certainly at Manchester United both the Trustand other organisations have been very successfulwith very large memberships. I think it’s a bit of anexcuse from Mr Gill, to be honest, to try and pretendthat some of those big groups are not representativeof very significant strands of opinion.

Q327 Mr Watson: If you could score supportersgroups in the way you score clubs, which would bethe 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’sorganisation develops, if it succeeds in getting awidespread involvement and if it operates in, whichthey nearly all do, in a democratic way with itsprocesses, then that’s a good one. I wouldn’t like tosit here and give my judgment now as to who’s top ofthat league.

Q328 Mr Watson: Well don’t you think it would beuseful if you’re trying to build a better involvementof supporters groups that you could actually vet thesegroups on behalf of clubs so they can get a sort of ahealth check from you guys rather than the clubshaving to do that in an arbitrary way?Malcolm Clarke: For any supporters organisation tobe affiliated to the Football Supporters Federation theyhave to meet certain standards; be a democraticorganisation, be committed to not supporting any kindof violence, be committed to an anti-discriminationpolicy, and similarly with trusts. Dave can speak withmore authority on this, but the whole approval processof supporters trusts is quite rigorous in terms of thestandards that it expects in order to meet the test ofbecoming a trust, and I’m sure Dave can elaborateon that.



15 March 2011 Dave Boyle, Malcolm Clarke and Steven Powell

Q329 Mr Watson: Okay, final question: when weheard from the Chief Executive of Leeds earlier heseemed to say the only real issue that matters for thefans was winning games or at least if clubs arewinning games the other issues fell down the agenda.Is that your view or what do you think is the issue offans today?Malcolm Clarke: Obviously, all fans want their teamsto win every game, that’s just in the nature of it, but Ithink it’s patronising and inaccurate to characterisefans and supporters groups as only being concernedabout the winning of the next game and not about thelong-term sustainability of their clubs. If you look atthe evidence which has been submitted not only tothis inquiry but to the various other inquiries that havebeen held by the All Party Football Group, by theTask Force and so on, you will see that it is thesupporters groups that have been promotingresponsible good financial governance.Obviously with any club there will always be fanswho are saying, “Get the chequebook out, MrChairman” and so on, but there are tens of millions offans and they don’t all think exactly the same. I thinkthere’s a certain patronising caricature of fans, someof which we heard in the previous session, “Oh theymight want to pick the team, they can’t be trusted tokeep confidential information, they don’t understand”,and the evidence—and again Dave can speak withgreat authority on this—is that the supporters truststhat have taken a direct role in their clubs have shownis that among the supporter base you get a huge rangeof skills and experience, you get very senior peoplewith wide ranges of professional skills, in financialmanagements and governance and so on. One of thethings that I’ve personally found annoying in football,is the sort of caricature that says, “Well they’re just aload of raggy-arsed fans”, pardon my language, “thatdon’t really understand how things work”.If you look at the football industry and you look atthe number of clubs that have been in insolvencyevents in the recent years and you look at the amountof money which is owed by the football industry tothe public purse, I don’t think the people who arerunning the industry at the moment are in a terriblystrong position to say that supporters organisationshaven’t got the skills and experience to involvethemselves more fully in the running the of theindustry.

Q330 Chair: Mr Boyle, do you want to add to that?Dave Boyle: Yes. I was just chatting with Malcolmearlier. The relationship that a lot of clubs seem tohave with their fans to me is more redolent of perhapsan Edwardian marriage where the wife would benever told the salary of her husband because thesematters were not for her, and there is this idea thatfans don’t want to understand, nor could theyunderstand if this were ever shared, but as some of theevidence you heard this morning said, fans do want toknow a lot of information, but that’s the nature of thegame. The reason why fans want to know is also thereason why this club has been here since 1882 whenvery few other businesses have survived that long.The depth of loyalty which is the bedrock financiallyof the game’s success has another side to the coin;

the relationship between the fan and the club is nota consumptive one, it’s an emotional one, and thatemotional relationship compels a desire to know moreinformation about the club because it matterspassionately to them and to their family and to theiridentity, and it seems to me the best way to deal withthis is not to ignore it or pretend it doesn’t exist or towish it away, but to manage it through dialogue.Speaking to a lot of people in clubs you get a sensethat, a bit like when you speak to people who staffhelplines, they have a rather jaundiced view of humannature because they see a greater proportion of peoplewho are not perhaps the most constructive, which iswhy we’d always say there’s been a trend withinfootball to look at fans as customers and deal withthem as customer services and that kind ofrelationship on a one-to-one level, whereas the beautyof relating to a democratically constituted supportersgroup is that you get a balanced view of what thesupporter base is thinking. You get a means ofcommunicating with people who are going to get ridof the issues off the table which really are purelyoperational matters which shouldn’t really be up fordiscussion.You mention about vetting supporters trusts andsupporters groups. As Malcolm said we do vet them,we make sure that they’re democratic, we make surethat they produce annual accounts, which are auditedindependently, and we’d love to work with clubs. Ihave to say my phone has never rung particularly hotwith clubs wishing us to perform that service, andwhat I would say is where there are a lot of supporterstrusts where they haven’t been as successful as othersand haven’t made as much of a breakthrough. That ispartly because sometimes the way the club deals withthe supporters trust makes it very clear that this is justa waste of time. When you set up a group, and a clubsays we’re just not interested in talking to you, then ittakes a peculiar mindset to say, “I’m going to turn itround and we’re going to win over the club.” A lot ofpeople would just say that this is going nowhere. If theclub actually opened the door and said we’d welcomethis—if you can get to this stage—I think you wouldsee a transformation.

Q331 Mr Sanders: The traditional model of theEnglish club is for the benevolent owner who runs theclub on commercial lines and that’s given us arguablythe most successful league structure in the world, sowhy play around with this state? Why not leave it asit is?Dave Boyle: I think there’s a complete flaw in yourquestion; they’re not run on commercial lines. Thefact that they spend £50 million more than what theyhave brought in—that’s not a commercial relationship.Most of them do have benefactors and I thinkincreasingly we have to say the benefactor model ismore ruinous than contributory to the health of thegame. I’m struggling to know, without knowing whoan individual is, how you can gauge their intentionsfor the club’s long-term future. They may have goodintentions, but what if you don’t even know who theyare and what their circumstances are? Benefactors areoften quite good in the short-term. The medium-termrecord is very poor, and I think one of the biggest




contributory factors to football’s economic poor healthis the very short time horizon. They think in seasonsrather than longer-term, which is again what mostbusinesses would be doing. One of the advantages ofthe supporters trust model is that it brings a morecorporate structure to the club, because there is nosubsidy. I mean benefactoring; you can call itbenefactor or you can call it subsidy for failure,because the club is unable to generate the resourcesto cover its ambitions. If you have to do that, I thinkyou become more innovative, you become moreexpansive, you draw on a bigger range of talents,whereas I get a sense that a lot of clubs have gotincredibly high revenues, but in their commercialactivities are not as advanced as they would have youbelieve, because at the end of the day it doesn’t reallymatter, a cheque’s going to get written by anextremely wealthy individual to get you out of thehole that your failure to generate revenue has leftyou in.You see it with very good public services. What’s thereward for innovation, because the cheque fromWhitehall makes good all failure? The other thing toadd is on the record of insolvency; it might be a verysuccessful football system, it might be a very popularround the world financial system; it’s not aparticularly good financial system in this country with81 insolvencies.

Q332 Mr Sanders: Okay, but we do have moreprofessional football clubs than any other country inEurope.Dave Boyle: We do, and we have more professionalfootball clubs, as the Chairman of the Football Leaguesaid, hanging off a precipice. Malcolm makes thepoint I’ve heard him make in the past, so I won’tplagiarise that, but it’s ironic that at a time whenEnglish football has never had as much money as ithas now, it’s also never had as much instability andfinancial problems for its clubs. There is an awful lotof money in English football but there’s a lot left tobe desired, and the distribution of that betweenleagues and between clubs does create its ownproblems.

Q333 Chair: The alternative which you wouldadvocate with supporters trusts shows there have beensome success stories, but equally there have beenfailures. Is there any evidence that the supporters trustmodel is any better?Dave Boyle: Yes, I note that what one would considerfailure is where, say, a supporters trust has becomethe majority owner of a football club and then has hadto relinquish that. In every one of those cases I canpoint to astonishing legacy problems. In York City’scase, the previous Chairman sold the ground to ahousing developer and they had to take on a £10million loan to buy it back.1 No supporter’s trusthas ever really inherited a club which was going well.They’ve been investors of last resort, the people whorescue it because the alternative is to let it die andthat’s just not an option, and because of that, theyhave incredible problems with debt, with loss of1 Witness correction following the evidence session: Thefigure is in fact £1m as I understand it.

assets. Stockport County, for example, had been quitehappy to see the shepherding of an asset for footballinto another sport. When you get the train up fromManchester you go past Edgeley Park, and it says it’sthe home of Sale Sharks, which will surprise anybodyfrom Stockport who’s watched Stockport County theresince about 1900, so that was the problem thesupporters trust had inherited, and in some casesthey’ve been able to get past it.Exeter City have made a fantastic success of runningthe club there, and one of the things which was amassive help was when Tony Cascarino drew theirnumber out of the hat and picked them againstManchester United, because the return they got fromthat cleared the legacy debts which would havehampered them most probably in the way that they’vehampered Notts County, Stockport County,Chesterfield and York City. I would never say thatsupporters trusts have an unblemished record, but bythe same token I think that it’s an unfair fight. If theseproblems with supporters trusts cause doubt for themodel, then are we going to say the investor-ownedmodel has some serious flaws with 81 solvencies since1986? An equivalent sort of comparison never seemsto be made that what problems there are would seemto be systemic and structural within football ratherthan being something which is peculiar to thesupporters trust form of ownership.

Q334 Paul Farrelly: There’s a world of differencebetween compulsion, forcing a model onto every club,and just encouraging supporters trusts if clubs wantthem. Where would you draw the line?Dave Boyle: You heard from John Bowler, who’s beentrying to create a trust. We’ve been speaking withJohn and if there isn’t the willingness amongst the fanbase at any particular moment then it goes no further,so clearly it will be wrong to compel anybody to dothis. What I would say is that there’s a differencebetween compulsion at one end of the spectrum, anda 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 inthe game is every week they turn up. The season ticketrevenues which form a key basis of the club’srevenues are paid over by supporters. Supporters arealready contributing in that sense and I think thenature of a club is that it isn’t really to be run oncommercial lines in the same way as an ordinarybusiness, because you have these investors who wantto be considered as investors, but they’re not able tobe able to be part of the shareholder base in thesame way.A lot of clubs make it very difficult for supporterstrusts to come on board because they are no sharesavailable in them. There are only five clubs in theEnglish professional league which are quoted on stockmarkets where you can actually go and buy shares andbecome part of the ownership base, so actuallymaking shares available as a matter of course it wouldbe a good start. I think clubs could also encouragefans by saying, “We’d like you to come and be partof a dialogue. You can have a dialogue every threemonths with the Chief Executive”. A lot of clubs don’tget that far.




Q335 Paul Farrelly: Malcolm, Steve then back toDave. We’re here in this fantastic club with its richhistory because the Government in their wisdom saidthey wanted to encourage more supporter involvementin clubs, but having decided that they knew what todo with the NHS and universities, they then had acollective scratching of heads and didn’t know whatthe hell it meant actually, so over to us guys. Give usa few concrete things that we should pursue that arepractical and feasible to achieve that end but don’trestrict a club’s ability to develop.Steven Powell: My colleague Dave is much betterqualified on the technical points of this, but I can giveyou my own perspective as somebody who’s beenactive in the supporters trust and I perhaps should justfor complete transparency here declare a couple ofnon-pecuniary interests: I am a founding life memberof Arsenal Supporters Trust and a former member ofthe board of the Supporters Trust but I’m also anelected director of Supporters Direct; neither positiongives reward.

Q336 Paul Farrelly: We will hold neither of thoseagainst you. Go on.Steven Powell: I think that first of all we’re trying tofit a square peg into a round hole with, for instance,the Arsenal fan share scheme, which I know you’vebeen to look at with members of the supporters trustand the Arsenal Chief Executive. There areregulations I think need changing. Clearly there has tobe security for anybody who is investing money in thescheme, but the hurdles we had to jump were designedfor a different sort of financial product. I’m a memberof 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 footballclub and I’ve left my units in my will to the supporterstrust when I go, and I think if you survey the vastmajority of the 1,700 members of the ArsenalSupporters Trust they’d all say the same thing.They’re not looking at it for a commercial returnthey’re looking at it as the investment in their footballclub, so I think that’s one thing that they can do.I also think that perhaps on the other side, as wesuggested in our evidence, we could look at a sportslaw providing some carrots if you like rather thansticks, to look at the form of registration. If I give youone example in Australia, almost all the clubs in theAustralian Football League playing under Australianrules are set up as not for profit. One club that didconvert to ownership by shares is converting back andthe reason it’s doing it is the Australian taxation officeis now challenging their tactics, their status becausethey don’t think there’s sufficient community benefits,because the structure there is very different. TheAustralian rules clubs support the amateur game intheir community, and that’s part of the reason that theGovernment invested in sport in that way. Theyinvested in the clubs who then invested in thecommunity playing of the game in their area, so Ithink that’s one area we could perhaps profitably lookat here as part of the sports law. I know that whenHugh Robertson addressed the Supporters Directconference a couple of years ago, he was interested inthe concept of a sports law for a number of reasons,

and that’s perhaps something we could profitably lookat and we’d be very happy to provide further details,not to go into the whole ins and outs today, if youwould like us to.Malcolm Clarke: Can I just add that ourselves andSupporters Direct have submitted evidence on that. Iwould just like to answer one point that repeatedlycomes up in some of the football authorises’ evidence;this is caricatured as being Governments trying to runfootball which would be not allowed by FIFA. Nowwhat FIFA are concerned about have been cases whereGovernments have tried to directly run football, butthis is not what we’re talking about. We’re talkingabout a legal framework for the regulation of thegame, analogous in Dave’s evidence to charity law orthe way that corporate laws has developed, so it’ssetting a legal framework which would give certainexemptions and certain responsibilities to sportsgoverning bodies to operate in a certain way, but it’snothing to do with the Government running football,so I think we need to nail that misrepresentation ofthe issue fairly firmly on the head.Dave Boyle: There’s a couple of things really; you’vegot the localism White Paper making its way throughthe House at the moment which gives a right to bidto community groups for community assets, but thedrafting at present is unclear as to whether you mightconsider a football stadium to be such an asset whichyou could place on a register. Because football clubsare incredibly public institutions, the danger is less ofa private sale in the dead of night, it’s more that youdon’t have the access to capital to undertake apurchase or greater involvement. There’s a case inWrexham at the moment where whoever can come upwith £2 million worth of cash gets a football club andthe difficulty is that where liquidity and speed arewhat is required that’s not necessarily the bestqualification for a community-minded owner of theclub. That’s what’s affected that club in the past, andthe supporters trust have got £300,000 to deploy, butthey could do with somebody lending to them, so theidea of a big society bank perhaps providing liquidityto such groups would be very, very helpful, becauseat the moment it’s that speed of access to cash whichis often paramount, specifically where a lot of footballclubs have transferred ownership under crisis termswhere there needs to be an immediate injection tocover losses.Some other things which could be done are stoppingsubsidising bad owners of football clubs by lettingthem write off the losses against corporation tax,profits in other parts of their business. It’s much easierto undertake, shall we say, a speculative investmentinto a football club knowing that if the other parts ofyour business are profitable you can use this to writeoff against the corporation tax liabilities you mighttake on. We’d love to get to the bottom of how muchof a subsidy from the state it is, but the nature ofopaque ownership leading to beneficial trusts makes itquite hard to find the actual transaction where thistakes place, where the debt is for tax reasons.However, we do know it goes on and it’s somethingwhich I think has negative consequences; in order toqualify, you have to have a dominant owner who owns75% plus one for it to be considered part of a group,




which immediately moves you away from, shall wesay, a balanced board like Arsenal Football Clubmight have, whether it’s on discussion or strategy, andmore to a club which does what the owner says itwill do. Now that can be dynamic, but it can also beincredible ruinous, which is why we prefer ademocracy to autocratic rule, because if the ownergoes off the reservation, as we’re finding in Libya tosay the least, then you’ve got no way round it.So this tax system incentive not only promotes thatform of ownership it also subsidises the cost baserising beyond the revenue base, which againsupporters trusts are not able to live with. They don’thave a parent company, because they’re owned by thecommunity so they can’t access that so it’s not a levelplaying field. The cost base which rises is harder forthem to keep up because the worst position in aninsane market is sanity, which is where mostsupporters trusts owned clubs are.On the issue of levelling the playing field, just toendorse Steve’s point, there is an issue with section21 of the Financial Services and Markets Act 2000,which essentially treats supporters wanting to raisefunds to invest in a club as the investment business,so you incur an awful lot of regulatory cost. At theend of the day, whilst the Arsenal Supporters Trustare blessed with an extremely professional and skilledmembership, they’re volunteers trying to do this intheir spare time, juggling it against their other workand family commitments. I’d also argue that if youare going to seriously get behind this you look at whathappened with the community share issue at FCUnited at Manchester, where that attracted for peculiarreasons which are not replicable enterprise investmentscheme allowance. That made a massive difference tothe take-up and the flow of funds into that investment,so some form of incentive through the taxation systemlike that which could be written off against anindividual’s personal tax liability would be very, veryhelpful. And the other idea we’ve talked about is thereis an awful lot more. Football sets aside some of thismoney for good causes through the FootballFoundation and grass roots investment. You couldargue that it would not be remiss to set aside some ofthis to enable fans like those at Wrexham to say,“Here’s a loan we can get from an organisation whichhas got a big fund for investment, and we will pay itback over a few years”. The beauty of that is bygetting people involved who have to pay it backyou’re instilling the business discipline which is sadlylacking at a lot of these clubs. I think there are lots ofsmall steps you can make but I would also endorsethe point that Steve and Malcolm make that at somestage you end up with a square peg in a round hole.It is very true that we have a legal and regulatoryframework which I don’t think is fit for purpose in the21st century, and certainly not if you want this idea ofcommunity engagement involved in it as well.

Q337 Paul Farrelly: I’m going to take my life intomy hands now and comment on a live situation; in myarea—and I’ll ask you a question about it—encouraging good stewardship is more important thannecessarily foisting a particular ownership model on aclub. The second team in Stoke is Port Vale. Port Vale

is now under assault by a man called Mo Chaudrywho has got a documented interest in property andfinancial services but no record in football. He’s beinghelped, quite frankly, by a local press that’s notsufficiently investigative and critical beyond justreporting who said what and when for easy stories.Bill Bratt is a Chairman who’s got a long track recordof running the club as a decent man, but he’s got anownership structure through previous restructures thatlimits shareholders to 25%, and you can see from theoutside that might make it more difficult to restructurethe club again. The loss of that ownership structuremight not necessarily be a bad thing if the goodstewardship of the club is encouraged. So where doyou stand on that question?Dave Boyle: I would agree with you that stewardshipis exactly the kind of modus operandi you want at aclub, somebody who respects where the club has comefrom and where it needs to be passed on to. What Iwould say is that the regulatory framework of Englishfootball is entirely agnostic about stewardship becauseit promotes a model of financial operation which saysthat doesn’t really matter. What do you want fromyour owner? Do you want stewardship? No, you wantsupport for negative cash flow because the financesare insane, and as long as what you need as a club isto consistently subsidise the fact that you don’t earnenough to cover your costs then all talk of what youmight like in an owner beyond their liquidity isultimately parlour room talk—it’s not really going tobe germane. The issue at Port Vale I would say is thatyou’ve got people like Bill Bratt. Why does Bill Bratthave financial difficulties? Why shouldn’t Port Valebe able to be a sustainable operation to end in a smallsurplus each year maybe for reinvestment? The factthat he can’t do that with all the good intentions theyhave says an awful lot to me about the financialenvironment of English football, and most of theissues you’ve spoken about in the earlier session seemto me to be about a failure to get to grips with thatfundamental tension.You’ve got all these clubs who will say it’s animpossible environment and yet nothing gets doneabout it with the speed and urgency you would suspectit would be. You know the football creditors rule isessentially a sticking plaster for a game which knowsthat a systemic risk is that you will be insolvent atsome point in the near future. If you weren’t in aposition where you took that as a very stronglikelihood you wouldn’t need it because you wouldn’tbe in that position. Going back to the Port Valesituation, first, why does Bill Bratt need to move it onbecause of this insane situation? The second aspect isthat should there be a supporters trust at Port Vale,and which wanted to be part of it, it would strugglebecause they’ve not got the thing the club needs rightnow, which is ready cash to support the loss-makingenterprise, which the rules of football and the structureof 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 theSupporters Direct evidence to the Committee you




recommended a licensing system for English footballclubs similar to the one that applies in Germany. Nowwould you like to take the German licensing modeland bring it here?Dave Boyle: I start from the perspective that in 47years they’ve had no insolvencies and we’ve had 81since ’86, so they’re doing something better than usin that respect. How likely it is to actually justtransplant it? I think it will be wrong and foolishpolicymaking to just transplant; you would look atwhat are the rudiments of a successful model, and themain thing it seems to me it shares with the UEFAlicensing system is that it looks at the key matrix youwant to ensure clubs take account of, and then assessthem against it. Julian Tagg mentioned the duediligence issue. A licensing system is just taking thelead on the transaction costs of doing due diligenceon behalf of everybody at the start of the season. It’san incredibly sensible thing to do, so you have to askyourself why on earth haven’t we had it. You got ahint of that with the evidence from Leeds andBurnley—there’s a feeling that it might stop us doingsomething, even though there is an understanding thatthe current state of affairs is not optimal, shall we say.With the failure to bring in a licensing system, wemust ask whether the governing apparatus of Englishfootball is fit for purpose. The fact that it has not beenable to introduce something like a costs controlmechanism when all the evidence says it’s screamingout 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 lookat. I know you’ve been across to Germany, so I won’tdetain you with that, but I also think the model as usedin France, whilst it’s far from perfect is also worth alook. It’s essentially a board with a Chinese wallwithin the French professional league—the equivalentof the Premier League of the Football League here—which has autonomy to go into clubs and to basicallyimplement special measures. It’s not perfect—thereare some financial problems in the game in France atthe moment—but it does show that you can createwithin the governing or the competition-organisingbody in France something which has sufficientautonomy to exercise real financial control, becausethe sporting pressures are always there to spendmore money.That’s the constant plea and what you have to do isfind measures of curbing that, and there are a numberof models. I don’t think a salary cap is going to work,because the sports that use them tend to be restrictedto one, two, three maybe four countries, but I thinkthere are measures that can be looked at. Germany isthe obvious one but there are also various models thatare used in North America and Australian sports. Interms of the conditions which are placed on clubs andtransparency, sanctions are applied in the AustralianRugby League. The Melbourne Storm, which won thechampionship, had a massive penalty imposed onthem for keeping two sets of books, which shows thatyou can have financial regulations with real teeth, andthe club is still suffering in competition as a resultof that penalty, which was imposed by the nationalrugby league.

Q340 Damian Collins: In practice, looking at theGerman licensing regime, today is the day forsubmission of cases. The reason no one’s ever losttheir licence is because the licence is reasonablyliberally applied and is really just a basic liquidity testfor the coming season.Dave Boyle: It might be, but then I come back withthe fact that in 47 years they’ve had no insolvencies,so even though it might not be the hardest test youcould possibly conceive of, it does appear to instil thediscipline which is the ultimate aim of the process,which is to ensure that clubs are able to meet theircommitments through the course of a season. Thesingle problem you have in English football is that allof the regulations are reactive rather than proactive asJulian Tagg has mentioned. They’re all about dealingwith insolvency after the event, and not as much asstopping it before it happens. Now that’s slowlychanging.The Premier League’s tests, which they’ve brought inthis year, are a welcome step forward; they could stillgo further, but the major argument against these kindsof regulatory impositions or interventions was alwaysthat the Premier League’s big end clubs compete on aEuropean playing field so we couldn’t tie their handsfor domestic purposes, which would weaken theirability to compete at European level. Now UEFA havetaken that off the table there is no reason why it can’tcascade down. The clubs submit forms at the start ofevery season to do with the players, to do with theground they’re going to play in, and I don’t really seewhy they can’t be submitting what their financial planis for the next twelve months and then you can assessthem after the fact that if they get it wrong, becausethen you’re into the issue of either somebody’s notvery good at sticking to an operating budget or therewas some degree of misinformation, both of which indifferent ways are things a league can start to tackle.

Q341 Damian Collins: Do you think rather than anabsolute licensing system, there should be a greaterrole for the governing bodies of the game to have anongoing dialogue with clubs over their financialstatus, because with the one in Germany, one of thepoints that came out is that it sometimes can bedifficult at one point in the year—or in Germany, it istwo points in the year—to say exactly what theincome is going to be. You know this will dependgreatly on performance, particularly whether or notthey qualified for European competition, and Germanclubs filing for their licence today won’t knowwhether they’ll be playing in the UEFA league nextseason, and that will have a huge impact on theirfinances.Dave Boyle: Absolutely. I think the issue is how youwould implement it in detail on a day-to-day season-to-season level, and where you would want to liaisewith the leagues, because they’re the ones who’ve gota lot of the data anyway, and they’re the ones whohave the primary relationship with the clubs. There’sa curious contradiction. On one level, when you askedsome of the previous witnesses do you think you needsomething like this, they were saying it should reallybe done by the clubs themselves, they should bedisciplined, and then with the very next question, the




clubs said we find it almost impossible to cut our costsbecause the players and their agents make it verydifficult. To me, that says that it’s crying out forsomebody other than the clubs to help them instil thediscipline which has been lacking for so long. Youcould call it licensing, you could call it monitoring,you could just have more active engagement with theclubs, but it should be something which says to theclubs we will set the framework which constrains yourfield of operation. That’s the absolutely essentialthing, because it’s all very well saying you want toleave it to the discipline of the club to manage its ownrisk, but the record says that English football clubscollectively are pretty appalling judges of risk.

Q342 Damian Collins: Do you think there is anabsence of leadership in the FA, a while issue ofmonitoring the financial performance of clubs andmanaging risk?Dave Boyle: I was greatly enthused when I saw LordTriesman’s original submission to the formerSecretary of State’s seven questions, which clearlycalls for something like a licensing regime. I just findit saddening that in their submission to you this time,the FA seemed to have moved further away from thatapproach. I think the FA are often unfairly criticised,but until Lord Triesman came along and that processled to them saying this is what we’d like to do, it isfair to say that there had been an absence. Partly, asyou know, when you speak to people who work at theFA, it’s not the case that there’s no activity going onbehind the scenes. For example, with the fit andproper person test or agent’s regulations, the FA weretaking a very strong lead, but I think as Malcolm canprobably speak about that more accurately me. Theway the governance of the FA works makes it not aparticularly well-suited body to this particular task. Ijust did a small calibration of the evidence you’vereceived, and only three out of the 85 submissions saythe FA and the league structures are fit for purpose,80% of them say not, which is pretty overwhelmingto me and I think that’s something which is borne outby the evidence of their own eyes.

Q343 Damian Collins: And finally, can I assumefrom what you said earlier that you would support theending of the football creditors rule?Dave Boyle: I think the football creditors rule istotemic of football basically trying to—it’s a secondorder solution to a first order problem. A simpleproblem is that football clubs are inherently unstablefinancially and the football creditors rule is a stickingplaster to deal with that and the immorality that comeswith it. It’s a sticking plaster which underwrites therisks taken by clubs, with the community they aresurrounded, which says—

Q344 Damian Collins: Is that a yes?Dave Boyle: That’s a yes.

Q345 Mr Sanders: To you Malcolm, in your writtenevidence to the committee you advocate wide-rangingreforms to the FA board and the FA council. Whatreforms would you most like to see and why?

Malcolm Clarke: I shall preface my remarks bysaying, as I did in my evidence, that there are, and asDave has just said, are a lot of very talented peopleworking very hard at the FA on a lot of theseproblems, and I wouldn’t want to gainsay that at all,neither would I want to gainsay the contribution thatmany of my fellow members of the FA council havemade to the development of football in this countryover a long period of time. It’s not about people,essentially it’s about structure. I don’t actually agreewith all of the report by Lord Burns. I know that somepeople are saying we want the full implementation ofBurns. I think as he said to you himself, he sort ofstopped short of some things. I think that if you lookat 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 orderto debate the key issues. The reality is that it’s notable to do either of those.I have here the last Council agenda. There are 121pages of council committee minutes which have to beworked through, some of them well before the councilmeeting, and it’s virtually impossible in a body of 118people to have a critical challenge to the board aboutwhat it’s doing, partly because the decisions are longsince passed and partly because of the sheer format ofa body of that size. If I just give you a few examples.The first one would be the FA’s evidence to thisCommittee. That hasn’t been anywhere near themembers of the council including myself, and in factthere are what I call the football family six: therepresentatives of the players, the managers, thesupporters, the referees and the equality and disabilityadvisory groups who are not represented on the board.We can’t stand for the board, we can’t vote foranybody on the board, we’ve got nobody on the boardwho represents us, so we have no input at all into theevidence that the FA itself has given you.We were never told why Ian Watmore resigned. Wedidn’t have a proper debate about the failure of theEngland team in the World Cup; I raised that on aminute and there were two contributions and then thedebate was closed down. Now admittedly there wasthen an away day which I wasn’t involved in to lookat some of those issues. It was left to me to ask aquestion at the last council meeting about the failureof the World Cup bid because there was one sentencein the General Secretary’s report that said the boardhave looked at this and learned the lessons. It didn’teven say what the lessons were—this was an £18million investment, and it now appears we never stooda chance in the first place. Peter Coates made thispoint to you and Niall Quinn said it was covered inarrogance or whatever. So if the council can’t addressan issue like that then there’s something wrong withit, and in terms of the board, I’ve already made thepoint that some people aren’t represented. You hadevidence from the former Chairman about the way inwhich it operates, as if people are delegates. Theyhave their meetings beforehand and you’ve got thesetwo groups, so there’s a desperate need for a differentway for the whole process to operate.There has been a lot of discussion about the twoindependent directors, which I’ve tried to promote forthe extraordinary general meeting in the Autumn but




only managed to get 1% of shareholders to sign up toit, instead of the 5% you need even to get it on to theagenda, but it now looks as though the new Chairmanis taking that agenda forward. But one of the thingsthat 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 isneeded, so I think we need to have another look andI welcome the fact it says that the FA are carrying outa review of governance. I’m not sure who’s doing thator what the involvement of stakeholders is going tobe, but it is still very much needed.I know there’s a lot of journalistic caricatures ofblazers and things like this, which I think is nothelpful, but there’s a lot of good people there with alot to contribute on both the executive and on the

council. The problem is the structure and the way inwhich the whole power lies with the Board, but theBoard itself consists of people with vested interests,and other witnesses have given you the sort of analogyabout banks running the regulatory body, and I thinkthat’s probably a fair analogy. Sorry I’ve spoken atrather great length.Chair: I think we’re probably going to have to drawit to a close anyway since it’s now 1.10 pm. We willbe hearing from Mr Watmore later, and also having alook at the bid so we may be able to illuminate someof these areas that you have so far failed to. Can Ithank the three of you very much for your appearancethis morning?

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Members present:


Ms Louise BagshaweDr Thérèse CoffeyDamian CollinsPhilip Davies

________________

Examination of Witness

Witness: Ian Watmore, former Chief Executive, Football Association, gave evidence.

Chair: Good morning. This is a further session of theSelect Committee’s inquiry into football governanceand I would like to welcome, as our first witness thismorning, Ian Watmore, the former Chief Executive ofthe Football Association. Can I invite Louise to askthe first question?

Q346 Ms Bagshawe: Why did you resign asChairman of the FA?Ian Watmore: I didn’t resign as Chairman, I resignedas Chief Executive.Ms Bagshawe: Chief Executive, I am sorry.Ian Watmore: That’s okay. I think the words I usedat the time were, “Well there was nothing chief orexecutive about the job”, and that is why I left. I wasfrustrated about a number of things that you justcouldn’t do and in my experience the Chief Executiveof any organisation would have been able to have justgot on and done some stuff and most of what I wastrying to do either hit the buffer of treacly governanceor just wasn’t possible to do at all because we didn’thave control of our money and our resources.

Q347 Ms Bagshawe: Can you elaborate on some ofthose things that you found impossible to enact?Ian Watmore: Yes, first of all I sent a note to theCommittee in which I argued that the board of the FAshould be independent of all its vested interests andthe reason I argued that is because I think anorganisation like the FA is seen to be the governingbody of football in this particular case and yet it hasgot people on its board who have a severe conflict ofinterest. They may be very good people, they mayhave a lot of knowledge and experience and so on butthey are conflicted and I think the usual analogy thatI use is you wouldn’t want to be running Ofcom withSky, BT and the BBC on your board, it is that kindof sense.The governance was a problem; the staff were not aproblem and a lot of people write about thedysfunctionality of the organisation and I think onething I would like to put on record is that the staff thatI worked with at the FA were absolutely fantastic andthey 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 youknow nothing about and they were great to work with,so that wasn’t a problem.One of the other problems I found was that theorganisation’s money wasn’t under control of theexecutive team so we raised whatever money we

Paul FarrellyAlan KeenMr Adrian SandersJim Sheridan

raised—usually about £200 million a year, throughTV deals and sponsorship deals—and then once wehad spent our core costs for running the actualassociation at Wembley the rest was distributed 50–50to the professional game and the national game.Apart from the fact I begrudged giving FA moneyback to the professional game—because I didn’t thinkthey needed it and the national game did and I thoughtit would have been much better to have channelledthe money in that direction—the sheer fact was thatwe didn’t have responsibility for how that money wasspent. A number of the programmes and projects thatyou would want to do just weren’t possible to dobecause you didn’t have control.

Q348 Dr Coffey: Can I ask specifically about theindependent board? You have used the analogy ofOfcom, where the Government appoints a regulator tomanage private competition. What it suggests to me,your suggestion, is more the civil service utopiaperhaps, of having a Government with no Ministersbecause they are pretty inconvenient, because theyspeak to constituents and make policies, whereas ifthe civil service ran it all it would be fine and so thatindependence would have a tickety-boo gain. I am notsure that is really true.Ian Watmore: I am not sure that would be the civilservice utopia anyway, and I am certainly not goingto say it even if I thought it. The reality is that I thinkwhen you are in one of those leadership jobs in anorganisation like the FA, to use the analogy, you areas much like a Minister as you are the civil servant;you are the person on public display, you are theperson that the public thinks and expects to make thekey decisions and I think both my Chairman at thetime, Lord Triesman, and I felt that we were seen tobe responsible for a lot of things but not with theability to make the decisions and actually carry themthrough.

Q349 Ms Bagshawe: You are hardly the first ChiefExecutive of the FA to resign recently, given there hasbeen such an enormous turnover of FA ChiefExecutives since Graham Kelly left the job. Wouldyou say it has become an impossible job for thereasons that you state; there is no actual decision-making power in the job?Ian Watmore: I felt it was impossible for me and thatis because I was used to, both in the private sectorand in Government, a different form of governancethat supported what you were trying to do and so I

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22 March 2011 Ian Watmore

didn’t feel I could carry on. I think it would be forothers. I wouldn’t want to say it was impossible foranybody to do what they wanted to do in the job butfor me it wasn’t right.

Q350 Ms Bagshawe: Do you feel that the resignationof past Chief Executives was motivated by the sameconcerns though that you have just expressed?Ian Watmore: Interestingly I went to see them allwhen I got the job; I went back as far as AdamCrozier. I didn’t meet Graham, I probably should havedone but I didn’t. Anyway, I met the others and ofcourse everybody has a different perspective on whythey went and different reasons but I think thecommon theme is that around the board table, youhave got all of the people from the counties in theprofessional game and they all have different interestsin what they are trying to achieve and there is noindependence and clarity that emerges from that andthat gets very frustrating as the Chief Exec, whetheryou’re picking a new manager or trying to spend arelatively small amount of money on something quiteunimportant in the big scale of things; all these issuesblow into one when you’re sitting in the middle ofit all.

Q351 Ms Bagshawe: How would you characterisethe relationship between the FA and the PremierLeague?Ian Watmore: One of the interesting questions; who,for this purpose, is the Premier League? When I metwith the key club members, the sort of people whorun and manage the clubs, the relationship was verygood. All of these clubs belong to the FA as much asthey belong to the Premier League but they have been,over many years, grouped in a sort of pack around theleague that they play in, so individual clubs, noproblems at all. When we got the collective things itdepended on what the issue was. Some things we hadreal strong agreement with, for example, goal linetechnology where our common enemy, if you like,was FIFA who wouldn’t sanction that; we joined upvery well on that.On other issues we might be miles apart or have adisagreement over whose responsibility it was. I thinkthat my Chairman at the time mentioned in hisevidence that football regulation, in the sort offinancial regulation sense, was deemed by the leaguesnot to be something for the FA, it was deemed to besomething for them and Lord Triesman disagreed withthat and that is where the tension first emergedbetween them. I think it is issue by issue.On a personal level Richard Scudamore—who ispossibly one of the best operators and runners ofanything in football—and I got on, I think, pretty well.We had our sort of Roy Keane-Patrick Vieira momentsand things but afterwards there was kind of sort ofmutual respect I think and that wasn’t an issue.Ms Bagshawe: Okay, thank you.

Q352 Chair: You say you got on fine with RichardScudamore. You will have heard the evidence of LordTriesman that he had rather greater difficulty gettingon with the Chairman of the Premier League whom

he found to be aggressive, was that your experienceas well?Ian Watmore: I kind of take the view that David saidwhat he said then and I think that is probably the mostevidence you need. I think there is a football saying,isn’t there, what goes on in the dressing room stays inthe dressing room and I think probably I would ratherstick 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 youmean by these people who have conflicts of interest.Who they are? Give us a flavour for what theseconflicts of interest were and perhaps give us atangible example of what that means?Ian Watmore: Okay. As you probably know thecurrent FA board—or the one that has been inexistence for the last few years—has five members ofthe professional game through from the PremierLeague, two from the Football League and five fromthe counties and then an independent Chair and ChiefExec. You might get an issue. Let’s take the one thatwe talked about which is the financial and debtposition.It is very hard to have a sensible discussion around aboardroom discussion when the Chief Exec of ManUnited is one of those board members and his houseis being daubed back at home green and gold by thefans who oppose the Glazer ownership. He is a greatguy, David, I have lots of time for him but on a topiclike that he is conflicted. If we talk about where theinternational game might benefit from perhaps the FAbeing tougher about calling up younger players so thatthey always played for the England teams rather thanwent off on club tours and so on, then the club peopleare, by definition, conflicted on that. It is great whenthey do have a really successful international playerbut they are juggling different interests whereas we,as an FA, are thinking purely and simply about howto develop the national team.On the other side of the fence the county people whodo wonderful work on the ground, and I can’t speakmore highly of them about what they do, they give uptheir time year after year after year and make all sortsof things happen in communities where football isreally socially cohesive and it really binds peopletogether. But they are worried about losing out bypicking a fight, being seen to pick a fight with the bigguys from the Premier League or the Football Leagueor whatever.There is this kind of tension that really exists betweenthem and the consequences that unless it is a commonenemy type of topic, like goal line technology—whereeverybody can get round the table and agree on it—you find everybody is coming at it from a slightlyconflicted position, which is why I think you either goto the German model where kind of everybody is inone entity and it is all part of one entity but I suspectwe are a long way from that, or else you go forindependence and that is what I would like to see.

Q355 Jim Sheridan: Are you suggesting then thatthe FA would be far more effectively run if we didn’t

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have big clubs like Manchester United represented onthe board?Ian Watmore: On the board, yes. I think very stronglythat we can have all the dialogue with the big clubsthat we need. If I wanted to pick up the phone andtalk to any one of any of the clubs in this country orgo and visit them or see them on a Saturday orwhatever, it was no problem at all. You get access toeverybody when you need it and I think we couldinvolve them and get their opinions and understandwhat they wanted and all the rest of it, as we do withother people who aren’t on the board. We go and talkto Gordon Taylor at the PFA or Richard and hiscolleagues at the LMA and a whole variety of otherplaces; you can get inputs from a variety of sources.But when it comes to making hard decisions I believethe best board is one that is made up of the exec teamsof the organisation and independent non-execs andthat is what I would recommend.

Q356 Dr Coffey: What was your vision for the FA?Ian Watmore: I ended up just encapsulating thevision. I called it football first and the reason I didthat was because I remember somebody earlier on saidto me, “I quite often go to meetings in the FA and theword ‘football’ never crops up and it is always aboutmoney or something else and the essence was not toput the football first”. A really good concrete exampleof that was Stuart Pearce who, running the under-21team, came to me and he said—they usually play theunder-21 games in one of the clubs around thecountry, grounds around the country—“I would reallylike to play at Wembley. I think these guys wouldbenefit from playing at Wembley so that when theycome up into the first team and play at Wembley—”.The crowd size at Wembley is likely to be much toosmall for the thing to even break even, let alone beprofitable so it is going to cost us money to put on thegame and in the past I think that would have beenblocked for that reason whereas I said, “Yes” becauseit seemed to me it was more about the football andless about the money; this was about trying to growthe talent, so putting football at the heart ofeverything. I was very strong on the Wembley pitch,for example, and I thought the history of Wembleyhas been dogged with controversy—and I don’t wantto go back over that—but the stadium itself physicallyis great but at the time the pitch was terrible and itseemed to me that people were more worried aboutthe business case of Wembley than they were aboutthe quality of the football in it and I happily—wellnot happily for me as an Arsenal fan—went to theCarling Cup Final as an Arsenal fan to see my teamhumiliated in the last minute but the pitch wasabsolutely stunning because they have now doneexactly what I think they did at the Emirates and otherplaces with this new pitch technology.I was trying to just inject in every decision and everythinking about what the FA stands for, to put thefootball at the heart of it and then let the other thingstake care of itself. That then cascades right across thegame from international football at the highest levelto kids playing on a Sunday morning, and I could talkfor hours about where we go with that but that wasthe essence of it.

Q357 Dr Coffey: Just to refer to the stadium oraspects of the stadium as your first two responses tothe vision of football and how you use that, thestadium has been criticised as being a debt-heavyweight around the neck of the FA. What changeswould you perhaps like to see to that? Is it a conflictof interest that David Bernstein is both Chairman ofthe FA now and of WNSL?Ian Watmore: Wembley is kind of a subsidiary of theFA so I don’t think there is a conflict and David isone of the people who helped save the Wembleyproject when it was going in a very bad direction. Ithink he has got huge experience and he was also verysuccessful at his club in his business career so I thinkhe is a good choice of Chairman, not that it is for meto comment but I do happen to think he is.The stadium does drag financially and the FA is shortof money so it is a concern but we are where we are;it was built on a debt model—I forget the exact figurethat is still in the books that’s overdue but it issomething in the hundreds of millions that still has tobe paid back—and every year that is a financial dragon the FA, which it would be great if it wasn’t but itis what it is.

Q358 Dr Coffey: Coming back to your idea offootball first, do you think the FA still has that as apriority? Is it implementing those tasks effectively?Ian Watmore: I can’t tell really from the outside. Mysense is everybody agreed with it on the surface but,as you know, probably in Government it is quite easyto agree in principle but not in practice and we see alot of that going on, so I couldn’t tell on the ground.But when we come back to why do people criticisethe FA, they criticise it because they perceive it notto be making sensible decisions in the regulator ingovernance space and they criticise it for seeminglyto always get it wrong, vis-à-vis the England seniorteam, those are the two things that dominate wheneveryou ask the public about the FA. Until we crack bothof those and have a clear programme that builds to along term success of the England team and get a sortof regulatory discipline environment that people trustthen I think they will continue to be dubbed in thatway.

Q359 Dr Coffey: What do you think was the worstdecision that was made at the FA when you wereChief Executive and can you explain a bit about thegovernance 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 bestwas but I would like to hear—Ian Watmore: No, that is a good challenge. I thinkprobably the one that frustrated me most was the pitchat Wembley just because it was something we couldcontrol in our own backyard and it wasn’t aboutintergalactic football and all the interrelations ofeverybody else and it was really frustrating. WhenMichael Owen ripped his hamstring or whatever inthe Carling Cup Final with Manchester United and he,to this day, believes it was the pitch that did it. Youcould just foresee that happening to a whole bunch ofEngland players just before the World Cup—and as itturned out it probably wouldn’t have mattered—but at




the time we thought we had real high hopes at theWorld Cup. That one was definitely a frustration.But I think the real strategic issues that we weren’tgrappling with were the areas of what role does theFA have in regard to governance of the game. Theanswer was quite a weak role and weakening everyyear and yet people perceived it to have so much morepower than it actually had, and I think that was thebiggest source of concern to the Chairman and I. Youcould look at what I said about the financials offootball clubs. I was frustrated that the women’s gamewas the first casualty when Setanta went bust,everybody just said, “We won’t do the Women’s SuperLeague” then I had to fight very hard to bring thatback in.We had a lot of issues around the staff and I had totake some very tough action with the staff, the sort ofthing that is going on in Government at the moment;pay freezes, we have ended the final salary pensionscheme. These are people who don’t earn a lot ofmoney, who have given their lives to the game andwhat was really annoying at the end of it all was that50% of every pound we saved there went back to theprofessional football game and that didn’t seem righteither, that was a hard sell to people. So there was acombination of things.

Q360 Dr Coffey: To give you the other side, whatwas your best decision? It might be the pitch.

Q361 Ian Watmore: No, because that came after Iwent, they made what I thought was the right decisionlater on. I hope the best decision will turn out to betwo things: one was to reignite the National FootballCentre project. We had bought the plot of land in 1999I think and it was still 2009 at the time and nothingwas there really, realistically. Working with DavidSheepshanks and others I think we breathed a lot oflife into that project and I think that is now off andrunning.I think we made some pretty sensible decisions aroundthe money side because when Setanta went bust thefinances of the FA were in freefall; it was theequivalent to a Lehman’s Bank moment for us, we’dlost 15% to 20% of income overnight and then themarket for what was left was deflated. So knowingnext 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 Ithink in the long run will be very important as peoplemove towards the internet for their footballconsumption. The final thing I did do was sign thepress release that made the Women’s Super League areality because I was very passionate about trying todo something for the women’s game and had some ofmy best actual moments I think on tour with thewomen’s team in Finland the previous summer whenthey got to the final of the European Championships.I really hoped to see that that combination of themplaying well and the start of the Super League wouldget the women’s game off to a future.

Q362 Dr Coffey: What I am trying to tease out isthat you were able to make good decisions and alsodecisions you were less proud of as the FA, what was

different in the governance process, if you like, thatallowed you to achieve some success? I suppose I amtrying to come from the fact that sometimes as ChiefExecutive, you will get what you want all the timeand other times you don’t take everybody with you,so what changes to the governance of an independentboard would make that different?Ian Watmore: I think the fundamental thing when youare a Chief Exec of any organisation is you want theboard to challenge you but you want the board to thinkof themselves, first and foremost, as part of theorganisation. People from various sectors of the gamewould sit in meetings of the FA and talk about the FAas though it was a third party. They were not drivingthe best decisions for the organisation, which is theFA; they were driving the best decisions for whicheverarea they came from. Sometimes they coincided andsometimes they didn’t. I believe you need a board thatis single-purpose and focused on the organisation andI didn’t think it was.I also found it very regrettable that the board leakedlike a sieve, if that is not being unkind to sieves. Itsort of started on the day I was interviewed for thejob. The headhunter said to me, “We won’t send thepapers out on the Friday night because it will all beall over the Sundays, we will do it Monday night andthe interview is on Tuesday and you’ve got a chanceof staying silent” but it was in the papers on Tuesdaymorning and it went on throughout the period and Ifelt that was a problem too. Again, that’s another thingthat I think is sacrosanct about boards. Boards shouldbe trusted by everybody on it that what is said anddone in it, is confidential to that board and it clearlywasn’t.

Q363 Damian Collins: When you were the ChiefExecutive how much time would the FA board spendon certain things like internationals?Ian Watmore: I would say in the board meetings Iattended, quite limited amounts of time.Damian Collins: Once or twice?Ian Watmore: Yes, and of course in the era I was ineverybody thought we were on a roll and Fabio wascoach of the year on the BBC’s Sports Personality;we all thought we were going to do something specialin South Africa. It wasn’t the crisis point that it can beperiodically but in the FA board as a whole it wasn’t amajor topic of discussion when I was there.

Q364 Damian Collins: There seems to be disconnectbetween what England fans, the football writers talkabout and what the FA board talks about and theongoing concerns about the fact that our players haveprobably never played in a league consistently at sucha high level in domestic football and lots of them playabroad, there is never more money in the game andyet the national team grows weaker and weaker. It isthe debate probably football fans have more than anyother debate and it is one that doesn’t particularlyseem to grip the FA board.Ian Watmore: One of the things I think is, again, I’vesaid that the board should be independent. I also thinkit should be half-executive, half-non-executive and thereason I say that is I would like to see people like SirTrevor Brooking in his current role as football director




and probably Hope Powell as the leader of thewomen’s game, on the board of the FA talking aboutfootball; people who have played it, people who areresponsible for developing it in the men’s andwomen’s game, people who have a pipeline ofknowledge about who is coming through the systemand what is right and what is wrong. I would like tosee the board have more people of that ilk on it fromwithin the FA so that these topics would be discussed,they would be driven out and the consequences andconclusions of that would be arrived at sensibly.

Q365 Damian Collins: How would you characterisethe failure of the FA board? Is it that there is no greatdesire for reform or change, there is plenty ofdiscussion about it, reports written, views expressed?Does the board either not share those views or can itjust not agree amongst itself what to do?Ian Watmore: I think there is a very smallconservative nature to it all so change is not awelcome word in that sense; people want to evolveslowly rather than radically. But you do have quitedifferent interests around the table from the five thatcome from the professional side and the five that comefrom the counties. Half of the money goes to each ofthem, as I have said; one half works out how to spendthis lot and the other half works out how to spend theother. So the actual board meetings, they could betetchy on certain issues but they tended to be onegroup of people talking about a subject, everybodyelse staying quiet or vice versa and I think it was justa sort of unholy alliance between the two groups notto tread on each other’s patch and I don’t think that isthe way the board of the FA should be.

Q366 Damian Collins: Just finally, do you think ifthe board was reformed in the way that you havediscussed—an independent board of experiencedfootball people—that the FA would be, if you like,more realistic in the way it uses its resources and youcould question the way the FA has spent money in thepast on Soho offices, salaries or how managers arepaid, even the company contract Capello was givenbefore the World Cup? Do you think a reformed boardwould be more practical about the way it uses itsmoney?Ian Watmore: I do. I think particularly if you hadsome good genuine independent non-execs of the typewho are used to challenging company Chief Execsand executive teams on how they are investingshareholder money. I don’t particularly name namesbut people like Terry Leahy, he was a fantasticsupporter of ours when he was at Tesco through theTesco Skills Programme. You just know that peopleof 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 virtuallyeverybody involved in football administration—thereare some excellent people doing excellent jobs. If wetake Richard Scudamore, who I agree with you is oneof the top people and a proper football supporter; hesupports Bristol City—Ian Watmore: He does.

Q368 Alan Keen: He understands how supportersfeel as well as everything else but Richard’s boss isthe 20 club owners. Their interest is not in the futureof English football or the future of football at all. Itis, in almost every case, the ability of the club thatthey own to make money. They may have come intoit not being worried too much about making moneybut I think ego comes into it as well. But certainly themain thing is that their interest is not the same interestas the future of football involving youngsters’development and everything else and supporters of allthe clubs around the country, whatever level the clubthat they support is at.It is the structure, isn’t it, that is wrong and Richarddoes a great job representing those people. But if heor you were the managing director of football as awhole then self-interest would work, with a right inthere. Do you think it needs Government legislationto set out a structure for football? It is obviously ashambles, isn’t it? What do you think about legislationto set up a structure that is for the benefit for the wholeof football, like there is in other European nations?Ian Watmore: I think I agree with a lot of what yousay, except the concept of Richard having a boss is aninteresting one. Sorry, just joking. I agree heavily withthe fact that, as you say, the running of the PremierLeague and making it the global success that it hasbeen today, which Richard and others are primarymovers of, has been a stunning success story and onethat we all enjoy if we like watching that sort offootball, which I do. They would argue that moneytrickles down through the leagues to the other clubs.I don’t know whether that is better or worse than inanother situation.But what it does do is it becomes a single objective,which is to make that league a huge success, whereasI think what you have said is there are more objectivesthan that. We want that but we also want a strongEngland team and we want a growing national gamein communities around the country and we want morewomen’s football, and so on. So these are things thatI think we need to line up and say, “Here’s a series ofobjectives for football as a whole”. That is what Iargue in my note to the Committee, which you maynot have but you can read afterwards and see if it ismore coherent than my verbal ramblings here. Youshould set out what the strategic objectives forfootball as a whole are and then what role the FAhas within that and then how the FA might have agovernance structure to determine that. I don’t thinkit will come about through natural causes. It will onlycome about through an external impetus that is eitheryour Committee or the Government through a Bill orsomething, because I don’t think it will happen on itsown merits. It took something like the Lord JusticeTaylor report to change football once before andmaybe this is the time to do something equallysignificant for the game in the long run.

Q369 Alan Keen: You mentioned Terry Leahy. Ananalogy with Tescos, if one part of Tescos is doingexceptionally well, whatever that part of Tescosmakes, if it doesn’t fit in with the overall aim ofTescos internationally then Tescos will do somethingabout it from the top downwards, whereas football is




run completely separately. It is all run by good peoplewith the best intentions and if you are being paid, asRichard is, by those 20 owners then he does a fantasticjob and it is his duty to do that, even though heunderstands very well that the thing is out of balance.Ian Watmore: I think it is possible to square the circleof competing objectives. In a world where the bestglobal talent is playing in the Premier League, whichis what people want to succeed, it ought to be possibleto use the money that comes from that to develop thebest local talent to be as good as that. It is cheaper tomake, not buy, if you do it over a long period of timeand there are various clubs around who do that verywell. We can see some of those clubs beginning tochurn out really top talented English players whoaren’t just the best in England, they are actuallymaking it with the best players in the world. Whetherthere are enough of them is highly debatable andwhether the system that is producing them isproducing them more by accident than design I thinkis definitely worth questioning. I would think one ofthe key objectives that we should set for the whole offootball is to grow that pipeline of talent systemically,using the wealth that is here because of the PremierLeague.

Q370 Chair: Can I just clarify: is it your view thatfor the FA to have the powers you believe necessary toimpose a greater governance on the game that wouldnecessitate some kind of Sports Act being passed byParliament?Ian Watmore: I don’t think it needs to be because itis obviously something that people could agree to do,but I don’t think they will agree to do it so it is goingto be an external intervention that causes them tochange. You may not agree with what I am saying butif you did agree with it I don’t think it will come aboutthrough just the natural process. I think it will requiresomething different. Whether that is an Act or astrongly worded demand from Government, I don’tknow, but I think it won’t happen otherwise.

Q371 Chair: There is no particular reason to believethat a strongly worded demand from Government isgoing to produce a response either.Ian Watmore: Sorry?Chair: It doesn’t necessary follow that a stronglyworded demand from Government is going to producea response either.Ian Watmore: No. I think in the end you have to lookat the restructuring. If you need to do restructuring itneeds to be forced, or at least to be threatened thereso that people might change themselves if they knowit is in the background.

Q372 Chair: Does all your experience suggest thatis going to have to happen?Ian Watmore: If you agree with the line of directionthat I am recommending, yes.

Q373 Dr Coffey: Is the risk of legislation that it willopen 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. FIFAstatutes don’t like government interference. It is moreaimed at different governments than ours butnevertheless I am sure it will be used. People willargue that it is threatening their livelihood and so on.So it is not without risk. It would be much better ifpeople just said, “Look, in order to give this a faircrack of the whip let’s have an independent structure,run it for five years and let’s see where we go fromthere”.

Q374 Chair: We have received evidence, not fromFIFA but from UEFA, recommending that we adoptsome kind of Sports Act.Ian Watmore: okay, that is more a party role then.

Q375 Jim Sheridan: Can I clarify: externalintervention; by that you mean Government, or isthere another external intervention?Ian Watmore: No. I think in this case it isGovernment. The analogy I had with the Lord JusticeTaylor report, I don’t know whether that was a RoyalCommission or something but it was somethingsimilar. Maybe a Royal Commission couldrecommend such things.

Q376 Jim Sheridan: But there is no otherintervention?Ian Watmore: Not that I can think of, not unless itwas a commercial proposition that dwarfed everythingthat there is today and I can’t see that.

Q377 Mr Sanders: From what you are saying, doyou think the FA should have a more leading role,actually take the leading role in regulating thefinancial activities of professional football clubs?Ian Watmore: I think the answer to that is at thestrategic level, yes. In other words, I think the FAshould set the financial regulatory environment inwhich professional football operates but I think itshould then be for the leagues and the clubs toimplement that, usually through their competitionrules, which is the most effective way of doing it. Alot is talked about UEFA’s Financial Fair Play schemeand I think there is a sort of assumption that UEFA islike a European governing body, somewhere betweenus and FIFA. In fact that is not true. UEFA is aconfederation of associations, owned by the nationalassociations. What UEFA is doing is using itsChampions League competition, and to a lesser extentits Europa League competition, to say, “If you wantto play in our Champions League competition thenyou have to comply with these rules”. So it could bethat the British clubs all said, “No, we’re not doingthat”, but of course they won’t because they aredesperate to play in the top club football in the world,so they will eventually comply.UEFA use a competition as a means of achieving apiece of regulation that they think will benefit thegame. I think we should set the environment at an FAlevel and then let the individual competitions, in thiscase the leagues, determine precisely how toimplement that, their own roles within the rules thatthey impose upon the clubs that play in the league.




Q378 Mr Sanders: But the FA could set someparameters by which your membership of the FA isdetermined. If you don’t meet them you can’t be amember.Ian Watmore: That is the kind of thing, yes.

Q379 Mr Sanders: Do you think the FA is fit forthat 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 thatstuff—I think some of the people I had in that areawere absolutely brilliant. One of them has gone off torun 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 comparisonto the football club. The football club was, of course,the disaster club of a couple of seasons ago. I thinkyou would need to ensure that the capability was therein the organisation to really understand, but I thinkthat is a soluble problem.

Q381 Damian Collins: You joined the FA just afterLord Triesman presented his response to the thenSecretary of State for Culture’s questions on football,and that covered some of the ground you are talkingabout. He talked about whether there should be afinancial governance system based on the UEFA fairplay rules. When you joined, what was your view onthose plans and what happened that led to the collapseand rejection of those ideas?Ian Watmore: It was, as you said, just before my timebut my understanding was that David and the stafffrom the FA produced a version of a response to Ithink it was Andy Burnham at the time, and the boardmembers told him that was not the submission he wasgoing to put in, that he was going to put in a differentone, which in paraphrase said, “See the submissionmade by the Premier League and Football League andthat is the FA’s position on these topics”. I think thatwas right at the start of the problems between him andthe professional game. I think he had also made aspeech that they didn’t like about debt in football, andthe combination of those two things meant it was verytense on that subject whenever it came up in anymeeting.

Q382 Damian Collins: Were these ideas pursued?They were in Lord Triesman’s report but from yourtime as Chief Executive was this something you feltthat, “This should be an agenda item, this is somethingwe should be taking up on a regular basis”?Ian Watmore: It was one we would have liked to havedone but it was made clear that the situation was notchanging, that these were matters for the leagues andnot the FA. That was kind of the line and so that waswhat prevailed.

Q383 Damian Collins: Given what you said aboutthe FA, you can probably see why the Premier Leaguemight not have very much confidence in the FA totake on that role?Ian Watmore: You can argue every one of thesethings. My argument would be that if you regard theFA as essentially an assembly of the people from the

counties who may or may not have the sort ofexperience and know how to deal with this sort of bigbusiness type of thing then, yes, you would have noconfidence, I’m sure, if you were in the professionalgame. But if the body concerned was properlyresourced, staffed with the right sort of calibre peopleand had the right sort of board structure then youshould have confidence. You might not like what theydecide but you should have confidence and that is whyI think a different sort of FA is required for thesepurposes, one that is independent of both its heritages.

Q384 Damian Collins: When we took evidence acouple of weeks ago from David Gill, Niall Quinn andthe Chairman and Chief Executive of Stoke City theyall agreed that the UEFA Financial Fair Play rules willbe a good model for enforcement through the PremierLeague. Do you agree with them?Ian Watmore: Each one of these sort of regulationstends to tackle a different problem and the problemthat Michel Platini and co were trying to solve wasthe combination of billionaires coming in and justbuying any player they want and paying whateverwage they want out of the petty change of theirwealth, or alleged places where the local cities wereputting local money into the clubs. He felt it wasunfair that clubs of the Chelsea-Manchester City type,or perhaps the Barcelona-Real Madrid models, werebound to be strategically much more successfulbecause they had all this money being poured intothem and he felt that by doing the Financial Fair Playrules that would cap that possibility and it would meanthat clubs would then have to survive on the resourcesthat they naturally developed. So that is what is nowcoming in.I don’t think it inherently deals with the sort ofleveraged debt takeover of a club, which you mightfeel is something else that isn’t an attractive thing todo. When Manchester United or Liverpool or any ofthese other clubs find themselves in the position theyare in, or were in in Liverpool’s case, I would havethought you should at least consider whether therewas a regulatory environment that said that sort ofthing shouldn’t be allowed from the outset. You havesome sort of capital ratio or something in the way thatthe club is owned. That won’t come up, I don’t think,with Financial Fair Play. You would have to dosomething else, but Financial Fair Play will probablyeventually cap the billionaire, “I’ll have that one”approach to football.

Q385 Damian Collins: On the Manchester City andChelsea stories, is their high profile something of adistraction? When we took evidence last week inBurnley, the Chairman of Burnley said that if youwant to sustain a smaller club in the Premier League,on top of what you get from gate receipts, on topof what you get from TV money, you basically needsomeone who is going to put in £50 million a year incash every year just to hold you in the PremierLeague. That has to be unsustainable.Ian Watmore: I would argue that it is, although theydo seem to keep finding people who are prepared todo it. People do argue that it is smaller sums but ithas always been that way in English football a bit.




But I do believe the sustainability of that should bequestioned. I do believe that if you apply FinancialFair Play at the highest level it should force its wayright through the system. Was it Burnley you said youtook evidence from? One of the reasons that theBurnleys of this world get to that level is because theChelseas and Manchester Cities of this world havestretched it so much up here that just to get ordinaryplayers they now have to pay twice the wages thatthey used to have to pay and so on, and the televisionmoney hasn’t kept up with it. So, I think having adampening effect at the top will eventually filterthrough to the rest of the system. I think what UEFAare doing is promising on that front, although we’llsee if people find ways round it.

Q386 Damian Collins: In your time at the FA didyou ever look at licensing models that operate in othercountries? The licensing model in Germany is one thatis talked up a lot. It seems to be a fairly flexiblesystem but nevertheless it does at least guarantee alevel of oversight from the governing body of thefinancial performance of the clubs and whether theycompete on a fair level, a fair level being that theycan pay their bills without going into administrationduring the season. Is that something that you lookedat?Ian Watmore: The German model is a good one on awhole range of fronts. It is integrated to start with.The DFB looks at leagues and the national associationis one integrated whole. It has all the strengths thatyou say and we have seen for more years than wecare to remember how good they are at churning outinternational teams of all types: men’s and women’s,all ages and so on. The only counter to that argumentwould be that the Bundesliga is not the PremierLeague. It doesn’t have the global pulling power; itisn’t the exciting league that the Premier League is. Itdoesn’t reach consistently the last stages of theEuropean Champions League with three or four clubs.I think if you were to look at the Premier League onits own you would say it has been more successfulthan the Bundesliga. On the other hand, if there wassome global downturn in football finances theBundesliga is more likely to come through as a sortof HSBC bank and the Premier League would be moredifficult to pull through in that. But nevertheless Ithink, for the period that we are looking at, thePremier League has a long way to go before it runsout of opportunity. It is only really tapping into theearly reaches of the global audience.

Q387 Damian Collins: I suppose, to stretch ananalogy, the question would be whether Englishfootball clubs are becoming too big to fail and therelative price of failure here is small. Leeds Unitedwill be back in the Premier League, if not next seasonwithin a couple of years, as probably one day willPortsmouth. The Germans have the ultimate sanction,which they don’t use or haven’t used yet, but there ispotentially a case where they might.Ian Watmore: I would like to see a system that didn’tweaken the Premier League but did strengthen the FA.I love the Premier League as a spectator and so on. Ithas transformed football in this country from where it

was in the late 1980s. I have nothing against thesuccess of the Premier League as a league competitionand it is well run. It has its issues, that I would liketo talk about in a sort of technocratic way some time,but right now it is in a good place. The FA is not in agood place at the strategic level. I would hope that wecan elevate it to have a much stronger role in footballand then we can have a strong FA and a strongPremier League, not a strong FA or a strong PremierLeague, and that I think is the fundamental thing.

Q388 Damian Collins: Finally, with regard tofinancial oversight, we discussed last week with LeedsUnited the fact their Chief Executive doesn’t knowwho owns the club. Do you think that is wrong? Isthat the sort of thing that the FA, even if not havingactual power over, should take a sort of moralleadership on and say on some of these practices,“There might be nothing wrong with what is going onbut it is questionable and not transparent and not theway we do things”?Ian Watmore: I think one of the good principles ofgovernance in any organisation is transparency, and Iwould apply that to football.

Q389 Paul Farrelly: Ian, I just wanted to return, aswe wrap up this session, to a few specifics about theFA. First of all, I wanted to take a few of the pointsthat Damian was exploring on finances and talk aboutsomething that did happen on your watch. We knowwhat happened to Lord Triesman’s paper but I havebeen passed a paper—not by you or anyone associatedwith you—called Football Finances that youprepared, I understand, in February 2010 and whichwas for discussion among a joint management group,including yourself and the Chief Executives of theFootball League and the Premier League. That wasprepared just a month before you resigned. Could Iask you what was the reaction to that paper that youprepared?Ian Watmore: I think it was more of the same as wehave been talking about, which is this is not a matterfor the FA really. I think there was an initial worrythat we were trying some sort of takeover or somepolitical stunt or something, which I wasn’t. I was justtrying to write down the issues as I saw them and tryand put them in a sort of consultative way that wouldget us talking. It was made reasonably clear that thatwasn’t the direction that people wanted to go in. Theygave us comments on it but I think it was just one ofmany things where I realised I was just butting upagainst the governance ceiling and it was time to stopwasting my time and go and do something else.

Q390 Paul Farrelly: Was that the straw that brokethe 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, althoughit is probably never spoken about, was I think DavidGill rather sensibly recommended that the decision-making bit around who gets what suspensions and didthey really punch somebody in the face or not, thesort of compliance unit thing, should be outside of thecore FA and in some way with some unimpeachable




figure running it. I have quite a lot of sympathy withthat. The flip of that is that the Football RegulatoryAuthority, which is the bit that sets all the regulationsand so on in the first place, would come back insidethe FA. At the moment it is in an arm’s length status.I think it is analogous to a Government Departmentsetting a regulation but running the operation within,which is 100% the wrong way round. The problem Ihad when I was reviewing that was if I brought theFRA back inside it would go immediately under thisconflicted board and then it wouldn’t be able to makethe decisions that it needed to make. So I got into aplace where on almost everything that I was movingon I saw cul-de-sacs and I decided I would just goand do something else.

Q391 Paul Farrelly: You have just covered onequestion I was going to ask, probably the lastquestion. Your paper, was it ever discussed at the FAboard at all?Ian Watmore: No.Paul Farrelly: It just remained among thismanagement group?Ian Watmore: Yes. We tabled it over time but—

Q392 Paul Farrelly: When you said that theythought it wasn’t for the FA, who in particular thoughtit wasn’t for the FA?Ian Watmore: I don’t want to go into particularindividuals, conversations that are private, but I thinkthe generality of the position that David had when hefirst tabled his approach remained, which is that forthese matters the leagues were the people to do it andthey should do it themselves and we should just buttout.

Q393 Paul Farrelly: The danger here is that thereare so many papers lying around, so manyrecommendations, that someone will always find areason to disagree with something because somebodyelse has said something different. That is somethingwe have to wade through. You make some interestingcomments that at present the game is applying theso-called fit and proper rule in a sort of not legallydisqualifiable way, which is taking a differentjudgement. You have mentioned capital ratiospreviously but you argue that perhaps the game mightadopt a fit and proper business case approach as well.You argue in particular about a ban on securitisingfuture revenues and player securitisation so that wedon’t get the West Ham-Sheffield situation. You evengo on to the football family taking such a collectiveresponsibility that, like the Government with schools,it puts clubs into special measures. All of thesesuggestions were batted away, were they?Ian Watmore: In effect. The topics in there, theintention of that paper—as you say, it has never seenthe light, I think it was leaked by somebody tosomebody else and it has probably moved around—was to say there is no right answer, there is no silverbullet, but we do have some issues. We have our twomost famous clubs in these debt problems, inLiverpool and Manchester United; we have the clubthat has produced more England players of highquality than ever, in West Ham, in the hands of

creditors to an Icelandic bank that has failed; we haveone of our oldest and most famous clubs, inPortsmouth, being the laughing stock of the PremierLeague, as it was at that point. We ought to be atleast discussing the sorts of things I put in that notein deciding are any of these things really the answeror should we just let free market reign? As somebodyonce put it, debt is the slavery of the free and I thinkdebt is the slavery of the free market if you take it toan extreme. There is obviously good debt, there arereasons to go into debt to build a stadium orsomething like the approach that Arsenal have takento building Emirates and then selling off their oldground and gradually getting back into financialbalance, but debt for the sake of it is troublesome overthe long term. I think we should be looking at ideasfor how to control that without stifling the inherentsuccess of the underlying leagues, which I am proudof.

Q394 Paul Farrelly: I have a couple more questionsabout the FA. I think we are quite clear on what youwould like to see. It is going way beyond Burns andhaving an independent FA. What would be the bestmodel in professional sport or professional football,possibly from overseas, that you would compare yourideas with?Ian Watmore: I don’t think there is a particular sportsmodel where I would go, “Yes, that’s the one tofollow”. Each of them has their flaws. The Germanfootball one is a great one but it could be challengedon the strength of its primary league. The Spanishproduce great clubs but one of the reasons they dothat is they skew all their television money towardsBarcelona and Real Madrid and not through the restof the league, while the Premier League is very goodat flattening its distribution of cash from top tobottom. We all know that most of the other sports,England cricket, English rugby and so on, have hadsome of the same problems. It has emerged from oneplace into another. I think the thing that makesfootball in this country different is the global successof the Premier League makes it such adisproportionately big event. To some football fansnow club football is what they watch in preference tointernational football and in almost all the other sportsit is the other way round. Even today club rugbyhasn’t reached the point where it dominates nationalrugby.So I don’t think there is an obvious one. I looked atthe States models and talked to Ivan Gazidis whocame out of major league soccer in the States. Thereare some things there but it is a closed system thereand I don’t think we have that. So I think we have tofall back on the fact we have the model we have withstrong leagues and a national association. If you putgovernance around the national association, like youwould a top PLC company, which is half executive,half non-exec, where the non-execs are chosen fortheir independence and their skills, I think you have areal chance that the national association could thrivewithout killing off the other two things.

Q395 Paul Farrelly: Under the governancearrangements, would you like to place the FA Council




in the position of a supporters’ trust with a club whereit may be consulted but it doesn’t necessarily haveany—Ian Watmore: I think I argue that it needs to cedemore powers to this independent board and not be theultimate parliament of football, but I wouldn’t do thatwithout the independence, because at the moment it’sa check and balance thing that is there to stopridiculous things happening. But I do like the peopleon the FA Council, not just because I like themindividually but they do have a real breadth andwealth of experience and I think we should tap into it.

Q396 Paul Farrelly: My final question is that thecoalition agreement talks about supporting the co-operative ownership of football by supporters. Myparty’s manifesto, for whatever reason, talks aboutmutualism at the heart of football as well. What is sospecial about football that we, as a committee, shouldbe making any recommendations about the futuredirection of the FA at all?Ian Watmore: That is perhaps a question for you, butI think the difference between football and othersports in this country is it does occupy a greaterimportance to people up and down the land en masse,whether it is playing or refereeing or watching ortalking about it in the pub or helping your kidsthrough or finding a way if you’re disabled intoparticipative sport. It is just massively impactful onBritish life, and it is British life not just English life.I think it is therefore appropriate that the Parliamentof the day should have a view on whether somethingthat important to the people is in a healthy state. If itis not it should certainly ask questions and then itshould decide whether it goes further than that andmake recommendations and even laws.

Q397 Dr Coffey: You were quite glowing about theGerman game earlier and the German FA. They donot have any independent directors on their board, sois it about structure or is it about personality andpeople?Ian Watmore: I think the lack of independence inGermany is because they have bundled everythingtogether. It is one integrated organisation where theylook at the whole. We have separated. We might aswell recognise that, and that the Premier League is aself-standing entity under its own right. It istechnically called the FA Premier League, but toeverybody in the world it is the EPL or the PL. TheFootball League has reinvented itself massivelysuccessfully after the ITV digital fiasco, and we havethe national association, that is the oldest one in thegame. It annoys people around the world that it’s notcalled the England FA, it is the FA, a bit like the Open

Golf Challenge, it is not the British Open. It is theoldest; it is 150 years old in 2013. I don’t think weshould be trying to push all of those organisationsback together à la Germany. You might take adifferent view. I think we can achieve the success ofthe Premier League and the success of the FA bygiving it strength and teeth, and I think that comesfrom independence, but you may form a differentview.Chair: Thank you, that has been very helpful.

Q398 Jim Sheridan: You spoke earlier about avested interest in the FA. There is no one with morevested interest than the fans, is there, or should therebe a structure that involves some sort of interactionwith the fans and the FA?Ian Watmore: I think that is a great question. I arguevery strongly yes, that whatever the FA is, it shouldbe consulting with the fans and the players, the massparticipation of the game as well; it is not just fans, itis players, Sunday morning kids and parents and thatsort of thing. I think the FA needs a much better wayof consulting with and engaging with those people.There are groups, as you know, like the FootballSupporters’ Federation and those sorts of things whereI think that there is a councillor slot on the FA Councilfor at least one of those groups. They have a role toplay, but they are campaigning on particular issuesand I think they tend to attract people who arepassionate and fanatical about the way sport is run, sothey have an interesting view to tap into, but I thinkthe FA needs to find ways of engaging with the broadmass of the public. I would say a bit like inGovernment these days, people are lookingincreasingly to the social media as a way of tappinginto people. I think football needs to do that muchmore broadly.

Q399 Jim Sheridan: Secondly—hopefully a yes orno answer on this—after listening to what you havehad to say today, would it be proper to assume or doyou feel that at any time that you, and subsequentlythe FA, were bullied by the Premier League, or byindividuals 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 easilybullied, so—Jim Sheridan: Were there attempts to bully you?Ian Watmore: I don’t recognise bullying. People haveargued passionately the opposite case and people havebecome frustrated when I have made my point, but Ididn’t personally ever regard I was bullied.Chair: Thank you very much.Ian Watmore: Thank you.




Witnesses: Richard Bevan, Chief Executive, League Managers Association, Steve Coppell, Former Managerof Reading, and Martin O’Neill OBE, Former Manager of Aston Villa, gave evidence.

Q400 Chair: For the second part of this morning’ssession, can I welcome Richard Bevan, the ChiefExecutive of the League Managers Association, withMartin O’Neill and Steve Coppell? Your organisationrepresents managers from the Premier League andthen goes all the way down to League 2. Can you justset out what you see as the main issues affecting themand to what extent they differ between the top and thebottom of the pyramid?Richard Bevan: Yes, on the main issues affecting themanagers, the LMA’s history goes back to 1919. Itused to be the League Secretaries and LeagueManagers Association. The LMA was formallylaunched in 1992. I think probably the biggest changesince 1992 will simply be employment issues. That isthe key one. The average tenure of the job back in1992 was about three and a half years. It is now sittingat 14, 15 months—I think I am about to lose amanager in the next five minutes as well. But also inthe Football League last season, the average tenure ofa sacked manager was around about 10 months. Ithink a very worrying stat for the game, which isreflective of the game and worrying for all thestakeholders, is that there are about 46 clubs at themoment that have a manager that has been in placefor less than 11 months. If you take the manager beingthe most important person at the club, as the one thatgets the sack most regularly when things go wrong,then you have to presume that is very bad news for thegame. Certainly in a business corporate environment,politics and any other environment, that would besomething that you would have to address fairlyquickly at the top.Secondly, not particularly sexy issues but veryimportant issues, many of our managers don’t getprivate healthcare, so in the LMA we recently set upa health trust. We now have 60 managers in that. Ifyou can imagine getting the sack every 12 months andyou are out of work for, on average, 16 months, youhave to make sure that there is healthcare as well asother basic needs. So the LMA is very much a familyfrom that perspective.Thirdly, I think very importantly, what we are tryingto change is our ability to collectively take the viewsof our members and to lobby both at home andinternationally across Europe. We have 91 managersin 30-odd countries. I think it is somewhat ironic thattoday in UEFA they are voting on new members ofthe UEFA executive. There are 13 nominees for sevenplaces, and out of those 13 nominees, there are fiveex-players that have been nominated by differentcountries around Europe by different FAs. The FA hasnever nominated any ex-player, nor to my knowledgehas it ever had an ex-player on the board. Even TrevorBrooking isn’t on the board of the FA. I think whatyou need, like Mr Platini did representing France, youneed to make sure that you have young, energeticpeople, not people, with all respect, in their 70sjoining the UEFA executive. So over a period of 10years, or 15 years, we can try to ensure that we get toa much better position, that we can help influence thegame in a better way. Perhaps taking our stock at the

moment, the Under-21 Championships, we went in forthat alongside Wales, Bulgaria and a couple of othercountries and it was recently awarded to Israel, so thatprobably reflects where we are at.Lastly, we are in regular communication now withcoaches across Europe. We are setting up a numberof meetings and think-tanks and we do intend to beproactive. In many ways, like it or not, with somestakeholders, the LMA, the players and perhaps thesupporters as well are probably the best policemen inthe game at the moment.

Q401 Chair: Can I come back to the first point youmade about the ever-diminishing average tenure of afootball manager? To what do you attribute that andis there anything you can do about it?Richard Bevan: There are a number of things that Iattribute it to, mainly the world we live in, the lack ofmanaging expectations at a certain number of clubs,the 24/7, the pressure, the financial issues as well, thereward for getting into the Premier League are nowreportedly in the region of £90 million. Equally, if youget relegation or even going out of the league, thepressures will be different, and they are exaggeratedby the very nature that we are living in a 24/7 mediaworld 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 arepushing for standard contracts. We are encouragingour managers to have the objectives of the club verymuch written in writing, “What are we looking toachieve in three months, six months, 12 months?” andhelping to manage those expectations, and veryimportantly, the LMA is very much moving into therole of developing training, coaching and managementeducation. We are moving into the National FootballCentre in July next year, and along with three businessschools, we intend to build upon the leadershipmanagement. We have recently been working withcompanies, major plcs in the country such as Castrol,Barclays, Jaguar and a number of other companies,because we are looking to bring that leadership modelin, because there are probably three aspects of beinga football manager in what I have learnt in the lastthree years since I’ve joined: leadership, managementand coaching. The FA are very much delivering thecoaching and education and we are going to bedelivering the management and the leadershiptraining.The total spend in football is embarrassing for thegame. Less than £750,000 is spent on the developmentof our technical staff—that includes referees—interms of technical training. We did a recent report withthe Warwick Business School on the film industry, thecomparison between the film industry and football.Very similar, £3 billion turnover—the entertainers, ifyou like—and in the film industry, they spend aroundabout 5%, 6% of their turnover on training of theirtechnical staff, which is fantastic, because that is whyour British technicians are wanted all around theworld, and that is why we are winning Oscars. Sohopefully if you were to look at the LMA in five



22 March 2011 Richard Bevan, Steve Coppell and Martin O'Neill OBE

years’ time, you will see it is very much focused onthe delivery of coaching and management. I think ifwe achieve anything like the goals we have setourselves, then we will improve longevity, because wewill prepare our managers better.

Q402 Mr Sanders: Can I ask Steve and Martin yourexperience of management? Is it becoming harder forclubs to bridge the gap between the Championshipand the Premier League?Steve Coppell: I would say most definitely without theinput of a benevolent millionaire who would invest,as we spoke before, the massive sums of money. Inmy experience at my club with Sir John Madejski, atReading in particular we tried to bridge that gulf, andeven though he is a wealthy man, his ideal all alongwas the club should sustain itself, which it can dovery successfully at one level, but when you get to thePremiership now, the Premiership is without doubt apower league. You can more or less forecast who isgoing to finish in what position at the start of any oneseason, based on the power reference of each clubwithin that league. There are always one or twoexceptions, but that cannot be sustained without thefinances involved. So to answer your question, Iwould say most definitely it is very, very difficult togo beyond the one or possibly two seasons’ successwithout the input of substantial funds.

Q403 Mr Sanders: Can I ask, Martin, is it possibleto challenge for a Champions League place on aregular basis without a very significant financialoutlay?Martin O’Neill: On a regular basis, I would probablyvery much doubt that. I think statistically it has beenproved that only Everton and Tottenham Hotspurobviously have broken into that top four in the lastseven or eight years. I think it is the dream and I thinkthe dreams are always worth pursuing. I suppose fromthe country where I was born that is what we lived onmost 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 terrificeffort at the moment. First of all, they have done it,and I think it has been a magnificent achievement, notonly in getting there, but what they have done in theirfirst season in the Champions League, now contestingthe quarter-final. So for teams of that ilk, and I amtalking about perhaps maybe tradition, history, crowdsupport, yes, I still believe—Tottenham have shownthe way recently, Everton did it before that—that it ispossible. But on a regular basis without that input, thatfinancial input, it is difficult.

Q404 Mr Sanders: Can we ask why you left AstonVilla?Martin O’Neill: You can, and I would not answer that,primarily because there is a tribunal coming up in thenext month or two and I am not at liberty today tospeak about that, but I appreciate you asking me thequestion and asking about my wellbeing.

Q405 Mr Sanders: In general terms, is there aconnection though to the difficulties and the

competition for wanting to achieve a top four positionand where you are today?Martin O’Neill: You make a very, very good point. Ithink that Richard touched on it. The managing of theexpectation is—well, let me start by saying that theworld in which we live in now seems to be—I onlysay seems to be—instancy. We are looking for instantsuccess and because we have instant access to things,I think the other seems to want to follow, or peoplefeel, if it is there for you, you are capable of doing it.What I am saying is that you set out with a numberof ambitions, a number of goals, you try to achievethose and if you have a little bit of a success early on,then people are looking for more, they are looking formore. I think that that has been the difficulty in thegame. I am not saying that it didn’t exist some yearsago, of course it did, but with the financial situationbeing so, so strong now, the possibility of failure inthe Premiership, the possibility of relegation, then thethoughts of getting into the Champions League, it hasreached a zenith.In my 20 years of management, I have seen a lot ofpositive changes in the game. It is still a wonderful,wonderful game, and, for instance, if you look at thestadium improvements, if you look at the racism thatwe were trying eradicate, all great news. Then I oftenthink to myself, “Well, has the game changed at all?”and I will bring you back to just a little story. About31 years ago, I sat in a dressing room in the CityGround, Nottingham Forest, as a player, and we werepart of a very, very successful team, the team wasgoing very well indeed. In stomped a colourfulmegalomaniac, who had obviously had a bit of anissue that morning with something or someone. Atthat stage, he was the most successful manager in thecountry. He had just won the European Cup, andwithin a couple of months he was about to win anotherEuropean Cup, and he stomped into the dressingroom—now Brian Clough could stomp into anydressing room and he could be irked by anything, butobviously he was chuntering about his board. Theyhad upset him that morning, I don’t know, perhapsbecause they hadn’t given him something that he hadfelt was his due, but he almost read the situation,because there was a number of us who were reachingthat age where we were thinking about management,certainly thinking about coaching, and I think he hadalmost a telegnostic feel about it, because he said, “Ifany of you lads are thinking about management,don’t”. He said, “The only inevitability about this jobis you’ll get the sack.”I wonder whether anything has changed over that 31-year period. Certainly statistically, as Richard talksabout, it wasn’t as severe, managers were gettinglonger in those days, although still getting sacked, butit has reached a level now where I think managing isstill a terrific job but it has become exceptionallydifficult.

Q406 Mr Sanders: Is it more difficult to manageexpectation than it is to manage a football team? Iwonder whether, Richard, I could ask you, whatsupport you give to managers in order to help themmanage expectation.




Richard Bevan: That is a very good question.Managing downwards and managing upwards are ofequal importance, and I think probably the traditionalChairman in football is going. Issues have arisen innegotiating over 100-odd compromise agreements inthe last 12 months or so, because we also represent alot of coaches, we have lost about 36 managers andabout 48 coaches so far this season. One of theproblems is who in the football club am I ultimatelyresponsible to? There seems to be in a lot of clubs,particularly in the Football League, two or threedirectors that have investment in the club, they arehaving a say in the club, that want to play in adifferent way and so I think that is very hard formanagers. In terms of what we are doing about it,particularly when managers are out of work, we havethe Warwick Business School football managementcourse. We are working on 16 three-day modules ofleadership and management, and media training is inthat. Also, we monitor media interviews of ourmanagers and we help them, and some have a greaterneed than others and some have a bigger drive, butwhat I find working for these guys, is that there is amassive appetite for learning. There are 100,000matches of experience between the members. That isa lot of knowledge, a lot of passion and I want to tryand harness that.I think you talked earlier about Europe, and we lookedat Europe, we looked at the way Holland works, welooked at the way Germany works and the one thingthat is very clear—to me, anyway—about Europe isthere are very few turf wars in those countries. Theywork together. Their strategy is more unified and Ithink proper governance, correct and successfulgovernance, is all about participation of thestakeholders in making the right decisions, but gettingthem to embrace those decisions and that doesn’thappen, if at all.

Q407 Paul Farrelly: We have heard from Steveabout John Madejski at Reading, but Martin, can Ijust come back to Aston Villa? I can understand thedifficulty of managing conflicting objectives, such as,“We expect the team to do this, but we are only goingto do this and we are only going to give you this” andsome people might want to take a stand and say, “Icannot fulfil that objective for you”. But if you arelooking at the Premier League and below in the round,take the perspective of just up the M6 from AstonVilla, from my club, Stoke City, for the likes of StokesCity it is an absolutely good thing for people likeRandy Lerner to pull the horns in and not join thesplurge, just as it would be for John Madejski not tojoin the splurge. Because if it is unsustainable, theway all the decisions on transfers and paying people’swages filter down, it affects the financial viability ofall the clubs below, so isn’t it a good thing that thehorns were pulled in in terms of not going on anymore spending sprees?Richard Bevan: Can I answer that question, becausethere is a Premier League managers arbitration and ifMartin answers that question he could conflict himselfout for what is going to be an important tribunal? SoI don’t think you can ask questions that relate to AstonVilla because—

Q408 Paul Farrelly: Let me phrase it generally: is itgenerally a good thing that unsustainable spendingsprees do not happen?Martin O’Neill: I think that Mr Watmore touched onthis, and he talked about the top clubs in thePremiership, where they have been on massivespending sprees, and therefore other teams, to attemptto catch up, proportionately they have to spend somemoney. Now, I accept your point entirely. I believethat football clubs—was it Deloitte that mentionedsomething about the 65% wages to turnover? I thinkthat is something that clubs should aim for andattempt to go for, and I do agree in principle that youcan only deal with what you are able to bring in, andif you cannot compete against Manchester United andyou cannot compete against Chelsea, it doesn’t stopyou attempting to do so, but then I think then that youhave to get some sort of—for want of a better word—reality check. But that doesn’t exist in thePremiership, and you have just mentioned Stoke City.Tony has done a wonderful job there, absolutelywonderful job. The day that they made it into thePremiership was a fantastic day for Stoke, but Stokebelieve that they belong there, even though theyhadn’t been there for quite some time, and now, lastyear, when they finished I think about 10th in theleague, it was terrific. This year, would 11th be goodenough for Stoke City this year? I wonder. I willthrow it back to you.Paul Farrelly: We might come on to that in amoment.Steve Coppell: Can I just add a little bit there? Youcannot compete with the big clubs financially, so youtry and compete at a different level, which is thenurturing and development of talent. Now, again, thebig clubs can spend more money, but you can providea more caring atmosphere with a route through toprogress. I think that is the attraction of the clubs whoare trying to compete against the mega-giants. It is theonly way you can sustain it and perhaps, in the future,if we have more home-grown players demanding tobe in the squads, which I think is a fine developmentfor English football and would protect our nationalteam to some extent in the future, I think that is theway forward.Richard Bevan: Certainly in the Football League, Ithink there is only one club that has just posted aprofit, which is Swansea. There are 653 clubs in 53leagues across Europe and over 50% are losingmoney. So certainly, whether it is under a licence orwhether it is a different type of UEFA financial playrule that is reflected down the leagues, we would verymuch like to see the ability of clubs managing costcontrols to a greater extent.

Q409 Alan Keen: Just a small question about theLMA. I am mindful of what the FA are trying toachieve, and that is to professionalise, not just at theclub managers’ level but coaching and further downso that we can bring people up through the game. Butthere is one problem, sometimes it is managers whosack coaches. A new manager goes into the club andthey quickly get rid of three or four coaches and takeit further down to bring in people that he works wellwith. I can understand that. Martin is known to have




worked with a team of coaches, but how has the LMAapproached it to sort of deal with that? Are you tryingto aim at getting a level within a club where theywould be looked upon as permanent coaches, say withthe under-17s and others, so that a new managercoming in is free to bring his own coaches in at thelevel for the first team coaching and other assistantcoaching, maybe for the reserve sides, so that thatcoherence of tactics and everything else is okay, butat least the other people in the club below that levelare fairly safe to pursue their career for five or sixyears or indefinitely, as it were?Richard Bevan: Certainly in 1992, when GrahamTaylor, Howard Wilkinson, Lawrie McMenemy and acouple of others formed the LMA, it was very muchbecause there were issues between coach andmanager, whereas in recent years, it has gone the otherway. We are representing and have represented—employment issues in particular—over 40-oddcoaches so far this season, and those coaches havebeen represented because of the request of themanager. Certainly there are some cases wheremanagers will take their coaches with them. In termsof managing the conflict, I think there is conflict inevery walk of life and it is how you embrace it, so ifwe were dealing with a manager and a coach in thesame club, where there was a breach—I have not hadto do that in three years—we would use separate legaladvisors, as with the PGA, if they were dealing withgolfer on golfer.Steve Coppell: I think you would find as well mostclubs within their academy system have fairly stableenvironments. I think they were designed to not beaffected by the incomings of a new manager, so thedevelopment of young players is very much insulatedfrom who is managing the club. It is not a separateentity, 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 toperpetuate for years. In my own team, Middlesbrough,they set a—Steve Coppell: Yes, development, you’d go todevelopment level, I think. It is the prerogative of anyowner or manager to employ his inner sanctum staff:people, like any relationship, you have to trust, andthat trust is usually developed over time.

Q411 Alan Keen: Even with physio, would the newmanager want to bring his own physio in, forinstance?Martin O’Neill: That is possible. I take your point, inprinciple as much as anything else. Any new managerwho is stepping into a football team and will concernhimself immediately with what the youth team isdoing is deluding himself. He should take himself offto the nearest insanity place, because he is not. He isdealing with football. He is dealing with football firstteam issues. That is what his job consists of. Itconsists of that immediately. If he gets the time, if hegets, as they have often talked about, these five-yearplans—I have never seen one myself—wheresomeone steps in and has time to look and see whatis happening at youth team level, he might get anopportunity to have a look at the youth team within

six or seven weeks of coming into the football cluband then it is up to him to take as much interest or aslittle interest as possible.Steve has made the point that they are usually almostseparate entities and chairmen like them to be separateentities, because the chances are if the manager isgoing, it would be because of first team results,obviously. Yes, a manager will take in some of hisstaff, but surely that is something that the club mustbe thinking about when they are about to sack themanager in the first place.

Q412 Dr Coffey: Mr Coppell and Mr O’Neill, youhave both been exceptionally distinguished playersand successful managers, are you concerned that theinflux of foreign managers is restricting theopportunities 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 havean 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 themoment are working with initiatives to try andeducate our coaches and managers to be better at theircraft so that in the future that won’t be an attractiveoption. The same with our players; to have so few ofour players playing every week, every Saturday in thePremier League I think is something that we shouldbe concerned about as regards the overall picture ofthe success of the national team. I just think it iswrong. We should have more protection within ourgame for talented people. The responsibility is withthe clubs to produce the best home-grown players theycan. It is their responsibility, without doubt, not tocherry-pick around the world and invite those playersto come and take advantage of the finance that hasbeen generated within our game. Similarly, with themanagers and coaches, there should be a more definedroute of progress, educational process, which againthe LMA are taking a lead on, so that when an ownerof a club, whether he be English or foreign, looks atthe contenders out there to run his club, he will say,“Well, the English system is the best system, they givethe best education and time has shown they producethe best results”.Richard Bevan: Can I give two important facts beforeI pass it on to Martin? One, there’s only nine overseasmanagers in the 92 clubs. It is a misconception thereis a lot, but obviously in the same way that the bestplayers in the world want to come and play in thePremier League, so do the best coaches and the bestmanagers. In terms of having an Englishman as ourEnglish manager, there are about 60 Englishmenmanaging in the 92 clubs, and I come back to thetraining point I made earlier: what are the FA doingin terms of vision and strategy for four, five, 10 yearsahead, and are they saying, “Are we identifying thetalent? What are we doing to help train thoseindividuals to improve, so we end up with a dozen orso candidates to become the next England manager?”Martin O’Neill: My view was concurring withSteve’s, but having listened now to Richard and thosestatistics, I think I will keep quiet.




Q413 Dr Coffey: I was going to ask, do you thinkthe FA should restrict the manager to being a UKnational, but I think there seems be consent that thatis true.Steve Coppell: I think the qualification rules for thenational team now should apply to the manager aswell, which doesn’t restrict foreign managers but itmakes it more difficult.Richard Bevan: We have about 10 managers, whoare managers of other national teams as well, Finland,Panama, Uganda, India.Dr Coffey: Tony Adams, Azerbaijan.Richard Bevan: Yes, Thailand, and 90-odd guysworking abroad, so as we train and develop our youngcoaches, they will go abroad to get experience.

Q414 Dr Coffey: From what I have taken from whatyou have suggested, the LMA is taking the leadingrole in educating managers, but should there be moremandatory levels of UEFA licensing, not just in thePremier League, but up and down our leagues?Richard Bevan: If you look at the number of UEFAqualified coaches in this country, it is around about2,700. If you compare that to Germany, it is 32,000,to Spain it is 29,000 and Italy is about 27,000. But Ithink what the National Football Centre will bring isa focus on quality, not quantity, and as well as the ABand the pro licences. We have about 140, 150 coacheswith the pro licence; the figure in other countries inEurope is over 1,000. I think the key for a coach, ayoung coach, and a manager is that there needs to bea clear pathway. If you go to Holland and you wantto become a coach or a manager, there is a very clearpathway of how you go up the ladder. If you have notplayed the game or if you come out of the game earlyand you want to become a coach, there hasn’t beenthat clear pathway. Although we are leading the way,we are not trying to take control of coach andeducation management, what we are trying to do is towork in partnership with FA learning in order toensure that the people we represent get a broadercross-section of training. In League 2, for example, itis my opinion that you need to probably understandthe commerciality of the club if you want to survivelonger than 12 months. You need to understand whatthe ambitions of the Chairman are, you need tounderstand the budgets and the cash flows and maybeeven read a balance sheet.

Q415 Ms Bagshawe: I just want to come in on alittle supplementary to Mr Coppell’s answer there.You said that it is the responsibility of the clubs todevelop players for the national team and that it is agreat shame that we have so few English playersplaying in the Premier League. Would you supportsome kind of quota for English players per team inthe league?Steve Coppell: Yes, I would. I would, to protect ourown talent and to put more emphasis on clubs toproduce the talent that will play for England in thefuture. Again, it is a pathway, as Richard was sayingthere. If you sign for a big club now, you know thatthe big club, unless you are the top of the tree, aregoing to buy somebody from somewhere around theworld, and that makes our league game more

attractive. If you go anywhere in the world, they willbe watching Premier League on the television in theafternoon, so it is that dilemma. But as somebody whoplayed for his country and loves the England team, Iwant the England team to almost run parallel with thesuccess of the leagues. Is it possible? I don’t know,but I think we can just move a little bit more thebalance away from the league itself towards anational team.

Q416 Ms Bagshawe: What about you other twogentlemen, quickly?Martin O’Neill: I think it would improve MrCapello’s choice of a game on a Saturday afternoonanyway, if he is getting to see more English playersplaying in the Premiership.Richard Bevan: Personally, I am less about quotas,less about restrictions. I am more about bettergovernance, better people leading our game, a moreunified approach, an agreed strategy, and if we hadthose, 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 onmerit, and presumably given that it is such a results-orientated business, if the best players are English,they will get in the team; if they are not, they will notget in the team? Do you not think that if you had thiskind of—laudable though it is—aim to force clubs todevelop more English talent, would that not in itselfdamage the Premier League in the sense that one ofthe reasons presumably why there is so much moneyin the Premier League is because of all these starscome from around the world to play in it? That is thething 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, youonly have to go to the top of the tree in the FA, andwhat you need is you have to first of all identifyplayers, identify the talent. Secondly, you have tomake sure they have enough hours to be trained.Thirdly, you have to make sure that the coaches thatare coaching them are the best in Europe, and thepoint where you do need assistance, which is why Iam sure the Premier League have gone for their 25-man squad rule, and the use of a minimum of eightplayers locally, I think that has to do with making surethat the Premier League and the FA have the abilityto—I have just forgotten the thread. The point I wasmaking, the last point, is that you must createopportunities. I think the Premier League and theFootball League, it is about opportunities for ourdomestic players, that is key.Steve Coppell: If the purpose of the English game wasto provide the best and most exciting leaguethroughout the world, I think you could say that wehave been fairly successful, but if the purpose of theEnglish game was also in combination to make a verycompetitive England team, which every two yearswould make us very happy, rather than making usreasonably unhappy, then we have been unsuccessful.We need to try and combine the two, and I don’t evenknow whether it is possible, but I think we can makea better fist of it than we are at the moment. Again, itis all down to that responsibility of clubs and the




Premier League to a certain extent to maybe shift alittle bit of power towards the national game.

Q418 Philip Davies: Can I ask about thequalifications issue for football managers, becauseevery so often it seems there is a controversy. The lastone—Alan will know more about this than me—theone that springs to my mind, I think, was GarethSouthgate, who I think had been appointed as managerof Middlesbrough and he hadn’t gone through all ofhis coaching qualifications and all the rest of it. Wheredo you stand on that? Just because somebody does nothave a particular qualification does not surely meanthat they are not going to be any good at managing afootball club, does it?Richard Bevan: I think if you are going to become asurgeon, you wouldn’t expect a surgeon not to havethe right qualifications.

Q419 Philip Davies: It is the same parallel?Richard Bevan: I think it is a good example, yes. Ifyou take Europe, we are the only country in Europethat doesn’t have mandatory qualifications, althoughthe Premier League do now, and the Football Leaguehave been moving very closely towards that. In GarethSouthgate’s case, it was also because Steve McClarenwas taken by the FA to become the manager ofEngland, and they wanted to promote him through.There have been four or five occasions. What thePremier League are doing is saying that as long as themanager is going through his qualifications, they doon occasions and have made about five or sixexceptions.

Q420 Philip Davies: My reading of the situation isthat somebody like Martin O’Neill has been atremendously successful football manager, notbecause of his coaching qualifications—if you do notmind me saying so—but because of your ability toinspire the people that play in the club, your manmanagement skills. It always strikes me, as anobserver, that the ability to manage people and toinspire them to play better and to fulfil their potentialis a far more important asset in being a successfulfootball manager than necessarily the coachingqualifications that you have. So surely somebody whois a great man manager, somebody who inspirespeople, who might not have all of the coachingqualifications, I put it to you would prove ultimatelyto be a more successful manager than somebody whocannot inspire the players in the same way but has allthe coaching qualifications.Richard Bevan: I think the point you are making is agood one. At the same time though, being a successfulmanager is about leadership, management andcoaching: can you teach leaders to be better leaders,can you teach managers to be better managers? Ofcourse you can, and in business, if you were going tobe looking at any of the plcs, do they train their seniorteam, their managers? Yes, they do. So you want toprovide the opportunity for a coach to have as manyqualifications, to have as much learning as possible tosurvive and be as successful as he can as anindividual.

Steve Coppell: You need to have qualifications. Youcan’t just say, “Open house, who do we want to bemanager next week?” I think it is a requirement ofthe trade that you do have some basic knowledge ofcoaching techniques. As you say, it is all about manmanagement. I am not sure whether Fergie has all hiscoaching badges, but you look at the success he hashad down to man management. Gareth Southgate hadspent 15 years in the industry as a player. It is anatural progression. He wasn’t a rookie by any means.He had been in many dressing rooms with many topmanagers and obviously learnt an awful lot fromthem. So I would say qualifications, yes, but itshouldn’t not allow people with man managementabilities to be able to do the job.Richard Bevan: There is also a big appetite amongour members. We recently had the Royal Marinesworking on a particular course with our guys, therewere about 40 members. We run coaching clinics and,in my time, there have never been fewer than 70managers and coaches turning up on one particularday. 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 mentionedthat. I am beginning to agree with you. I have alwaysbeen a bit sceptical about—Richard won’t like me forsaying this—the licence, the procedure you gothrough. I do accept it. I accept because, again, youhave to do something about it. It might be the worstanalogy in the world, but it might be a bit like gettinga driving licence, you have to pass the test at somestage or another. Will that be how you drive in thenext two or three years? Well, if it is anything to dowith my driving, it certainly wouldn’t be, but I thinkthat there are certain things that you can learn duringthese courses. I must admit, I don’t have my licencemyself at this minute, and hopefully it won’t debar mefrom going back into the Premiership. I will certainlydo it, but I will do it because I want to do it. I wantto do it, because there are things that I can learn fromit. Now, I don’t for one minute suggest that when Itake a coaching course just for the purpose of passingan exam—it will give me that experience, of course,but will that be any good to me in the heat of themoment when I am having to make a decision as towhether a game can be won? I am not so sure. Maybethat is just experience, but I do accept the point. Ididn’t always think this, but I am coming round moreto thinking that the licence is there for a purpose. Asyou say, I am not even sure that Alex Ferguson hasthis particular badge. It hasn’t prevented him frombeing one of the greatest managers of all time, and Iam still debating the point.Richard Bevan: Well, 50% of first-time managersnever get back into the game when they get the sack,and so—

Q421 Philip Davies: I was going to move on to therespect bit, because as we have mentioned AlexFerguson, it seemed a good point to ask just briefly—the FA tried to introduce a respect campaign to helpthe amateur game as well, parents not having a go atthe referee and all this kind of thing. As we touchedon Alex Ferguson, what is the League ManagersAssociation doing to make sure that managers set the




best example of all to their players, which is not tochallenge the referee’s decisions, that the playerstherefore do not challenge the referee’s decisions,because unless the managers and the players at thehighest levels of football show some respect to thereferee, there is no chance of anybody lower down thechain doing it.Richard Bevan: The Respect programme is a veryimportant programme, and when the FA and LordTriesman launched it, we were, and still are, verysupportive. I was in a meeting yesterday, and ampleased to see that the results of the Respectprogramme have been working, that there has beenturnaround in terms of the amount of referees, therewere about 7,000 amateur referees leaving the game ayear, that has been turned round.In terms of managing at the very top and thevolcano—I think they call it, sitting on a volcano—attimes there will always be moments of high emotion,but behind the scenes our guys are extremely hard-working. We have completed a document and we havemeetings on a regular basis with the PGMOL, thebody that works with the referees. We had 80managers working over 500 hours, chaired by GregDyke, where we came up with a number ofrecommendations on how we could help referees, andthat is on an ongoing basis.Steve Coppell: The only thing I would say, after agame that has been very intense and the be-all andend-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 verydifficult to be even-tempered and conclusive aboutwhat happened. So I think it is just the passion of themoment. It is what makes our game, it is what all thesupporters want to see, they want to see themanagement team show passion. Sometimes wordsdon’t come out the way you would mean, but I don’tthink it is a bad thing. I think there is an awful lot ofrespect emanating—certainly I call Sir Alex the donof managers. He is the don of managers. He does somuch for the game that is positive and I think so manyof the top managers are of that ilk, but just for 20minutes sometimes you just don’t think straight.Richard Bevan: These guys do a fantastic amount ofwork, as I said earlier, behind the scenes, andsomething that people are not aware of is we havebeen debating for the last three, four weeks in termsof what happens in post-match interviews, in terms ofnot answering any questions regarding the referee.They tried that in Scotland recently and it didn’t holdtogether, but it is something that we are looking at.There was a case with one manager that said after theFA Cup match that he didn’t want to complete theinterview, but he was told that he was legallycontracted to do that, which wasn’t the case in the FACup, and, again, his emotions were very high. Youlook at the likes of Peter Jackson up at Bradford, hehas three or four games to prove his worth up thereand to hopefully get a full-time contract there runningthe club, not as a caretaker manager, and one decisioncould affect that. But it is an entertainment world. Atthe same time, our guys behind the scenes do verymuch care, they are very positive about it. As I said,

we had a five, six-hour meeting on the subjectyesterday.

Q422 Damian Collins: There has been a lot ofdiscussion about debt and profits in the game. Howmuch pressure is there on football managers to spendmore money?Steve Coppell: That is a good question. There is anawful lot of pressure on most managers not to spendmoney. There are very few occasions where aChairman has said to me, “Well, why aren’t youspending the money that I’ve given you?” The realityis I think you know you have to compete. I think mostmanagers, given the opportunity to spend money,would rather see that money running around on thepitch than sitting in a bank account gathering interestand looking after the financial security of their club inthe future. You know you are managing in the instantand you have to get results. You are judged on results,so if you get the opportunity to spend money—butagain, I have never known a Chairman who hasallowed me to spend more than he has offered.

Q423 Damian Collins: But you must know in yourconversations with the chairmen of football clubs thatif they have an ambition to reach a certain level, it isgoing to cost them money, and if a manager wants tostay in a job beyond the end of the season, he knowshe 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 themoney, you buy the best players and then you havethe best team. It’s easy”. But most clubs don’t havethe freedom of the finances to be able to do that, soevery judgement call you make then is just trying toget the best value for the money you spend, and thatis the art of management.

Q424 Damian Collins: Mr O’Neill, I think it wasreported you spent £120 million in four years at AstonVilla, and that was not enough even to get into theChampions League, but to get within touchingdistance of it. I appreciate you cannot talk about Villadirectly, but I would be interested in your views onthis: are managers in a position where effectively theyare driving debt within the game, because they haveto be advocates for spending more money?Martin O’Neill: Well, one thing I will say, the figurewas much, much less. What generally happens in afootball club is they talk about the amount of moneythat is spent on players coming in. What they forgetto do is that you have to attempt to balance somecapacity by letting other players go, and in actual factthe figure that we are talking about was closer to £70million net over four years. Yes, there is seemingly anoutside pressure, there is a pressure from supporterswho feel that when a club is taken over, the owner,the Chairman, has just carte blanche to put this into adifferent stratosphere when, in actual fact, mostpeople would want to run football clubs as a business.As Steve has just mentioned, I am not so sure thatthere have been that many chairmen who would say,“Well, here’s a spare £50 million. Go out and see whatyou can do with it”. I think that prudence seems to bethe key word these days. But, yes, it is a difficult one.




You have to try and compete at some stage or anotherand if you feel that there is something out there,someone out there who can help, of course you willhave these discussions. But the owner of the footballclub will have the ultimate sanction.

Q425 Damian Collins: Do football clubs have astrategy beyond spending as much money as they canto try and sustain a league position? Some clubs arestriving to either get into the Premier League orcompete at a higher level within it. You have talkedabout youth football and other things within the club,and clubs have limited resources. It would strike methat a club would need a strategy to say, “We have acertain amount we can spend. There is a certainamount that has to come from internal developmentwithin the club, a certain amount we have to raisethrough a better commercial strategy”. Do clubs haveserious strategies like that, and given the managementmight be there for a relatively short period of time,what role does the manager have in that?Richard Bevan: That will vary dramatically from oneclub to another, and there are some very goodchairmen and boards out there. We spoke earlier abouta 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 DoncasterRovers and numerous chairmen and boards are verytalented and have very successful models in that theycan break even at the club and operate in a positivecash flow. I think it will depend upon the boards. Ifind that particularly on the employment tribunals andthe legal issues we have. About a third of the clubsare probably struggling with some of the quality ofthe leaders of their clubs and the way that they operatetheir model.

Q426 Damian Collins: Mr O’Neill, do you think wewill ever again see a club like Nottingham Forest witha European Cup?Martin O’Neill: Funnily enough, I was thinking aboutthat last night. Again, it is a dream. I think it is highlyunlikely, highly unlikely, the way that football hasgone in the last 20 years, and I think that would be ashame. It doesn’t mean that there couldn’t be amanager who could bring all of these things to pass.You could inherit a very, very good youth team in acouple of years who might come through, if they sticktogether, and I am talking about the ManchesterUnited side of about 1994, 1995 time, but I supposethat was at Manchester United. Nottingham Forest area provincial football club, steeped in the history nowwith two European Cups. I don’t think it isimpossible, but I think it is highly unlikely, certainlyin the 20 years.Richard Bevan: Perhaps the expectation has comeaway from winning the Champions League to gettinginto the Champions League, as Everton did in 2008,and getting to the last 16. That was obviously amajor success.

Q427 Damian Collins: I record for the record thatSteve Coppell was giving a no to that.Steve Coppell: That was a massive no. Absolutelyimpossible without the massive support of a

benefactor. If you are producing a team, if you have agreat youth team then in the next transfer window youlose your three best players. It is the very nature offootball now.Damian Collins: One final question, if I may, I knowwe are getting tight on time.Martin O’Neill: I wasn’t expecting him to be asstrong as that.

Q428 Damian Collins: I could see him vigorouslyshaking his head, so I thought I would give him thechance to put it on the record. One topic that we havetalked about quite a lot in previous hearings is thefootball creditors rule, and when we discussed it withthe Premiership chairmen and Chief Executives theyexpressed a view they thought the rule should go, andthat without the football creditors rule clubs would,out of necessity, need to be more transparent in theway they deal with each other. Clubs would be morecautious about selling a player to a club if they didn’tknow that that club had the money to pay for thatplayer and that it would be fairer, because it seemsunfair that a football club with smaller creditors fromthe community that they serve lose out when afootball club the other end of the country is protectedby it. As managers, I would be interested in yourviews on that. If the football creditors rule went, doyou think it would make a difference to the way youdo your jobs and do you think it would be good forthe game?Richard Bevan: First of all, before I pass on to theseguys the football creditors rule doesn’t apply tomanagers and coaches. It is obviously something thathas had a lot of debate recently and probably stillneeds to have more debate, but I think that wouldcome if the clubs could have a licence, in looking athow they would operate. But it does need a debate,and certainly the man in the street running the smallprinting business and not getting paid is an issue intoday’s commercial society around football.Martin O’Neill: Are you referring perhaps totransparency? For instance, I have never understoodthis idea about a player being sold to another cluband it was a non-disclosed fee. I have never been intothat idea.

Q429 Damian Collins: No, I think what I wasreferring to is if a player is sold to a club and thatclub might be in financial difficulties. The footballclub selling might not be as concerned that it mightnot get its money if the payment was being paid ininstalments, because they are protected by the footballcreditors rule, but if that rule didn’t exist a club mightwant to know a lot more about how a club is going topay for that player.Martin O’Neill: Obviously.In the temporary absence of the Chairman, Mr

Adrian Sanders was called to theChair for the remainder of the meeting.

Q430 Mr Sanders: If the Chair were here, he wouldbe calling on me to ask the next question, which iswhat impact has the increased level of overseasownership had on standards of governance in theEnglish game?




Richard Bevan: We have about 11 or 12 overseasowners in the Premier League. To be honest, whetherthe owner comes from America, Birmingham,Australia, Wales, wherever they come from, I thinkthat they need to be operating within a much tighterenvironment. We would like to see a licence goingfrom the FA to clubs, a framework where a newowner, wherever he came from, had to work withinmuch closer guidelines, and that would protect thefuture of the club and also give more integrity.Certainly, there are the UEFA fair play rules, and thereare still some issues around ownership and offshoreownership and transparency. But I think it is not somuch about overseas owners, it is more about thequality and making sure the framework is correct. Ifyou do have overseas owners coming on board, as wehave recently, I think we have to—the leagues and theFA and the media—impart upon them the importanceof the tradition, the philosophy, the supporters and theactual community, and I think if we do that—in manyways the Government are also a union for supporters.It is representing—

Q431 Mr Sanders: Would you see this in place ofthe fit and proper test or is it in addition to the fit andproper persons?Richard Bevan: Do you mean the licence?Mr Sanders: Yes.Richard Bevan: The fit and proper persons test or thedirector test, I see that as part of a licence.Steve Coppell: I think good governance is all aboutprotection. You have to protect the people within thegame and I think the people who need to be protectedon this particular point are the supporters, because thatis the only loyalty in football, the supporter for hisown club. Almost every other loyalty can be bought,but the supporter for his own club, when he is at thewhim of bad governance then he is vulnerable and Ithink everybody within the game is going to be verymindful of that.

Q432 Mr Sanders: Martin, can I ask you, becauseyou are in a unique position. You will haveexperienced a club run as a committee at NottinghamForest; you have experienced the traditional Englishclub ownership model under, say, Doug Ellis; and youwill have experienced foreign ownership at AstonVilla. How would you compare the differencesbetween the three?Martin O’Neill: Yes, I joined Nottingham Forest wayback in 1971 as a 19 year old player and they werethe only team in the Football League who were runby a committee. That of course, changed in—you maysay it might have changed about 1990-odd orwhatever it was. It changed in January of 1975 whenBrian Clough arrived, because it was no longer acommittee, it was his decision. It was interesting forthose couple of years to see how that committee wasrun. Of course, I was a young professional footballerat the time, more interested in trying to break intothe first team, but I did not know the basic differencebetween that and the board. I felt that the committeeat Nottingham Forest seemed to run itself reasonablywell at that stage. It did not find itself in serious debtuntil 1979, when they decided to build the East Stand.

They needed £2 million, would you believe, and Ithink they found a little bit of difficulty, and evenwinning the European Cup at that time did not coverthe cost. So that was the first time that I realised thatthe committee could find itself in a bit of difficulty, ofcourse there were shareholders and such things likethat.I have been involved with football clubs where theyhave been run by boards. I have been in boardmeetings too; those are interesting in themselves. I getback to the point that Richard and Steve make. If youhave good governance, I think that will transcendmost things, and I think that is the best way for me toexplain it. If the club is run exceptionally well, hastransparency, obviously, and I suppose if the supporterbelieves in the way that club is being run and thinksthat this club can have a future for a start and,secondly, can have some ambition, I believe then thatthat is the best way. If there is a comparison betweenthe three, it would have to do with the governance ofthe club itself, not the way in which it was done.

Q433 Jim Sheridan: Can I ask a question about therole of football players’ agents? We have the extremeexample of Wayne Rooney, who made it known thathe was not happy at Man United and then regainedhis enthusiasm when another couple of zeros wereadded to his contract. You guys depend in your job ongetting the best out of players, they have to remainfocused on what they are supposed to be doing interms of playing football, but if players are beingdistracted by being promised extra money, or movingclubs, or to stop being players, that will impact onyour job, I would imagine. I was trying to get a feelfor what managers think of agents, and should therebe a code of conduct between managers and agents.But also should the manager and the player have thesame agent?Richard Bevan: That is a big question. I think the roleof the agents is something again, a little bit like thegovernance issue, where there will be good and badout there, and we probably experience both. There are400 licensed agencies, I think, in the UK. Our biggestconcern is that FIFA, I think in 2012, is going to berelinquishing their regulatory control over agents, andI think that is going to be a major problem. I think,probably because of legal issues, administrationissues, if you have agents bringing young players fromcountry to country, indeed from continent to continent,you are going to have a lot of issues. Certainly, frommy experience, I have seen a lot of good agentsworking. Probably the biggest negative for me is thesize of agency fees. I think that is something I havebeen extremely surprised at.Steve Coppell: From my experience again, as Richardsaid, there are good and bad. A good agent is a hugeally in dealing with some players, particularly difficultplayers. A bad agent needs to be regulated, and again,that is where you need guidance from your governingbody, to make sure it is not just a code of conduct butactual regulations whereby bad agents are eliminated.Martin O’Neill: You would hope that when you signa player that if he signs, for instance, a four year deal,that you would be hoping that you would have somecontrol of this. I think that this might be a separate




issue, but the control has left the football clubs andgone to the players and therefore the agents. I thinkthat is one of the major changes I have seen in thegame. When I started out, the player had no controlwhatsoever, he was at the behest of the football club.Now it has gone full circle and I think the players arenow in charge, which is a bit of a shame.Richard Bevan: Recently I heard it is a bit like thewild west out there, we can’t do anything about it, weare where we are, and I think that is an inappropriateapproach to it.

Q434 Jim Sheridan: I think the fundamentalproblem as I see it is that there is an incentive foragents to move players on, simply because of thecommission they get, so it is in their interest to keepmoving players on. The other factor is the fact thatthe agent also is paid by the club. Would it be fairerif the player pays the agent rather than the club?Richard Bevan: I think you probably need to look atother models around the world and pick upexperiences. For instance, if you take America, in anumber of sports the agents’ fees are paid centrally. Iam not necessarily saying that is the right way to go,I am just saying there needs to be a focus on theframework and if there is not it will be chaos.

Q435 Jim Sheridan: Steve, you say you think thatagents 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 Bosmanruling has had an inflationary impact on players’wages?Martin O’Neill: Yes, I do. Interestingly, I think thatyou can trace an awful lot of these questions todayback to Bosman. Bosman set out in the first place withright on his side, because he had been given a freetransfer, his money for the following year was goingto be less than the previous year. In English footballhe would have been given a free transfer and thereforehe would have been free to negotiate another deal withsomeone else. But he was held back. He was heldback by the club, who had freed him, and were notprepared to keep him but were looking for a fee. Hetook this to a higher authority and won his case, andI think quite rightly won his case. Had he been dealtwith in England, it would have been perfectly all right.But suddenly, just from that, the fallout from that wasextensive, so much so that we were possibly debatingthe idea that football itself could have its own rules,and I think there is certainly a case for that. Becausethe minute that there was a possibility of a playerhaving a bit of a difficulty with his contract, suddenlyhe could go to European law, and find a loopholethere, and sort things out. Clubs were finding outloopholes as they were going along. For instance, aplayer with two years left of his contract was in theposition, by some sort of law—made way back, Ithink, during King John’s time—that he could actuallyget out of his contract, and certainly in his last year,

could buy himself out and agents were using these tomanipulate situations. Bosman himself set out on theside of right, but a lot of fallout from that hashappened. It has triggered a number of situationswhich I believe could have been resolved early on.

Q438 Jim Sheridan: Can I just clarify the question Iasked about, is it unhealthy or bad practice for theplayer and the manager to have the same agent?Steve Coppell: I would say it is bad practice, with thepotential of being unhealthy.Martin O’Neill: Yes, absolutely. Conflict of interestwould almost certainly take place there.Steve Coppell: With the Bosman thing, I think we canrealistically say now, for most good players, a contractis probably at least 12 months short of the reality,because you know you have to protect that asset.

Q439 Damian Collins: You have to renegotiatebefore you get to the last year?Steve Coppell: Yes, very much so. At least 12 months.And that, with the combination of increased TVincome, has made it very inflationary, yes.

Q440 Alan Keen: Because we are short on time, Iam going to try and be brief. It is the main structureof the game in this country that needs changing. Doyou agree that it should be the FA that is the body thatis strengthened so it is superior in power to any otherbody in football? That would be with an LMArepresentative on there as well, of course. But it is theFA surely, that must be strengthened to be theregulating body above any other part of—Richard Bevan: I think, if there is one thing that cancome from the select committee and theencouragement to the game to do various proactivethings, one of them will be to work together to unifythe family and absolutely a pyramid system in whichthe FA are on top. The FA are the representative ofFIFA and UEFA. At the moment the FA just managethe business. Like Ian said earlier, I think a lot of thecriticism of the executive is unfair. In my three yearsI have come across a lot of fantastic executives in theFA and in the Premier League as well, and their speedand their communication and the discussions we haveare very good. Unfortunately, the framework in whichthey operate does not encourage them to beinnovative, proactive and, most importantly, it doesnot encourage leaders. It is the framework that needsto be changed and if you do not change the frameworkthen they will not develop.

Q441 Alan Keen: Do you agree that the PFA also,along with the LMA, should have a representative onthat?Richard Bevan: I think, if you wanted effectivegovernance in the world we live in, whatever sport itwas, if you do not embrace the players, the coaches,and certainly, in our case, the managers, then you willfail in delivering that participation. It is only whenyou get participation in decision making, if youachieve that then you will find people are on the samewavelength and we will deliver far greater success. Alittle bit like, I was talking earlier about Germany and




Holland, where you do not see the turf wars, for wantof a better way of putting it.Martin O’Neill: Richard had said earlier that we dohave the determination, we have the passion, and Ithink we have the knowledge, although that might notbe universally accepted. But I do believe that we havean important role to play, simply because we are, orare supposed to be, the most important person at thefootball club.Richard Bevan: I think there has been a fair amountof talk as well, about whether there should beindependent directors. If you had a very efficientstructure in the way we have just been mentioning,then the need for independent directors would notcome out. But you do need, as it stands at the moment,guys who will challenge, and the PFA and the LMArepresent people across all of the leagues. I think thatis very important.

Q442 Alan Keen: Do you agree that the independentdirectors, the sort of people who would be appointed,would listen to you? At the moment you do not havethat voice at the top.Richard Bevan: I think we have the voice, insomuchthat the guys that are members of the LMA have gota powerful voice collectively. We try to use that veryprofessionally, whether it is the professional wayforward document; we have a current review withSouthampton University going on in the technicalarea; we are looking at transfer windows; we arelooking at a whole range of technical issues. But thereis not a technical committee in the FA. The TechnicalControl Board they got rid of in 2006. Then you canlook at the true governance, you have the ProfessionalGame Board, which sits below the FA, and theProfessional Game Board’s remit is the finances of theFA yet the Chief Executive and the Chairman of theFA do not have a vote on that, which is why I believeAdam Crozier resigned.

Q443 Paul Farrelly: We have run over our time, Iam sorry to detain you. I only have two questions onwhich I wanted to seek your views. Firstly, withregard to the game and the FA, we went to Germany,and without being naive and taking everything at facevalue, we got an impression of a more collectiveethos, particularly when we were told the story of howthey reacted to their disappointing performance inEuro 2000, to try and change their game. My specificquestion is about youth development. Do you thinkthat the current proposals for youth development inthe country—with all the different interests involved,including the Premier League—are right, or is theresomething better that we could be doing?Steve Coppell: To be honest, I do not know the answerto that. I know there is progress being made at theacademy level at the moment, and changes are afoot.But in any walk of life you are judged on results andif we are not getting results, if we do not have theinput of young, home-grown players coming throughthe way we would like, to give us a very competitivenational team, then we must change, we must dosomething different. We must have a more innovativeapproach to how we are producing our players ratherthan just leaving the blinkers on and saying this is

what we have done for so many years and we are allright. We have to be more open-minded and flexible,I think.Richard Bevan: Youth development is massivelyimportant. Our Chairman, Howard Wilkinson, whosadly could not be with us today, has a lot of goodthoughts and views which he is imparting upon keypeople in the game. I think the responsibility for youthdevelopment essentially should be with the FA, butthe Premier League are taking some key movementsinto their new academy system. I think what isimportant is that they embrace the Football League,which they are in negotiations with, and I am surethey will come out together. But what is important isthe likes of Watford and Crewe and Southampton andMiddlesbrough. Those clubs are doing fantastic workwith youth development. They are still incentivised,they are still encouraged, and they still see that as animportant role. If you look to Germany, they arespending £500 million on their youth developmentand their structure. But they are more or less oneorganisation and so they do work much closertogether. But I absolutely believe that the PremierLeague are a very efficient organisation. If they wereto work closer with the Football League and indeedwith the FA, giving clear guidelines, then we wouldbe in a better position.

Q444 Paul Farrelly: I am just wondering, Martin,whether over this issue we can square the circle bypersuading people to give away some of their ownmoney and share it out a bit more, if not in their owninterest, then in the national interest?Martin O’Neill: Yes. I did not realise until I read it afew days ago that each member of the German WorldCup side, the 23 players, had actually come through aBundesliga academy system. If you tell me that is afallout from 2000, then that is very, verycommendable, and there are parts that we could pickup from that. Like Steve, I am not really sure—I willonly go from my personal experience at club level, Iam all on for the youth academies. When I went toAston Villa, I did not ask them to go and produce fouror five players within a year. But I hope over timethat we will get some very, very good players comingthrough the football club, and I think that is happeningat 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 five-year plan that a manager and owner or Chairman seemto set out in the very first place, you have to bewinning games at that first team level. And you arehoping by the end of that five-year period that youmight have at least three or four of those youngacademy players playing regularly, consistently wellin your team to hold down a place in a side that isdoing very well.Richard Bevan: The investment in the NationalFootball Centre is fantastic. 1999 was the year whenthe FA bought the land. They probably should havebuilt the National Football Centre then, instead ofbuilding Wembley and wasting £92 million on legalfees around Wembley. That is probably a lack ofstrategy and vision. But the hardest thing I think forthe Premier League and the Football League and the




FA, and indeed any of the other countries that investtime and money in youth development, is creating theopportunities, that is the hardest thing of all. You canfind great coaches, you can invest in those sort ofstructures, but creating the opportunities for theseguys to play is the hard part.

Q445 Paul Farrelly: Burton, the brewing capital ofBritain, in my county of Staffordshire, leads me neatlyto my last question, which is about supporters, whichis what this inquiry really picked up on in the firstplace, from what the Government and various politicalparties were saying in their manifestos. As you allknow, a fortnight, particularly at this stage of theseason, is a long time in football. With Stoke City, ifyou do not beat West Ham in the quarter-finals of theFA Cup to get to the semi, and then if you do not beatNewcastle United 4–0 to stave off the relegationbattle, within a fortnight you can go like Tony Pulisand Peter Coates at Stoke, from walking on water tobeing dead men walking. You hear supposedly saneand rational supporters, who are not idiots, grumblingand you just want to tell them to get a life sometimesand get some perspective. So given that, my questionis, you have been under these pressures, do you likesupporters, and if the answer is yes, what role do youthink they and their organisations have in thegovernance arrangements of clubs in the country?Steve Coppell:We exist to make the supporters happy.They are the people that need to be entertained tocontinue our industry, so they do have a massivevoice. How that should be channelled, I do not know,because, as you mentioned with your own club, it getsalmost so centred to their own team that you can’t seethe bigger picture. But without doubt, we have to keepour customers happy, they are our number one bossesand they have a massive voice to say in the wayfootball in this country is going to be developed in thefuture, whether it be paying through the turnstiles orpaying for TV. Someone with a better footballingbrain than I will determine how that can be done, butthey have to have a say in the way our game isdeveloped.Martin O’Neill: Are you concerned about themadness that Stoke City’s fans are showing at themoment?

Q446 Paul Farrelly: I would not want to single outone club. I am sure it is across a lot of clubs in thesecond half of the division. But the question really is,Martin and Richard, should there be specific structuresimposed, specific models imposed or, within therealms of involving supporters, should the clubs beallowed to evolve their own models?Richard Bevan: Supporters’ trusts operatesuccessfully in a number of clubs, and absolutely they

are key stakeholders. On the board behind you is theword “participation” all the way across. I think it isparticipation—they need to have their voice listenedto, they are absolutely key to the game and the morethat the Football Supporters Federation can get a seatat the right tables, then the better for the game.Martin O’Neill: Steve mentioned earlier, I think itwas a good point, that the only loyalty in football isthe supporter with his football club. I think that theyalways want the best for their football club. They wantthe very, very best. If they have a good manager incharge, they want a better manager in charge. I justthink it is the modern day approach to the game andI listen to the occasional phone-in, the website, thisinstancy. You want to be better, you want to be betterthan the previous week, you want to be better than theprevious day. That fortnight you talked about wherethe manager and Chairman can go from walking onwater to being dead men walking, that exists at everysingle football club. When you have won a fewtrophies, as Sir Alex Ferguson has done, just a few,then I believe that you can transcend that. But we aremere mortals in this game and we have to live withthat. I believe there is a touch of insanity about it, butI do not know how it is going to be eradicated.Supporters are the most important people because theywill still be supporting the football club. How youinvolve them, I do not know. Would you be thinkingabout a renegade group joining the board, orsomething like that? I just really do not know at thisminute, and I have not thought it through.

Q447 Jim Sheridan: I think the sad reality is,everybody I have spoken to agrees that supportersshould have some sort of tangible role in football, butthere is always resistance. It is like the constituentswho always want to play a part in community but theywant it somewhere else. That is exactly what we findwith football. Yes, there should be a role forsupporters, but I am not going to give up my positionto give it to a supporter.Martin O’Neill: I must admit, honestly, I really havenot thought it through.Mr Sanders: I am sorry, gentlemen, I think we mustwrap this up. You said earlier that you thoughtsomebody was going to go imminently. It almostmakes Martin’s point. I believe it is Ronnie Moore atRotherham, who only a few weeks ago was in fifthposition in League Two, and five poor results and itlooks like he has been shown the door today. Can Isay a very big thank you to Steve Coppell, RichardBevan, Martin O’Neill, for giving evidence today. Ithas been a very good session, thank you.

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Members present:


Ms Louise BagshaweDr Thérèse CoffeyDamian Collins

________________


Witnesses: Mr David Bernstein, Chairman, the Football Association, Mr Alex Horne, General Secretary, theFootball Association, gave evidence.

Q448 Chair: Good morning, everybody. This is afurther session of the Committee’s inquiry intofootball governance and I thank the FA for inviting usto Wembley to hold this morning’s session. Iwelcome, as part of our first panel, David Bernstein,the new chairman of the Football Association, andAlex Horne, the general secretary. Mr Bernstein, youare relatively new in post. Can you set out how youwish to see the FA develop in the coming months?David Bernstein: Yes indeed. First, may I say howpleased we are that we have been able to play thisfixture at home? There is a great deal, clearly, thatneeds to be done in football and we believe that theFA should be a leader and seen to be the leader of thegame in this country and should provide, in manyways, what might perhaps be dangerously describedas moral leadership as well.We are taking this inquiry extremely seriously andobviously the recommendations that you comethrough with and the Government come through withwe will listen to with the greatest of care. When I tookthis position, I knew that the status quo was not anoption, that some change is necessary, but the changeneeds to be for the right reasons and at the right pace.I am confident that Alex, whom I have worked within different capacities for a number of years, and I candeliver that change.There were five themes that I identified very quicklyas part of the agenda that I want to pursue. The firstdeals with football in terms of Club England, that is,the international side of football, the first team and theother teams that we have, and youth developmentwhich clearly is vital; I am sure we will come to lateron. Secondly is respect, because the respect side ofthe game is very important to me. There is a hugeamount of what we have done at the bottom end butI think that those at the top end of the game that needaddressing. Also I suppose respect for the FA becauseperhaps one of the reasons we are here today is thatthere are some questions about that. Thirdly,governance which is obviously one of the key mattersfor today. Fourthly, relationships, both in terms ofoverseas relationships and relationships within theUK. Finally, efficiency because I think in terms ofrunning the organisation efficiently and prioritisationof resources, there is a great deal to be done there.Those are the five themes that I have come up withearly on, and while only two months have gone, I feelthey are reinforced by those two months and itrevolves around those five issues.

Paul FarrellyAlan KeenJim Sheridan

Q449 Chair: Alex Horne, you will have heard theevidence we have received from predecessors in yourposition, particularly Ian Watmore, who said he wasneither a chief nor an executive. You changed yourtitle to “general secretary”, I note. Do you have somesympathy with that comment? Do you agree that yourjob is nigh on impossible?Alex Horne: No, I do not agree that it is nigh onimpossible. I understand some of the frustrations thatIan experienced, but in the year since Ian left we haveachieved an awful lot as a team of executive. We havedelivered against a stretching business plan across allthe divisions in the organisation and, most notably, forthe first time in the 11 years that we have been talkingabout it, we have moved forward with thedevelopment of our St George’s Park NationalFootball Centre, our home for coaches nationwide,which will change fundamentally our approach toyouth development in this country. We have delivereda 25-point plan for youth development withrecommendations stretching right across the game,showing that the game can work together and, as ithappens, we have delivered a Desso pitch here atWembley and we have a very, very good playingsurface. With a bit of patience, we have delivered alot in the last year.

Q450 Chair: But do you see scope for furtherchanges?Alex Horne: As David has outlined, the status quo isnot an option; we have already put forwardrecommendations for further independent directors onthe board. What we have done as well is to put anumber of independents into our structure at what Ibelieve are the right places. For example, we haveindependent directors on the Wembley board.Operating an asset of this nature holding multipleevents requires specific skill sets and we have lookedfor directors who have those skill sets.We have done the same thing with our St George’sPark development and also with our FootballRegulatory Authority where the body responsible forsetting the rules across the game has a balance ofprofessional game, national game and independentmembers. We are not averse to change. We haveindependents in a number of places, but we shouldnever be complacent about looking at that structure.Chair: Okay, we are going to come on to a numberof those issues.

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29 March 2011 Mr David Bernstein and Mr Alex Horne

Q451 Paul Farrelly: The reason we started thisinquiry was that the coalition Government, followingeach party’s manifesto, put in a commitment toencourage more supporter involvement but it clearlydid not have much of an idea as to how to do it, so wehave stepped in to give it some thought. A question toboth of you: what role, if any, does the FA consider isright for supporters in either the running orgovernance of football clubs?David Bernstein: As with many of these questions, itis a more complex question than perhaps first meetsthe eye. There are a number of different levels ofsupporter involvement. The first would beinformation; undoubtedly, supporters are entitled tofull information from their clubs—a proper dialogue,whether it be financial or about ownership. They areabsolutely key stakeholders and there should be a veryfree flow of information between clubs andsupporters. I think anything less than that isunacceptable.Board representation varies greatly from club to cluband I have already met some supporter organisations;I met with the Arsenal Fanshare people who run avery sophisticated supporters scheme. I was mostimpressed with them with what they are doing and ofcourse also with Arsenal who are a very progressiveclub in these matters. They do not want boardrepresentation in that particular case; they are notlooking for it. I think that board representation couldbe, in some cases in some clubs, highly desirable, inothers it could be risky for supporters; there are someboards that they may better not be on. I don’t thinkthere is one rule for all. I think in some cases boardrepresentation is a good thing. In others, I think it maybe less desirable.The other key area of course is shareholderrepresentation and one needs to distinguish between acontrolling holding by supporters or minoritysupporter shareholdings. I think on the whole minorityholdings, where possible, are quite desirable. Aschairman of Manchester City, we were a publiccompany. When I was chairman, we had 5,000shareholders. We had an AGM where 800shareholders turned up and I was very, very proud ofthat and I was very disappointed, in many ways, whenthe club was taken over and all the shareholders wereremoved to a single ownership.I think controlling shareholding, however, is a difficultone and it will depend very much on the club and thestate of the club. I have already been round thecountry visiting quite a few clubs, one or two outsidethe League, and there is, we all know, a hugeimbalance of finances within many clubs, both Leagueclubs and non-League clubs. My concern would bethat if supporters rush in to ownership they may findthat they are involved in something that is rather morethan they expected; the funds have to go in thebeginning and then, maybe, depending on whathappens in the financial areas—I am sure we will betalking about it later on—the funds need to be put inyear after year and we all know that many ownersare subsidising their clubs year on year. That is not asituation I suspect supporters would want. I think it iscomplex. Clearly, more involvement is better than lessinvolvement, but I don’t think there’s one rule for all.

Alex Horne: That was very comprehensive, but I canadd that I think what we would seek to see are nobarriers to entry to these models, if supporters go intothem eyes wide open and they understand the risksthat David referenced in terms of liquidity andownership of clubs and the fiduciary responsibility asdirectors of clubs. I am intrigued by the notion offiscal support or tax breaks, which I know has alsobeen floated into the Committee.

Q452 Paul Farrelly: We have just produced a reportinto the arts and heritage and we commented that thebig hole at the centre of the Government’s so-calledphilanthropy strategy was that they propose nothingto encourage it. They must have read some mindsbecause in the budget they did put forward a policyon inheritance tax and legacies. Do you think footballis such a special case that it merits special incentivesand tax treatment to encourage supporters to invest inclubs or not?Alex Horne: I certainly think, given the communitynature of clubs, it’s something that is worth theCommittee looking at further.David Bernstein: Yes, I think I would support that. Idon’t have that much to add but, yes, given the sortof the complexities involved and maybe the financialscenario. I certainly thought of the Arsenal supporterspeople. They were very much pushing the need forsome help in that respect.

Q453 Dr Coffey: You are very familiar, MrBernstein, with the finances of Wembley stadium, Towhat extent is the requirement to pay for Wembleystadium, that constant top-up, constraining the abilityof the FA to support the national game, thegrassroots game?David Bernstein: Yes, I am familiar with our finances.By 2015, we will have paid £150 million of debt plusinterest and by 2015 we are anticipating that Wembleywill become cash-positive and will start pushing cashback into the game. There is a lot to be done betweennow and then. In this environment, as you will knowfrom the many businesses in sport or entertainment, itis not an easy call but that’s our aim. Clearly, in theinterim, Wembley has been using FA finance tobalance its books, but I think given what we see, giventhe fact over this few weeks we are in now, we’ll haveeight events attracting 700,000 people to the stadium,it’s a fantastic national asset. Yes, there has been adegree of restriction of funds going to the rest of thegame, 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 nationalgame strategy, which is trying to develop that. Myunderstanding is that the amount of money going tothe Football Foundation has been cut at certain points.David Bernstein: It has.Dr Coffey: It seems quite concerning trying todevelop the grassroots instead of topping up thestadium.David Bernstein: Yes, obviously, no one wants to cutthat 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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territory. We should have a double whammy positiveeffect for all those areas.

Q455 Dr Coffey: We heard last week from IanWatmore that he considered that the professionalgame got a 50:50 with the national game. He didn’tthink that was the right thing to do. Given thestraitened 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 LordBurns that we formally recognise a 50:50 split ofsurpluses to distribute to the professional game andthe national game. It is now set in our articles ofassociation. To change it would require, not only 75%shareholder vote, but also Premier League, FootballLeague and the national game board approval. I haveto say, I think it reflected the priorities at the time. Iunderstand the model. However, I do think it is veryrestrictive. If the size of the surpluses changedramatically, it’s a very restrictive mechanism to havewritten into our articles and there may well be, fiveyears on, a better way to invest our resources againstthat of strategic priorities.

Q456 Alan Keen: I was reluctant to ask thisquestion; I was reminded when Thérèse asked aboutthe stadium. I’ve been on this Committee since 1997and I remember at one stage the FA were given £20million, providing they made sure there was anathletics track at Wembley or the facilities to buildone and take it away again. Was that liability evertaken away from the FA or does it still exist and, if itdoes, 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 theCommittee?

Q457 Alan Keen: I will support you in not having topay it back but I just wondered whether that wasstill—David Bernstein: Yes, I am sorry. It is something Iam not conversant with it. We can come back to youon that, if we may.Alex Horne: I think our commitment to the IAAFremains in that if we were asked to we would have toconvert the stadium into an athletic stadium but, onthe basis of the Olympic Park development, I assumethat liability has been expunged.Alan Keen: I am sure West Ham will—David Bernstein: I can say I was very involved withthe City of Manchester Stadium and the whole movefrom Maine Road to that and certainly the view ofour supporters—and I am sure supporters across thecountry—is English supporters do not like stadia withathletics tracks around them. I know there are waysthat one can convert from one to the other. Certainly,at City of Manchester Stadium, we did make a quitesophisticated move from the Commonwealth Gamesto a football stadium which went extremely well. Ithink it was probably very much a very good exampleof how a stadium—Alan Keen: If I remember, I think it was SportEngland who provided the financing.

David Bernstein: They did, indeed. They did, indeed,but we complied absolutely with Sport England on thelist of requirements.

Q458 Dr Coffey: Could you remind us how manydirectors there are at WNSL because I can recallMelvin Benn, the music promoter, is an independentdirector?David Bernstein: On the board we have seven, Ithink.1

Q459 Dr Coffey: Seven and how many of them areindependent?David Bernstein: There are two independent non-execs; Melvin Benn and Ian Ritchie. I will be comingoff as chairman, because it is clearly not proper that Iam chairman of the FA and chairman of that; that willhappen very quickly now. Alex is on the board andthen we have two executive directors. It is a muchmore conventional board, as a board that would standup to plc corporate governance.

Q460 Chair: Can I come back to the FA’s investmentin the national game? You also receive quite asubstantial amount of public money—something like£25 million over four years to invest in the nationalgame. While the target that the FA have set is toincrease participation by 150,000 people over thatperiod, recent figures show that participation hasdropped by over 45,000 in the last four years, so itappears you are going in the wrong direction. Can yousay what you are going to try and do to reverse that?Alex Horne: Yes, the national game strategy verymuch has in its heart increased participation and thatis of players but also of the support infrastructurerequired for the players to deliver: quality coaches,referees, and so on. One of the issues that we’ve hadwith the Sport England measurement is that it’s globalacross all sorts of social football and our investment,historically, has been very much structured around 11-a-side formal affiliated football. Over the last two orthree years, we have worked very hard to make surethat we’re embracing all forms of the game andencouraging football to be played in many formats.The small-sided game is much more relevant topeople now who are time-hungry, where resourcesallow for that flexible playing after work and so on.Very specifically though, to turbo-charge the movetowards those targets, we have brought on board oursponsorship with Mars and absolutely targeted a very,very substantial investment from Mars in deliveringadult social play. Towards the start of next season, wewill be launching our Just Play initiative which willsee 100 centres and 800 Just Play co-ordinatorsoperating across the country, designed exactly to helpdeliver against those Sport England targets.

Q461 Chair: Do you agree with the estimate thatparticipation has fallen by that amount and, if so, whatdo you put it down to?Alex Horne: I could not challenge the statistics. Ithink one of the anomalies is that the numbers we are1 Witness correction: There are 8 members of the WNSLBoard (1 Independent Chairman, 2 Independent Non-Executive Directors)




measuring, which are around the number of registeredteams, we are not seeing the same decline. We areseeing the number of teams, at least to hold static ifnot increase across the men’s game, the women’sgame, 11-a-side and smaller forms of the game. Weare probably scratching our heads a bit in terms ofwhy the Sport England numbers have come down byso much.

Q462 Chair: But even by your measure, holding thenumber of teams static when you are investing thatkind 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 thosestatistics over the remaining two years of the four-year whole sport plan funding.David Bernstein: There are social trends which onehas to fight against with many young people movingaway from active participation in sports generally. Iam chairman of a tennis club and the same thingapplies: there are fewer people playing generally so Ithink there is a hill to climb in that sense.Chair: Certainly, it is a challenge facing all sports butit is also perhaps the key objective for the legacy ofthe Olympic Games.David Bernstein: Absolutely, absolutely.

Q463 Jim Sheridan: Could you expand on youranswers to Mr Farrelly about the financial regulationof English clubs, particularly about ownership andindeed the scrutiny of the clubs? Do you think thatthe current financial regulations are robust enough orare there changes that you think should be made?David Bernstein: There is a lot happening and someof what is happening perhaps is a little piecemeal; wehave Financial Fair Play coming in with quite a partof the Premier League. We have forward testing. Wehave a degree of wages control at the bottom level ofthe Football League. So there is quite a lot nowcoming together in a sort of a maybe slightlypiecemeal basis. I think my view would be that,although one is comparing a very wide range ofeconomic models between the Premier League and theFootball League, nevertheless, there possibly shouldbe more consistency across the field.I would like to see Financial Fair Play potentiallyextended across the whole of the Premier League andmaybe moving in to the Football League as well, butI think progress is being made; it’s being taken veryseriously, I know, by the Leagues. I think perhaps thequestion should lead on to as well is the FA’s role inthis and a number of other areas that you may wantto touch on. We believe that the FA’s supervisory roleshould be increased. I think perhaps we have allowedsome of these things to drift away from us. The waythe Leagues are run with self-regulation we think isabsolutely right; we wouldn’t want to change that ortry and pull that back but I think our supervision overthe 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 thatcovered everything.

Q464 Jim Sheridan: David, I think you mentionedin an earlier question that supporters have a need foras much information as possible; we heard at aprevious session when Niall Quinn was telling usthere was some sort of clandestine organisation thatlooks at people trying to take over clubs or ownershipof clubs, but he did not think it was important thatthe fans knew just exactly who was lurking in thebackground and who was taking over the clubs. Whatdo you think? Is that right, given that what you’ve justsaid about supporters’ information?David Bernstein: I’m sorry, but I haven’t read whatNiall Quinn said; I have great respect for him but, no,I disagree with that. I think that supporters shouldhave very open access to ownership of their clubs.One comes down to this whole fit and proper personquestion. No, it is absolutely key that supporters knowwho runs their clubs and we have seen incidents overthe years of perhaps ownership falling into hands thatare not totally ideal.

Q465 Jim Sheridan: Can I use two clubs asexamples? There is the telling case of Leeds Unitedwhere supporters do not know who owns their club;that has to be looked at. Secondly, look at Portsmouthlast season who managed to get to the FA Cup withoutany sanctions whatsoever. Is that acceptable bestpractice?David Bernstein: That is a difficult one. The Leaguescan and do put sanctions on clubs going intoadministration. Administration is not a cessation oftrading; companies who go into administrationcontinue to trade. Of course in the FA Cup it wouldbe difficult to find a sanction other than throwing theside out of the competition—obviously you cannotdeduct points—which would disrupt the competitionand have all sorts of other effects.In one way one would say, yes, it would be great todo something for a club in that situation, to penalisethem in the FA Cup, but it would cause difficulties.There is no halfway measure; you either let them stayin or you take them out. If you take them out, thenyou have to be able to have a walkover I presume andyou would have all sorts of implications. Not idealbut I would have thought probably best dealt with asit was.Alex Horne: In the matter of Leeds, it is worth notingthat the ownership structure is known to a limitednumber 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 agreewith David that fans should know who owns theirclubs.

Q466 Jim Sheridan: As part of this investigation,the Committee visited Germany. We have seen howthe system works in Germany in terms of the licensingsystem; I take it you know the licensing system inGermany. Do you have any views? It seems to me thatthe president of the German FA had a far moreeffective role in terms of organising club football.Would you like to see that brought into the EnglishFA?Alex Horne: I’m familiar with the licensing scheme;it is very similar to the UEFA licensing scheme that




exists in European football, which I’ve been involvedwith for six or seven years. I sat on the original UEFAlicensing panel that wrote the licensing rules and thenthe latter rules around Financial Fair Play and themodel was based on the German model and theFrench model where they license their clubs.The danger with an overly formal licensing scheme isit becomes bureaucracy for the sake of it. There area number of good practice/best practice governancemeasures that come through that licensing scheme,most of which the Premier League today has adoptedand put into its rules, most of which are now moveddown into the Championship rules. I think Englishfootball adopts good practice where it’s appropriate,for example, around qualification of managers and soon.Turning to financial regulation, I think there is adecision moment for the game because I agree withDavid; I think it is time to look now at the gap andconsider closing the gap between the salary cap thatexists in League Two and the cost control measures,the Financial Fair Play measures, which now exist forclubs in Europe. There is a moment to reach acrossall four Leagues and look at appropriate cost controlmeasures in all four Leagues and listening to theChairman of the Football League’s evidence. I thinkthat would chime with their position and theirconcerns regarding debt in their clubs. If we weregoing to go down a more formal hard financialregulatory model we would not need some form ofoverarching licensing system to make sure it wastransparent, auditable and fair.Chair: But it is not the position of the FA but that isthe direction you are going to move.Alex Horne: That is the direction that David and Iwould both seek to move in. One of the things I willadd as well is that David, in his point aboutrelationships, has called a meeting of the chairmenand chief executives of the Premier League, theFootball League and the national game to make surethat we are sitting down and understanding some ofthese whole game issues and making sure that we areagreeing our approach: if you like, uncluttering someof the regulatory framework that exists, making sureour roles and responsibilities are clearly defined acrosseach of those bodies and making sure that we’readopting the right strategic approach when it comesto, for example, financial regulation of clubs orperhaps future youth development measures. That issomething that David has already put in train.David Bernstein: This relationship area is incrediblyimportant. There are natural tensions between theleagues and ourselves, that’s healthy but there’s also ahuge area where we have mutual interest. I think weneed to sort of embrace that, work with our colleaguesin the leagues and the national game to work on thepositives, although there are a lot of positives. Ofcourse, the Premier League and the development ofthe Premier League, which gave rise to these tensionsbut is a fantastic success, arguably, is one of the greatsporting successes of all time.

Q467 Chair: Indeed, but do they agree that youshould move towards a licensing system?

David Bernstein: Well, we will see. No, I’m notsaying they agree that at the moment and we have yetto begin to explore some of these things, but I’mhopeful.

Q468 Chair: It appears to be your view that youshould move in that direction but if you don’t havethe support of the Premier League you will run intothe same brick wall that all your predecessors haverun into.David Bernstein: Understood, but it’s a journey thatpeople have to take and the way we’ll be taking itquickly and we will work them, hopefully, to apositive conclusion.

Q469 Jim Sheridan: Is it, therefore, the intention orthe ambition of the FA to take over—or primarily takeover—financial responsibility for the clubs?David Bernstein: No, sorry, definitely not. I just wantto emphasise that is not the intention. I think thedelegated authority that exists is absolutely right, Ithink it is absolutely right that the leagues haveprimary responsibility for that, but it is, I think, forus, as I said earlier, to ensure that our overview, ouraudit, if you like, of what is happening is moreextensive than it has been.

Q470 Ms Bagshawe: Just a quick summary: MrHorne, you seem very uncomfortable with the issueof transparency, that the supporters of Leeds Unitedhave no idea who runs their clubs. Earlier, MrBernstein, you drew a distinction betweentransparency for supporters sitting on the boards ofclubs and ownership models, where supporters ownthe clubs, but you said that in some cases, it might bedangerous for supporters to have representation on theboard of some clubs, but not on the board of others.In what way would it be dangerous for supporters tobe represented on the boards of clubs?David Bernstein: Well, dangerous perhaps is toostrong a word, but yes, what I mean is that being partof a board has responsibilities and exposures, and itwould be very important for anybody going on to aboard to understand those. Given the imbalances infootball at the moment and the situation in some clubsat the moment, I think there are some boards thatsupporters should be very wary about joining, forobvious corporate reasons.

Q471 Ms Bagshawe: Fair enough, but assuming thesupporters would delegate somebody who would becommensurate to fulfil those responsibilities, wouldyou agree that it is a regrettable situation that in amajor club like Leeds, their supporters do not knowwho owns it?David Bernstein: Absolutely. Sorry, I said earlier—Ithought I was clear—I think the supporters shouldknow who owns all and any club, absolutely. I do notthink there should be any exceptions.

Q472 Damian Collins: I just go back to LeedsUnited. Mr Horne, you said that executives within thegame know who owns Leeds. By that, do you meanthey know who the investors are in the trust, the




Swiss-based trust that owns the majority shareholdingin 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 theFootball 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 orthree executives within his team who know. Therequirement to submit that information is arequirement to become an affiliated club underFootball Association regulations, so in order to grantthem that access, which they need to be a votingmember of our shareholding and to play in the FACup, we had to understand that information and thenwe were able to grant that access.Damian Collins: So presumably, there are issues likedual interest, which you have oversight over?Alex Horne: Correct.

Q475 Damian Collins: So would that mean youwould need to know whether a major investor in thattrust also had a stake in another football club?Alex Horne: Correct, which is why we know, but asI said earlier, our rules do not then allow us to openlyexpose that shareholding, for want of a better word.

Q476 Damian Collins: But is it required that you aretold the names of those people so that you can assesswhether their club passes the test, even though theirnames as individuals are not even known by the chiefexecutive of the Football Club?Alex Horne: Or indeed, the general secretary of theFA.

Q477 Damian Collins: Would the FA would havedealt directly with the trustees to understand thosepoints?Alex Horne: Yes.

Q478 Damian Collins: With regards to what I mightcall the FA’s licensing system proposal, is that similarto the recommendations that Lord Triesman made inhis report that he submitted to the Committee inresponse to the questions by the previous Secretaryof State? He recommended that independently auditedclub accounts were lodged with the FA, that the FAwould have oversight over that. Are you working fromhis report, his recommendations? Is the FA continuingin that vein of thinking?Alex Horne: Just to reiterate, we are working on thepremise that the UEFA licensing model which existsworks, and it works in co-operation with FAexecutives and league executives. The work is doneby a combination of those executives. The decision ismade by a committee of FA members, on behalf ofthe FA board, but much of the work is delegated tothe 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 FinancialFair Play regulation model works. Does that mean thatyou have had discussions with UEFA aboutenforcement of that? Does that mean that UEFA havemade decisions about how they are going to enforcethe regulations and work potentially with nationalgoverning bodies to help them do that?Alex Horne: UEFA absolutely enforce theirregulations in their competition and they recognise thenational associations in each of the countries as thebody responsible for regulating and for licensing theclubs. So that is what happens right now. UEFA hasno authority to extend that into domestic leagues,because they are only competition organisers, so theycan only do this on the basis that those clubs want toparticipate in their competition.

Q480 Damian Collins: Lord Triesman floated theseideas nearly two years ago. Has the FA been inconstant dialogue with the Premier League aboutmoving to a licensing model or a model at least wherethe FA has or other bodies have scrutiny of clubs’accounts, the ability to call them in, or even sort ofwhat was suggested to us last week, you know, putclubs in special measures that they think havefinancial problems? Are these issues that you havebeen actively discussing with the Premier League?Alex Horne: Yes, and they are issues that the twoleagues currently enact. There are already specialmeasures put in place where clubs are submittingfinancial information for a season, forward-lookinginformation, and where leagues have concerns,particularly in the Football League, they areembargoing them from, for example, entering into thetransfer window. So sanctions do exist, the work ishappening and it is happening at League level inconsultation with ourselves.Damian Collins: But you are talking about somethingmuch more substantial. What I am trying to get at is,if we take Lord Triesman’s word for it, it sounded likeSir Dave Richards and the Premier League were notparticularly interested in the FA’s view on this subject.Are you making more headway?Alex Horne: I am not necessarily talking aboutanything more substantial. As David said earlier, Ithink this can work with the delegated authority to theLeagues. What I think we need to do is to agree withthe Leagues that it is time to do this. We need to setthe rules very clearly so they work across thespectrum of the four senior professional Leagues inparticular to make sure there then aren’t any gaps orunintended consequences, for example, for conferenceclubs. As regards headway, I think that is wherestability of leadership with David and myself comesinto play and David’s meeting that he has called to tryand move some of these agenda items on.Damian Collins: In terms of stability of leadership, Isuppose only time will tell.Alex Horne: Yes, sure.

Q481 Damian Collins: An issue that we havediscussed quite a lot with clubs and other individuals




who have come before the Committee is the footballcreditors rule. What is the view of the FA on thefootball creditors rule?David Bernstein: I can understand the rule being thesubject of some criticism, because there is clearly aperceived—and probably actual—lack of equity insome respects. However, I think from my point ofview, the FA’s point of view, we would, on balance,remain supportive of it. Why? Because the integrityof the competitions is protected by it, and without it,there could well be a snowball effect if a particularclub hits the buffers. I think I’m more confident insaying that in the context of the additional financialregulation and control that we’re talking about; that,with Financial Fair Play, with forward testing, withcreditors being paid more promptly—I mean, therehas been all sorts of issues of course with InlandRevenue liabilities. Well, that is going to be muchreduced now. They have to be paid more promptly.As part of that, I think if Alex and I had our say, wewould like to go back to the days of football transfers,of money between clubs being payable within oneyear and getting away from extended terms, whichhave their dangers. So I think, on balance, not an easycall. We would want to maintain that, but with muchstronger controls around to avoid the exposures thathave arisen.

Q482 Damian Collins: The chairman of the FootballLeague told us he could not find a moral argument forkeeping the football creditors rule. Do you think he iswrong? Can you find one?David Bernstein: As I said, I can see there is a moralargument, 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 integrityand protection of the league is very, very important,and very important for supporters.

Q483 Damian Collins: Lord Mawhinney said hetakes a completely different view about integrity ofcompetition, and that clubs going into administrationand clubs being allowed to over-extend themselves,safe in the knowledge they may not have to pay alltheir non-football creditors damages the integrity ofthe competition, and certainly damages, I think, themoral authority of the game in terms of its standing.Alex Horne: It is a difficult one, this, on the basis thatit is a closed league, the participants have to interactwith each other for the duration of a season, they haveto play matches against each other and they will tradewith each other in terms of players. So the rule seeksto make sure there is no advantage or unnecessaryadvantage to a club in entering some form ofinsolvency, particularly on the other members of theLeague. So it is quite a selfish sort of members’ clubrule, but I think very necessarily it is a selfishmembers’ club rule, because I think if you were toallow a club to fail owing large sums of money toother clubs, there’d be a real call for that club to beextinguished from the League.

Q484 Damian Collins: I agree with you. I think it isa selfish club rule that allows businesses that supporta local club within its community to lose out and

potentially face financial hardships themselves,whereas a football club at the other end of the countryis completely protected by the integrity of these rules,and other people in the game have spoken out aboutthis. In fact, David Gill said when he came before usthat he thought that we could get rid of the footballcreditors rule, and that if we did, clubs would be moreresponsible in their financial transactions with eachother, because they will have a vested interest inensuring that the clubs they are dealing with can trulyafford to pay their bills. Do you think David Gill iswrong?Alex Horne: No, I understand both sides of theargument, and I think it is a difficult one. Corporately,we’ve defended this hard over years, and I understandwhy 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 testworks and football liabilities were perhaps moreconfined, in other words, long-term credit was notgiven 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 thatthought the FA could give moral leadership forfootball, and I’m not seeing much moral leadership onthis issue, I’m afraid.David Bernstein: I hear you. I think we have anumber of roles. One of them is to maintain theintegrity of the leagues and ensure this whole thingcontinues to work properly. I repeat, it is a view whichgoes along with the controls which I think is soimportant, which would change the whole look over aperiod 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 thewhole thing? I am a great supporter of the privateenterprise system. I spent all my working life, 38years before I came into Parliament, most of that timeas a company director in a national company as wellas having my own business for a spell. I am a greatsupporter of that, but there are restrictions on the freeenterprise system. In fact, I even felt sorry for Skywhen they had taken such a wonderful initiative andtook a gamble as well when they started to pourmoney into football in order to increase their intakefrom subscriptions, and it has been vastly successful.I felt sorry for them in a way that that initiative thatthey took and the gamble had to be penalised; Europewanted more competition. Now, coming on to thefootball itself, the vast amount of money in the gameis put in by supporters, either through subscriptionsthrough Sky and through to the Premier League, thesale of merchandise and entrance fees. It is supporterswho put the mass of the money in. If I was a PremierLeague club owner, whether I was one who hadbought the club by using the club’s assets to borrowthe money and my intention was to take as muchmoney as I could out in as short a time as possible,by either selling the club or taking it out inmanagement fees, or whether I was somebody likeAbramovich, who I think is a genuine football




supporter, there is still a vast amount of money infootball and we are scraping to fund grassrootsfootball. So the balance is not right.I understand the ownership of clubs. You cannot justgo and take it away from people and it would damagethe game, but would you agree with me that this iswhole crux of the problem that we are facing? I mean,it is connected with the ownership of clubs andsupporters’ rights. It is a long question, this. If, forinstance, the next television agreement doubled theamount of income for the Premier League clubs,would you not agree with me that all that moneyshould not go to Premier League clubs and thereshould be some sort of regulation? Football should beable to demand much larger chunk of that money tofund grassroots football. It is how we do that thatreally is the crux of the whole thing. Do you agreewith me on the case I am putting forward?Alex Horne: I think the thing I would point out isthat, while there is an awful lot of money going intothe Premier League, there are very few clubs makinga profit.

Q487 Alan Keen: But if the TV deal was doublednext time, as it almost was last time, would that stillbe spent on salaries to players? It is not goinganywhere else, apart from some club owners whoseintention is to take money out of the game. Whateverit is, it is supporters putting the money in, and theycare about grassroots as well, and there are at leastthree of us on this Committee still playing football atour advanced age now, because we care about thegame at every possible level. Do you not agree withme?That is the crux of the problem that we are facing,that the vast amount of money in the game is goingout in players’ wages and we would only have to takea relatively small amount more than we are takingnow, but it is not easy to take that money out from thePremier League. I am a great supporter of the PremierLeague. Its achievements have been absolutelyfantastic and we are very proud of it, but there is animbalance, and it is an injustice as well, when we arestruggling to finance grassroots football. I know thata lot of money goes from the Premier League now tofund grassroots football, but that balance cannot beright. I am asking you, do you agree with me thatbalance is wrong?Alex Horne: I am not sure I do. I think that thePremier League, as a separate commercial entityreturning circa 10% of its revenue to the rest offootball, is not an inappropriate number. I’m sure youcould have a different number, but it’s a very generousnumber for a commercial organisation.More importantly for me is the second part of thequestion around the overall cost control measures. Ithink that’s an example where the clubs may well beprepared to. It may be time to embrace overall costcontrol measures, because the fact is that incomecoming into the League does pass straight through theLeague. The European nature of it, the competitivenature of it says that the performers on the pitchdeserve to be remunerated for entertaining us all. Thesupporters pay to see the football being played, soplayers deserve to be paid commensurately with the

income into the game, but not necessarily significantlyover and above the income into the game.David Bernstein: If a Premier League club subjectto Financial Fair Play, i.e. balancing its books—let’sassume that for the moment—and over a period oftime, its income, let’s say, goes up from £300 millionto £500 million, and it is able to increase its wages toplayers still at 50% of turnover, but to 50% of £500million, is that a proper thing to do? Well, it is thewages that attract the players. It is the players thatmake the league. The Premier League is a success, ina sense, because of the amount of money going toplayers, and if the club is in balance and if these otherareas that we are talking about are dealt with, then Ithink that is really, whatever one’s moral view on thesubject, a matter for the club as a self-standingorganisation to trade as it will, if the club is complyingwith the financial regulations we’ve been talkingabout.

Q488 Alan Keen: The question I am really leadingon to is: football is different from the rest of privateenterprise. Should we not be entitled to make sure thatthe FA, when it started the pyramid—it is not quite atthe top of the pyramid, not within this country—should be able to make sure that more money goes tograssroots? If the TV income doubled again, the extrawages to players would continue, as you have justagreed. You could add another 50% on the players’wages. Maybe Messi and a few of his colleagueswould come and we would impoverish the rest ofEurope. We would get them all here, which would bebad again for the development of English footballers.You know, that must be true.I know it is extremely difficult for you two to agreewith what I am saying, and I am sure you do notdisagree with me. We can talk about the rights of thefree enterprise system, of clubs holding on to thatmoney, but football is different. I mean, this is whatwe really have to face. We have the media sitting inthe back. The media needs to bring these issuesforward and highlight them for the rest of the footballfamily to discuss. I know it is difficult. I did notexpect you to give any answer other than you havegiven.David Bernstein: We have to be clear. Alex’s and myagenda is to try and perhaps take the high groundagain on behalf of the FA and to reclaim some of theareas and functions that perhaps have been allowedto slip. Nevertheless, there are areas which are reallybeyond and should be, I think, beyond the FA’s remit.The actual mechanics of how a club operates, of howit manages its wages policy, as long as it’scomplying—I keep saying the same thing,complying—with the financial regulations that are andmaybe should be more extensively put in place, andsome of these things are, I believe, on the edge orbeyond our remit. There is a limit to what I think theFA can be expected to tangibly do.

Q489 Alan Keen: What about quotas then forLeague clubs? That would be one way of us not goingfurther and further so that clubs have no Englishplayers left playing for them on a Saturday orsomething.




David Bernstein: Yes, of course.Alan Keen: You know, there are regulations that canbe brought in that can address this without having togo completely against private enterprise, normalcompany law, European law.Alex Horne: If we are going to get into youthdevelopment—looking at the Chair, I’m not sure longwe have—but if I try and give a succinct answer tocover a couple of your points, one of the excitingthings about the Premier League proposals for eliteplayer development is that it will necessarily bediverting and requiring investment into young home-grown playing talent. What we’re striving to achievearound that turbo-charged academy system is a muchbroader, deeper talent pool of young players comingthrough the system from five years old.You may have seen in the press recently that we arerewriting how the game is played across the country.We are seeking to play more developmental footballlater on different sizes of pitches, so that the game ismuch more about learning to play, being comfortableon the ball than it is about necessarily points orwinning or tables. We are working very hard to fuelthe pipeline, if you like. The Premier League and theFootball League are working very hard to increase theoutput of their academies, and that then benefits ourinternational team structure.So we’re then working very hard at the other end ofthat spectrum to make sure that we’re working withthe best young English players coming through theacademy system and converting them into teams whocan win at all levels. Our under-17s are currentEuropean champions, our under-21s, although theyunfortunately lost last night, are number one in theworld and go to Denmark in the summer with theprospect of doing very, very well.2 A number of ourdevelopment teams are performing well, but we needto keep working on that and make sure we have apipeline of international players and internationalteams who can succeed in future tournaments.All of that is underpinned by another central FAattribute, and that is the development of coaches. Weare setting about professionalising the coachingindustry, licensing coaches, continuous professionaldevelopment for coaches, more better-qualifiedcoaches with age-appropriate skills being available tothe game at all levels across the grassroots and intothe academies, and that’s our investment into thestructure.Just to turn full circle, that’s the clubs’ and league’sinvestment into the structure, which is so importantto long-term development of better home-grown, andselfishly, better English players. I would rather seethat work, if I’m honest, than force a quota system.The whole game is aligned behind that approach, andthat’s what we’re going to focus our time and energyon.Alan Keen: The Chair will not let me get further intothe argument, otherwise I would come back at youstraight 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 tocomment on this particular question, but just before onwhat Alan was saying about money leaving football,throughout this inquiry we have heard of genuineconcerns about the role of footballers’ agents in thegame and the money they take out of the game. It isjust to put on record that there are genuine concernsabout the role of football agents.David Bernstein: Absolutely, understood.

Q491 Paul Farrelly: I want to move on to yourinternal review. In your written evidence, you said youwould keep us updated with progress. Your writtenevidence also said that David was due to receive thatreview on 1 February. So will you tell us what itrecommended?David Bernstein: Yes. May I precede that by quotingsomething to you? I addressed the FA Council lastweek on the question of independent directors, whichis a focal point for the moment on the internal review.I would like to read a couple of paragraphs of what Isaid, because I think it sort of sets the scene. I said,“There was a widely held thesis that the FA isgradually losing authority and that this is not just afactor of a rapidly changing football landscape, but ofa corporate governance structure that has not adjustedto take account of these changes. Independentdirectors are not the only governance issue we shouldbe discussing, but nevertheless a very important firststep”. I just wanted to make it clear that that has beenput to the council. It was accepted, I think, by theCouncil, and I think we are on the first stage of ajourney with this.The actual results of the review, what they focusedon—and it may not sound particularly exciting to theCommittee—were basic governance issues. I do havea list of them here: draft formal schedule of mattersreserved for the board; enhanced corporategovernance; sections of the annual report;performance appraisal of the chairman—unfortunately—to be introduced; annual report toinclude a summary of the roll and membership of thenomination committee; director development to beconsidered, to include the appraisal of individualdirectors as part of an overall performance. It iscertainly 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, aresome of the other perhaps more fundamental questionsI know have been raised in other evidence and thatwe are aware of. I think it is very important to tryand get the first steps through successfully, i.e. theindependent directors, both because I think it is areally crucial issue and also in a way it tests thesystem, and ours is quite a complicated system. Imean, in order to get this adopted, I’ve had to put thematter already to two board meetings in February andMarch. It went to the Council for discussion in March.I then have to do a road tour around shareholdersaround the country. It then comes back to Council inMay and then it goes to the shareholders, I think inMay. So it is quite an extended process to get thisdone, and I do not really want to get too involved in




other basic issues at the moment until we have thishopefully put to bed.

Q492 Paul Farrelly: So are you hoping that after theFA Cup final, before people go off for the summerbreak, that you will get this proposal through?David Bernstein: I will do everything I can to get itdone, yes.Paul Farrelly: You said it did not sound terriblyexciting.David Bernstein: Not those particular items, no.

Q493 Paul Farrelly: I think that is probably anunderstatement. I mean, to what extent is your internalreview anything more than what you might call in therag trade a two new suits policy or a suits assessingsuits policy? What else is in there?David Bernstein: As far as the governance review isconcerned, there is a lot of compliance type detail,things that a major public corporation would do, andthe sort of thing I am used to from the commercialworld, proper compliance stuff; other areasconcerning the board and other related matters,structural matters within the FA, how the committeesare organised, the role of the FRA and so on have notbeen fully concluded yet. Frankly, I’m happy that theyhaven’t. I think we need a bit more time and I’d liketo get this independent directors situation out of theway first. I think there is a little bit of a danger herethat as a new chairman, all full of enthusiasm and soon to get certain things done, I do not get too far aheadof my own constituency. If we are going to get thingsdone effectively, I think we need to ensure that I’mworking with my colleagues and the board andCouncil, and so on and keep them on board, clearly.

Q494 Paul Farrelly: I understand that, but I thinkwhat people are looking for perhaps is a firm smackof leadership. Let me just ask one question which hasbeen left in the air: regarding fans, you think fansshould know who owns their football clubs. Somepeople within the FA know who is behind allegedlythe trusts at Leeds, but you have not said what youare going to do to make your wishes and ambitions areality. Does your review address this particular point?Alex Horne: The first step is David’s meeting withthe other chairmen of the other bodies and the chiefexecutives of the other bodies with myself, to sit downand reset the architecture. Once we know who isresponsible for what, in my view, we shouldunderstand our role within the overall hierarchy beforewe go back and look at our corporate governanceagain. Corporate governance is a constant thing on theagenda. As David said, very rightly, the immediaterecommendation is around incremental independentnon-executives. I think we want to run that through inparallel with our conversations around how we thinkthe overall architecture should be reset and then comeback to that. Once we have agreed our role and ourrole in oversight and/or delegation, that will enableus to look again at the right corporate structure forthe FA.

Q495 Paul Farrelly: That was not the question. Myquestion was what, if anything, in your internal review

is there to say, “This is what we want to do”? Forexample, take the issue of transparency amongst theconstituent members of the Football Association whatis there saying, “and this is what we arerecommending to make it a reality”?Alex Horne: Forgive me, Paul. I am not sure Iunderstand the question. The transparency ofdirectors—

Q496 Paul Farrelly: No, transparency of ownership.David, do you perhaps understand better?David Bernstein: Yes, I understand the question. Ithink the slight difficulty here is I have been inposition for two months. I have made, I think, a lot ofprogress in a very short period, and maybe my lengthof period here and what you’d like to hear is not anideal mix. I am into the Club England chairmanship,which I think was extremely important for a numberof reasons you might want to touch on. We have theindependent director thing moving and a lot of otherinitiatives going, but we haven’t yet come to aconclusion on some of these things. In a way, I’malmost pleased that we haven’t. It would be prematurefor me to come up with answers, with a wide rangeof answers, so quickly.So on some of the things you would probably like tohear from me, I’m not quite there yet, and nor do Iwant to be, because I think it would damage the firstvery important step of independent directors. I do notwant to make independent directors sound like the be-all and end-all, but I think it is important, I think it issymbolically important for the FA to get this done andI do not want to prejudice that.

Q497 Paul Farrelly: Can I ask you, David, then inwhat sense do you think that to date the FootballAssociation has not behaved like a respectedgoverning body?David Bernstein: I think probably what has happenedis that the FA is in some respects unfairly maligned. Imean, let me say—it has not been said yet—that Ithink the staff within the FA, a lot of the basic workbeing done within the FA are absolutely fantastic. Iam new on the scene here. I am incredibly impressedwith the quality of a wide range of work and personnelwho are employed by the FA. The problem—and therehas been a problem—has been at the top of theorganisation. We have had too many changes: changesof chief executives, changes of chairmen.We have had clearly a poor performance in somemajor areas, such as the World Cup bid, the WorldCup itself, the World Cup performance, and these arehigh-profile, very important areas. The FA perhapslacks confidence because of those things. I think it’smy job, working with Alex, to get the FA on the frontfoot, to take the high ground in the way we’vedescribed already.I think there’s very important work to be done, butI think it’s building on what is a very, very strongorganisation in many ways. I think because of theproblems at the top end, some of the issues, many ofthe good things lower down in the organisation arenot properly recognised. I have already been aroundthe country quite extensively, to the Midlands, toMiddlesbrough, looking at youth developments,




looking at sites where Football Foundation money hasgone into. There is fantastic work being done. It’svery, very impressive, and a lot of that is lost becauseof some of these high-profile issues.

Q498 Paul Farrelly: I just have one final questionon your structures. The strong view that we haveheard from many people who have been in and out ofthe FA’s doors is that the FA does not work becauseit is too riddled with entrenched, vested interests. Thesame might be said of the structure just below the FAboard, the Professional Game Board. Can you tell uswhat the purpose of the professional game board isand has your internal review recommended that thereare independent non-executives attached to thatcommittee as well?Alex Horne: The Professional Game Board’s role, asoutlined in the Burns recommendations, is to overseematters relevant to the professional clubs, to the 92professional clubs. Very specifically, that is wherewe’re debating the youth development proposals at themoment on behalf of the whole game. That is wherethey discuss the distribution of the moneys, thebudget, the funding formula that we referenced earlier.So it is a tight remit around the 92 clubs. It is madeup at the moment only of club representative directors.Again, you may not like the answer, Paul, but I thinkin our conversations with the leagues, as we agreewho is going to be responsible for what, one of theanswers will be, “What is the role of the ProfessionalGame Board? What role should it play on behalf onfootball?” I have to say, sitting as an executive, thereis a lot of duplication of my own time and of rolesand responsibilities. There is a lot of overlap betweenthe professional game board and other committees ofthe FA, the FA board, league boards and so on. Oneof the key things we can do is unclutter all of this,and be very transparent about the roles of each ofthese bodies. What role should the professional gameboard play in a reshaped architecture for football?Again, once we agree that, the membership will beclearer.

Q499 Dr Coffey: One of the perhaps worse examplesof lack of corporate governance seen in the FA inrecent times was that one person unilaterally was ableto renegotiate Fabio Capello’s contract just before theWorld Cup. How was that possible?Alex Horne: No one renegotiated his contractunilaterally. The issue around the private contractbetween an employee and the FA was that there wasa contract through to 2012 for four years. Within thatcontract was a clause allowing either party toterminate for an amount of liquidated damages. Wewere coming under a lot of pressure in the run up tothe World Cup for certainty over whether Fabio wasstaying or not. There was speculation about clubscoming in for Fabio, and it was agreed with a fewindividuals at the top of the organisation, the lastchairman being at the heart of it, that we would deletemutually those two clauses. So effectively, we wouldremove our ability to terminate Fabio’s contract withliquidated damages and he would delete his ability towalk away from our contract with liquidated damages.So having qualified top of the group very comfortably,

facing that uncertainty going into the tournament, itwas exactly the right thing to do, and that decisionwas made in April or May 2010.

Q500 Dr Coffey: I was under the impression it wasjust one person who made that decision, so how manypeople exactly were involved in that, because it seemsa significant change to the liability of the FA?Alex Horne: Well, no.Dr Coffey: Especially given the performance of theteam in the World Cup.Alex Horne: Forgive me, it was not a change to theliability of the FA on the basis that the liabilityexisted. The contract existed in the first place, so therewas no change to the liability of the FA. I’ll hold myhand up on behalf of David Triesman and say that Ithink, with hindsight, it was a whole board decision,and should have gone to the whole board, but it didnot.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, thatsame situation?David Bernstein: I think if I am Chairman, it will nothappen 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 apersonality or does it rely on—?David Bernstein: No, I think it’s as a properorganisation. I think we have the remunerationcommittee. Any contract of any size, even muchsmaller than what we’re talking about here, or anychanges of significance should go through theremuneration committee and then, if necessary, to theboard. I would ensure that proper governance is inplace for those things.

Q504 Dr Coffey: Lord Triesman has gone, but isanybody else who was involved in making thatdecision still involved in governance within the FAtoday?Alex Horne: Forgive me, because I do not know whoexactly was involved in it, so I am not sure I can bevery specific, but there will be a couple of boardmembers and a couple of executive members whoknew about it, yes.Dr Coffey: I am confused, Alex, because you seemto be clear it was not just one person, it was a fewpeople, and now you are not sure who did it, whomade the decision, apart from Lord Triesman.Alex Horne: I am not comfortable sitting here andnaming four or five people. I don’t think that is fairon those individuals, on the basis that the decision hasbeen reviewed internally and we have held our handsup to a corporate governance mistake. I think theoverlapping roles—David is not here to answer thequestion, and David was the senior member involvedas chairman of the association, and clearly felt he hadthe authority to make that commitment. It was onlyafter he left that the board questioned it.




Dr Coffey: I accept you cannot answer on behalf ofDavid Triesman.

Q505 Damian Collins: Mr Bernstein, I appreciateyou have not been in post that long and you clearlyset out your task of trying to convince the FA Councilof the need for change.David Bernstein: Yes.

Q506 Damian Collins: When Ian Watmore wasbefore us last week, he said that the FA will notchange without some sort of external pressure. I amnot going to ask you whether you agree with him ornot, but do you think that the FA Council shares thesense that many people have shared with us throughthis inquiry—probably people outside the FA share—that the FA does need to change and that, within anenvironment where you are already regulating andcontrolling yourself, is the pace for change or the needfor change really taken seriously? Is it seen as a kindof 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 thatit would make it more likely the FA Council wouldgrip that?David Bernstein: Difficult question: you are askingme to sort of judge how a group of whatever it is, 110people are going to react. I mean, may I say, just toput it on record, that the Council membersindividually are a fantastic group of people. They areoften demeaned. This blazers thing comes into play.But I must have met with a quarter of themindividually now. They have come to see me. Theyare people who have dedicated their lives to football,people who give tremendous service, have tremendousknowledge, and although I’m not 100% in agreementwith the total structure of our committee systemwithin the FA, nevertheless, the committees do afantastic job of detailed review and investigation. SoI think there is a lot of merit to the body; let me saythat straight away.They are fairly conservative; the Council is a fairlyconservative body, which one might understand fromthe make-up. We will have to see. I felt the reactionto my initial presentation, the one I just read, wasquite positive. I am hoping we will get the majoritieswe need. The council works on a 51% majority andthen the shareholders work, on many issues, on a 75%majority, so there are sort of two levels of approvalrequired for these things.

Q507 Damian Collins: When we look at otherindustries that self-regulate, where that works well, Ithink, is where there is almost a clear understandingthat, if self-regulation failed, another sort of regulationwill come in its place.David Bernstein: Yes, the Council does not respondwell 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 sortof way, but again, I think with my footballbackground, it does help a lot in football to have beeninvolved 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 exampleswhere the structure has embraced independence. Ourcommissions all have independent members on themnow, which was not the case years ago, two or threeyears ago. The FRA, as I have referenced, has fourindependent members and the national game andprofessional game members working in that bodyrecognise the value of the expertise and experiencethat those independents can bring, so I think there areadvocates for change in the shareholders.

Q508 Paul Farrelly: Going back to your evidence,you say that the FA recognises it is important to learnfrom the best practice governance arrangements, bothacross football and wider across other sporting bodies.Could I just ask you two things you have learned sofar, and from where, just to pick one each?Alex Horne: If I may go first, David, the independentdirector recommendation is absolutely mirroring bestpractice and common practice now in every othersporting body. So we understand that there areindependent directors on all the major—and manyother—sports’ governing body boards. For example,that is substantial evidence behind ourrecommendation for independents.David Bernstein: Yes, I think the proper applicationof wider corporate governance, you have touched onthe remuneration committee issues, for example. Ithink we have some of these things in place. I thinkthere is a little bit of a danger in that, historically, theFA has sometimes, because of the pressures for aspeed of decision necessary, that maybe some of thecontrols have been innocently circumnavigated. Ithink it is very important, and I think the examplethat you have been discussing with Fabio Capello’scontract was maybe a good one, that we ensure thatwe fully comply with our own procedures, even whenwe are under pressure. One cannot overestimate thepressures that arise with football issues surroundingEngland. You want to see the media over the last fewdays about various fairly peripheral issues, Ipersonally think. The pressures are very intense. It isvery important the system stands up to thosepressures.Paul Farrelly: So no more innocentcircumnavigation.David Bernstein: Yes.

Q509 Chair: Can I finally turn to the FootballRegulatory Authority, which is responsible fordisciplinary policy? It draws on members of the FA toadjudicate individual disciplinary cases. It wassuggested to us that those should be done externallyand it is not appropriate for the FA to do so. How doyou respond to that?Alex Horne: Can I just explain the distinction,because the FRA is the rule-making body? It sets thepolicy. That is the body with four national gamerepresentatives, four professional gamerepresentatives and four independents on it. They donot appoint the commissions. That is a completelyseparate body, completely independent.Chair: But the people who judge disciplinary casescome from the FA.




Alex Horne: No, they come from—the commissionsare made up of, in the first instance body, two FApeople and one person from a football panel. So thereis a panel of individuals nominated from across thegame, ex-referees, ex-players and so on, who will sitin hearing on each of the commissions; one footballpanel person plus two Council members on everycommission.

Q510 Chair: Do you not accept that it should bedone externally, completely?Alex Horne: No, I do not. I think that history on thewhole would show you that the commissions madesensible decisions, and the adding in of footballpeople has definitely helped with making consistent,appropriate decisions. So they are adding expertiseinto consistency. This has been done well, but I thinkthe addition of football people has improved theprocess. If I may say, the second body, the appealsbody, is then further independent. It has twoindependents, the independent chair and one FAperson. Occasionally, these things are three, four. Theconstitution of these commissions is very muchdependent on the case matter in front of them as well.So if there are doping cases or child abuse cases, thenagain, the balance of the commissions will change tomake sure we have the right, appropriaterepresentatives on it.

Q511 Chair: My last question: the FA draws parts ofits income from the England team. Tonight, fans willhave spent quite a lot of money to come and watchEngland playing. Do you think they are being short-changed, because they are not going to see people likeRooney and Lampard on the pitch tonight?David Bernstein: No, I do not. The manager—and themanager has to have the say in these matters—has abalancing act. He picked a very strong squad for thetwo matches. Every member of the squad, I suggest,is a top class player. He has to balance, as we hadwith the World Cup, fatigue issues, other competitionsthat some of these players are playing in, relationshipswith the club managers, which is very important. Weare looking for an improved balance of give and takewith the clubs. It requires both not just giving and notjust taking with the club managers to ensure that weget that right players, certainly for the competitivematches.


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 thenational game. I welcome Roger Burden and KellySimmons.

Q514 Jim Sheridan: Beneath the FA board, thepolicy responsibilities are divided between, as Iunderstand it, the national game board and theprofessional game board. How successful has thisdivision of responsibilities been?

This is very much a manager’s decision and I thinkthe team he will put out tonight may lack one or twoof the glamour names, but will be a very strong team,indeed, and a team with players who I believe hereally wants to trial, and really see how they performon a very big occasion in front of a capacity crowd,to see how they will hopefully perform in competitivematches later on.

Q512 Chair: So is the team that plays tonightentirely the first choice of the manager?David Bernstein: In all the circumstances, yes, no onehas forced him to send players back. It is his decisionto do everything that he has done with regard to thesquad, absolutely.Chair: The reluctance of the Premier League clubs torelease players for a match like tonight—David Bernstein: No, sorry, we had all the playersthat we wanted and the manager has decided to send,I think, five of them, back to their clubs for variousreasons, as I have just tried to explain. I am incomplete support of the manager in doing that.

Q513 Chair: One of the criticisms of the ratherdisappointing performance of the England team todate is that some of the star players do not get as muchopportunity to play together for the team, as theymight do.David Bernstein: Possibly—there is no questionabout the tensions we talked about earlier betweensuccess with the Premier League, the ChampionsLeague, international football, the effects on the FACup, which we have not touched on today. There area great range of tensions there, and running theEngland team is no easy job. Just for the record—Iwill put it down here—of the 18 competitive matchesthat Fabio Capello has managed England for, we havewon 13, drawn 3 and lost 2, one of which was a deadrubber match. Unfortunately, the other match we lostwas a very, very important one in the World Cup, buthis record overall is actually outstanding. I know thathas been blurred by the very, very poor World Cupperformance, but generally, his qualification recordpreviously was good, and so far we are top of thegroup table for the Euro championships and hopefully,we will stay there.Chair: I thank the two of you very much.

Roger Burden: I think in the last four years it hasbeen particularly successful. I say the last four yearsbecause that is since the Lord Burns review, whenboth the professional game and the national gamewere given quite clear delegated authority aboutresponsibilities—you were discussing the PGBearlier—and with that authority came the split of thesurplus too, which we call the funding formula, whereit is 50:50 between us. So the relationships have been



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.

Q515 Jim Sheridan: From whom?Roger Burden: From some of the people who havepresented in front of you.

Q516 Jim Sheridan: Kelly, do you wish tocomment?Kelly Simmons: I think, from the executive side, thefocus on working with a board that is completelyfocused and committed to driving the growth anddevelopment of the national game, and having a clearstrategy and a long-term budget and investment intothat has really paid dividends. I think you will seefrom our submission, some of the results we have hadin terms of growing the game, growing and improvingthe quality of coaches and referees, investing infacilities. The whole range of work we have done, Ithink, has been very much because we have had thatreal focus and leadership from people who are expertsaround the board, in the area of the national game. Ithink it has been a good thing for the organisation.

Q517 Jim Sheridan: Can you see any benefits inappointing FA executives or non-executives to thenational game board?Roger Burden: To the national game board? We havethe general secretary comes in, we have Jonathan Halland we have Kelly coming in. They are not membersof the national game board, but they speak when theyhave something to say. I have never thought that; 15or 16 of us around the table, I think that is morethan enough.

Q518 Jim Sheridan: What is the purpose of it, ifthey are coming to the national game board?Roger Burden: You mean the national game and thenational game board?Jim Sheridan: What is the purpose of Kelly cominginto the meetings with the members?Roger Burden: They are the executives. It is just likeany other board, really, where the board is looking tothe executive for the initiatives, and we present whatwe think is the appropriate support and challenge tothe executives. They come with the budgets. Theycome with ideas and reports against progress. We havequite a comprehensive strategy with key indicatorswhich we like to hit, and again, that was mentionedthis morning. It operates, I think, the way you wouldexpect a board to operate, with executives reportingin.

Q519 Jim Sheridan: On the criticisms that you thinkhave been unjust, would you like to give us a flavourof what the criticisms are that you do not agree with?Roger Burden: Yes. I have heard—not followed everyword of it, but I have heard—that some members ofthe professional game board have been criticised forbeing overbearing and some because they have vestedinterests so are not putting the fair view to the board.I do not agree with that. I do not see that. It surprisesme that people are surprised that the chairman of thePremier League is not a pussycat. He is a resilientman; you would expect him to be that, but he does

not roll anybody over at the FA board. It has not beenan issue for us.

Q520 Chair: You channel quite a lot of money downinto grassroots football, primarily through county FAs.We have had suggestions that the county FAs are notentirely accountable for how that money is spent. Canyou say what audit procedure there is that you use tomake sure that the money goes to where it issupposed to?Roger Burden: Yes, I can give a couple of top levelviews and then Kelly can give you some detail. Mostof the money we give counties—and it is something inthe order of £10 million a year, I think—is for salaries,development staff salaries, referee development, childwelfare officers, as well as a chief executive. Everycounty needs them. So that is very easily auditable,because we only give the money based on thepayment of salaries. From the chairman of the nationalgame board’s point of view, we do have an internalauditor in the FA and he has been out to counties,reported back to me and through to the national gameboard and Kelly with regard to the controls thatoperate in the counties, and he has been entirelysatisfied. Frankly, it is not difficult, because it is allbased on salaries, if the people are not there, and theyare not earning the money, they do not get the grant.Chair: It is not entirely salaries.Roger Burden: No, it is not entirely salaries, themajority is salaries. There is also some revenuefunding, and Kelly can talk about that.Kelly Simmons: There is a blend. In terms of thenational game budget, some goes to the countyfootball associations in terms of workforce, but alsorevenue 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 notwant it to be thought that it just goes into countyfootball associations. You know, they are our keydelivery agency in delivering national game strategy,and provide and oversee the administration anddevelopment of 130,000 teams playing in 1,200leagues across the country every week of the year.The national game strategy, really, sitting under thatare county football association strategies in line withthat national game strategy. To get that money, weassess their plans and they have to set targets on howthey are going to grow the game, raise standards,increase coaches, grow referees, and so on, so a rangeof key performance indicators. We track that througha score card process every quarter. We have regionalmanagers that work with those county associations aspartners and we are tracking their plans and the returnon the investment that we are making in thosecounties, and working with them to share goodpractice, to make sure that we get that money to workas well as it possibly can.Then on top of that, as Roger mentioned, there was aboard audit committee that has gone in and looked atthat funding. In terms of the workforce, there is a clearset of conditions, how the counties must recruit,deploy and develop the workforce, to make sure theyare providing good service to develop the game. Ithink there are a number of accountabilities in there.




Q521 Chair: If there were allegations ofinappropriate awards being made by a county FA, whowould investigate that?Kelly Simmons: Awards in which sense?Chair: Grants being made.Kelly Simmons: Our money goes primarily intoworkforce and some programme money, but the maingrants would be through the Football Foundation. Thestrength of the Football Foundation is you have aseparate body that is assessing the grants that arebeing worked up at a local level to the county footballassociations and the partners. In other words, if it wasa Football Foundation grant, that would go back intothe Football Foundation in terms of query. If there wasa concern in terms of something the county was doing,that would come back to the executive, and if therewas a concern that we could not fix, obviously, Iwould work with Roger and the board.

Q522 Damian Collins: I want to talk about youthdevelopment. Why has it taken so long to get theNational Football Centre plan up and running, andwith a delivery date? It has been the longest gestationprobably of any public project in recent memory.Roger Burden: Yes, that is a good question. The veryfirst board meeting I attended, Howard Wilkinsonpresented for the National Football Centre. I think thatwas probably nine years ago. And at the samemeeting, there was a meeting about Wembley too, soat a stroke the board was being asked to look atsomething like £150 million, and there is the answer.We did not have it. The National Football Centre hasbeen put off, not because any of us did not think itwas a good idea, purely on the basis of funding. Whenit eventually came through and we were satisfied thatwe could fund it—and the national game is putting£6 million into it, incidentally, as is the professionalgame—we agreed as soon as we were comfortablethat we could pay for it.

Q523 Damian Collins: Ian Watmore, I think, gaveus the impression that he found the National FootballCentre lying dirty and tattered, in rags in the guttersomewhere and picked it up and put it back on theagenda; that it had been an unloved and forgotten partof the FA’s programme. Is that fair? Obviously, I donot suppose you will say that is a fair description, butthere seemed to be a lack of impetus for quite a longtime, and that was not just about money, but aboutpriorities.Roger Burden: Yes, I think the priorities thing is fair,but money is at the heart of it, because, shortly beforeIan joined us, we had reviews on the National FootballCentre and it just was not affordable. It did tend tocome up and down on the priorities, depending on acertain amount of pressure from the then-chiefexecutive, and whether or not the chief executive ofthe day really felt that this was a viable moment toput it forward.

Q524 Damian Collins: I appreciate you said moneywas a part of it, but it was not just money. What elsewas it that caused it to go up and down the list ofpriorities?

Roger Burden: I do not think the National FootballCentre ever went out of favour as an idea or concept.All of us were happy with it, but with Wembley andthe television money going down, we could not affordit. It was as simple as that. At least in my view, wecould not afford it. I voted against it when we wereasked for £40 million, because I did not think the FAhad £40 million.

Q525 Damian Collins: The reason I ask is that therehas been criticism that we have a problem of lack ofqualified coaches, and the National Football Centreplays a key role in that. We have less than 10% of thelevel of fully qualified coaches that you might see inother comparable European football countries. Whydo you think that has happened, and who is ultimatelyto blame for that?Roger Burden: I am not sure why it has happenedand I do not know if anybody is to blame for it. Ithink the important thing is now that we have got togrips with it. The World Cup was a bit of a focus forus. Kelly has various figures that she can give you.Coaching is a whole game issue; it is not just nationalgame. We are encouraging all our teams now to havequalified coaches, at least at the first level. All thechildren’s teams is what we want, and we are reallystarting from now, and I do not think there is any pointin looking back to see why we are where we are. Theimportant thing is that we are looking forward andKelly can tell you some of the things that we aredoing.Kelly Simmons: Yes, we have been working reallyhard. We started from a very low base. In 2000, whenthe FA did the first football development strategy, lessthan 5% of those coaching grassroots football, youthfootball, had any qualification whatsoever. We arenow up to 72% of all junior football—mini-soccer andjunior football—is FA chartered standard, whichmeans that they have a minimum qualification. Weare just about to announce our 500th community club,multi-team girls and boys, youth to adult, minimumlevel 2. We are working hard on getting the Tescoskills programme out there so that children getadditional, top-up, age-appropriate specialistcoaching. I think you will see that in action later on.We are investing through the national game board inregional coach development managers who areworking with improving the skills and knowledge ofthe coaches working in the grassroots game. Regional5 to 11 specialists really focus on the new age-appropriate agenda in the philosophy that the FA haspublished around coaching and working with youngplayers. We are putting a lot of effort and focus in. Ithink we are starting from a very low base in terms ofprevious history.

Q526 Damian Collins: Other witnesses havecommented that in some ways what we are seeingnow is the coming to fruition of recommendations thatwere made in the Lewis report five years ago. Therehas been criticism of the FA with Lord Mawhinney,for example, on this point saying this is an exampleof the failure of the governance structures and theleadership of the FA, that these issues have been leftto drift for too long, and while the right thing is being




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 thefigures prove that we do not have enough coachescompared to competitor countries—I will call themthat—in Europe, in the competitions. I think it is fair,but we are doing something about it. We have notjust started in this past year. National game has beenencouraged by Sir Trevor Brooking in investing inlocal coaches for some years now, as Kelly hasmentioned.Kelly Simmons:We are training about 45,000 coachesa year, so we have significant numbers coming at thebase. The focus will be that St George’s Park will bea major asset in making sure that more of those localcoaches can get to the top. It is not just the A licenceand the Pro licence, but specialising in working withyoung players, which has been a real gap.

Q527 Paul Farrelly: What percentage of theFootball Association’s total income is spent oncoaching and youth development?Kelly Simmons: Coaching, I believe, it is £8 millionon coach education. Youth development, through thePGB—it is not our own—I believe £7 million goesthrough the Football League Trust into centres ofexcellence and academies on the boys’ side. On thegirls’ side, it is between £2 million or £3 million onthe girls’ centres of excellence, and about half amillion on the talent pathway for players withdisabilities.

Q528 Paul Farrelly: So, just under £20 million. Howdoes that figure as a percentage? I have not got theannual 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 ofabout £80 million, which is split between nationalgame board and professional game board, but there isalso other income coming into the FA, and we do nothave those figures in front of us. We only have ourown figures.

Q529 Paul Farrelly: I am just trying to get a feel,because you mentioned other countries, how do werank as a nation?Kelly Simmons: Significantly higher; I am on theUEFA grassroots panel and work with a number ofmy equivalent colleagues across Europe in some ofthe big countries, and the Football Association investssignificantly more in children’s football, grassrootsfootball and coaching.Paul Farrelly: As a percentage of its overall income?Kelly Simmons: I am sorry. I meant total. Yes, cashtotal, I meant.

Q530 Paul Farrelly: That is apples and pears, is itnot, depending on the country’s size? Can you give usa feeling, do you have a feeling for how the FA rankspercentage-wise against Spain, France, Germany?Kelly Simmons: You would have to go back and lookat their turnover and their investment in coaching. Mysense would be that we are pretty high, I think, interms of that, and that is over recent years: as the FA’sturnover has significantly increased, we have been

able to invest more back into the game. You have seenwe have significant numbers of coaches in level 1,level 2 starting to come through that coachingpathway. I think now, with St George’s Park and withthat focused effort, we will see us closing the gap onthe top level coaching qualifications.In terms of the national game, we need a blend offunding. We need to fund coaches. It is absolutelycritical, but we need facilities; we need referees; weneed leagues and competitions; we need clubs. It isone piece of the whole pie, if you like, of footballdevelopment we need to invest in. We are investingin skills programmes, coach education, coachdevelopment, regional coaching infrastructure. Sothere is a range of investment in there that we aretrying to move those coaches through.

Q531 Paul Farrelly: If we can write to youafterwards, it would be useful.Kelly Simmons: Yes, of course.Roger Burden: The figures must be available. We justdo not have them.

Q532 Paul Farrelly: This is ultimately about sharingout money. Do you think there is more theprofessional game could and should do, be it thePremiership or the Football League, to help improvethe coaching and youth development, outside of theirown academies? Is there a case to be made, if it is notin their interest but in the national interest, that theycould contribute and should contribute more?Roger Burden: You mean financially?Paul Farrelly: Yes.Roger Burden: I had not really thought that there wasuntil I was listening to the debate this morning.Personally, and from the national game board’s pointof view, we have been very happy about the way themoney is split. They have been really supportive ofthe things we have wanted to do with our money.Obviously, if there is more money around, I wouldhope that they would see their way to help the nationalgame. Although I do not have any concerns orcriticisms, we always want more, and in the case ofthe national game , we have a lot of mouths to feedin order to do what we want to do and increaseparticipation. But I do not have any concerns aboutthe level of support we are getting from theprofessional game.

Q533 Paul Farrelly: Final question on this topic: wehave been to Germany and taken some evidence oftheir response to Euro 2000, their dismal performance,and their youth development, which we saw comingthrough in South Africa. We have learned from themthat they have a contracting system where the childrenat the age of 15 to 18 can be contracted, which givessome protection for proper recompense, as against thepoaching that will inevitably happen. Do you thinkthat current arrangements between the Premier Leagueand Football League clubs and proposals for changesto the academy system are right, or should there beanything else in place that protects the smaller clubsand gives them better recompense?Roger Burden: It is not really our field, in terms ofthe smaller clubs, because I know you are looking at




the smaller Football League clubs, but what I haveseen recently with the way the Premier League andthe Football League have been talking to us and toour people, I thought it was a step in the rightdirection. There is going to be a change and you areprobably already seeing some of that, some of thearrangements.Paul Farrelly: I am not talking from the point of viewof your own niche but I am talking to you as arepresentative of the governing body of the nationalgame .Roger Burden: Yes, okay. I am satisfied. I think it isright. I think the way the programme for childrencoming through the game and the opportunities thatexist are right. That is one of the things we want toachieve. We want to get children playing and we wantto make sure they have the skills coaching so that, ifthey are good enough, there is an opportunity and wewant to make sure they do have the opportunities toget into the professional game if they are good enoughand they want to. I think those opportunities arethere now.Kelly Simmons: The academies and centres ofexcellence for boys doesn’t sit within the nationalgame. In terms of the youth review that Alex touchedon earlier, I see it as our role is absolutely vital intrying to drive through and work with the Leaguesand clubs to make the changes that are required tomake sure that all children have the best introductionto football. We are looking at: at what point dochildren stop playing mini-soccer and move into theadult game; whether nine versus nine is a bettertransition; at what point you bring in league tables totry to take away some of the competitiveness andmake sure that all children get to play and try differentpositions, and it is the right kind of environment,which Respect is really trying to drive, to make surethat the environment on the sideline is good andconducive in terms of player development.I see that as being our role, alongside bringing asmany players into the game as possible, which I thinkwe are doing through the growth figures. We have hadover 5,000 new teams since we launched the strategyfor children, so widening the base and making surethat we continue to do that work around coacheducation. Then we hand them on, obviously, into theacademies, the talented ones.

Q534 Dr Coffey: I want to ask one supplementaryquestion, Chair, on that particular point before movingon to structure. Do you think the national game was abit slow in recognising that primary schools were nolonger particularly teaching football any more? Schoolsports dropped significantly in the 1980s.Kelly Simmons: It is very hard, isn’t it? You look atthe scale of primary schools in this country and theresources that we would have had in the FA severalyears ago to try to tackle that. We work very hard,and have been working over a long term to make surethat, where football is not played in primary schools,we have a healthy English Schools FA that providesout of school competitions and we are working veryhard in terms of our junior club development. I thinkwe have made some great strides with that. I think

we mentioned earlier 72% of those clubs now reachour kitemark.I think the biggest issue for football is not so muchthat football is not played in primary schools; it is thephysical literacy of the children coming out ofprimary schools, which I think affects all sport. It isreally important that football and the governing bodieswork with the Government and with education to tryto address that. That is what the skills coachingprogramme is that you will see later. It is not justabout football skills; it is about trying to improvechildren’s movement and physical literacy so that,when they come out of that sort of 11 age group andpick their sport maybe that they want to specialise in,they have the foundations. What we are finding, and Isaw it when I was coaching in schools, girls and boysjust do not have that movement and co-ordination toenjoy any sport and have a lifelong love of it and begood at it. So I think physical literacy is a bigger issuein that sense.

Q535 Dr Coffey:Moving on to the FA structures, MrBurden, why did national game representatives opposethe full implementation of the Burns report? I am notsaying they were wrong to, but why did they do it?Roger Burden: There were issues in there that wewere not comfortable with. There was not much thatwe opposed. I think Lord Burns did suggest—

Q536 Dr Coffey: Can you recall what you didoppose, specifically?Roger Burden: Yes. We did oppose the twoindependent directors. We were not convinced thatthat was necessary, but we did support the idea of anindependent chairman. So it was a compromiseinternally. You may not be aware but, as I think thechairman said, you do need a 75% majority in Councilin shareholders to get things through. It was our sensethat we would not get that through with twoindependent directors. Colleagues were reluctant. Atthat time, the national game board and theprofessional game board held equal votes within themain board. We had six and the professional gameboard had six and the chairman and chief executivedid not have a vote, which puts us in quite a goodposition, we would think. As corporate governance, itis not a great position and that is why Lord Burns wasencouraging us to give the chairman a vote and givethe chief executive a vote. For corporate governancereasons, I happen to agree with that.So it seemed sensible that one of the ways we couldachieve what Lord Burns was after, which was tobreak this sort of six-six position, was to have anindependent chairman. That seemed a sensiblecompromise, which as we went around the countrytalking to colleagues we thought they would support,and it did give us an independent chairman and it hasgiven the chief executive, general secretary now, avote. The professional game board and ourselves bothgave up a member of the board, so we went down tofive each, and you have probably seen that, plus thetwo. I think for corporate governance reasons that wasa good thing to do and I think that was a reasonablecompromise.




Q537 Dr Coffey: We heard from David Bernsteinearlier that he thought he had a good hearing. You areobviously a leading player in the national game. Doyou think you will see any further changes and if sowhat would you like to see changed on the FA boardand Council?Roger Burden:My experience of being on council formany years and working with the committees is thatthey are, as you have heard, sensible football peopleand they want to do what is best for the FA. So in theboard, when the chairman put the idea to us, I was oneof the ones that said, “You need to consult because, ifthe grounds are good, and the signs are the groundsfor this are good, then Council and shareholders willgo with you, but what they will not do after just a fewweeks in the post is suddenly switch to something thatthey remember just four years ago only just gotthrough the shareholders. So we need to treadcarefully.” You heard the chairman say that is exactlywhat he wants to do. There is no doubt in my mind, ifa 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 heardfrom Lord Burns, Lord Triesman and others thatnational game representatives are conservative andhave acted as a brake on structural reform. Are thereany changes you would like to see to the FA Councilto try and not necessarily be quite so conservative butopen to new ideas, perhaps term limits, not almosthave a place for life? I know you have to be elected,but there is no limit to how many times you can bere-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 fromcouncil at 75. You have to come off the board at 70,which I think is good corporate governance. So thereis an age limit; it is not a place for life. Interestingly,there is a position, after you have served the FA for 21years, you become a life member. Only at the Januarycouncil we were successful in establishing that evenlife members have to retire at 75, so there is no longera place for life. Some are already on there and theycan go beyond 75, but for the vast majority of us wewill be kicked off at 75, even if we are elected everyyear. My own position is that I representGloucestershire on the Council; I have to be electedwithin Gloucestershire every year and all of us fromthe national game have to stand for re-election to theboard every three years, which again I think followsgood governance policy.

Q540 Dr Coffey: So you would not want to see anychanges to perhaps trying to encourage fresh blood inat the highest levels of our game?Roger Burden: It is really difficult. Part of LordBurns’ report, which we did support, was that weshould be more open in Council and make sure peoplewere properly representative: we increased the

women’s representation, we introduced a referees’representative, players, managers and there is adisability representative. So we did become moreopen and there are over 100 of us and I would needto be convinced that that is not enough, that we needmore. I do not think we need any more in Council.

Q541 Dr Coffey: You were acting chairman forabout seven months.Roger Burden: Nine months.Dr Coffey: Nine months, sorry. There is something inthe papers today about a report you wrote when theinquiry started off, which was working together withthe Premier League and the Football League for a co-ordinated response to kill off the nonsense aboutinfighting that politicians and the media seem keen toinvent. I was a little surprised by that, only becausethe Committee has not come to that view. It is peoplewho have worked with the national council, like LordTriesman and others, who very strongly suggest thatthere are internal tensions. So why do you think it wassensible to put your thoughts in writing?Roger Burden: Because I do not see that in theboardroom. Some of the disputes that we have heardfrom Lord Triesman, and I think Ian too mentioned it,I have not seen in the boardroom.

Q542 Dr Coffey: Have you seen them in thecorridors outside the boardroom?Roger Burden: Yes, but what is wrong with that? Ianis a good example where he resigned in frustrationand others have been accused of disagreeing with him,but the place to bring these presentations, chiefexecutive, is in the boardroom. He put up his 100-dayidea, and I liked nearly all of it—not all of it, butnearly all of it. I am sure we would have made 80%or 90% of it, but he resigned so we did not have achance to have that challenge in the boardroom. Ifsome of my colleagues in the professional game maynot have not been supportive of it, I would have heardtheir arguments. I liked what Ian put but we never hadthat opportunity, and Lord Triesman may have beenin the same position where outside the boardroom hehad some disagreements. He should have broughtthem inside the boardroom and there he may havefound he got some support.

Q543 Jim Sheridan: Could I ask you basically whatyou see as the main challenges facing the Englishnational game? As a Scot, I am keen to find out whatthose challenges are and see how best we can makethem even more challenging.Roger Burden: Thank you very much. Kelly hastouched on them. We are here to increase participationin football. We want to see as many people playingfootball and going to watch football as we can,preferably playing because then, if they are today’splayer, they might be tomorrow’s administrator ortomorrow’s referee, like me. I was a failed player soI went into refereeing and administration. What wewant to do is give everybody that opportunity toparticipate. That is our challenge.Within that, of course, you then have the challengesthat Kelly has touched on in terms of making surewe have good facilities, making sure that children in




particular have a safe environment in which they canplay, and “safe” means they have properly checkedand trained people looking after them. It is our belief,as we have said that, if they do get properly coachedby coaches that have been trained, it will improvetheir skills and they will enjoy it. They may not go onto be elite players, but hopefully they will playfootball until their maybe late 30s, maybe even 40snow with veterans league. I was sitting at the backand I heard somebody was playing football. I couldonly suspect it was veterans league football, butforgive me.Jim Sheridan: What made you think that?Roger Burden: It is really once you are in your early30s, 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 thechallenges are because one of the strengths, I believe,of the national game strategy is that, before weproduced it, we had a major research and consultationinto the national game, involving over 20,000stakeholders: players, coaches, referees. They wereclear what the challenges are for them and where theywanted the FA to invest its money to tackle some ofthose challenges. Behaviour came out very strongly.The Respect campaign was a response to that. 40% ofthose this year surveyed believe that Respect so farhas improved their experience of the game. We knowthat 2.5 million people, despite 7 million playing, stillwant to play the game, either play more or play, andwe have been working very hard to create both juniorfootball and the 5,000 teams I mentioned earlier thatwe have grown since the launch of the strategy.On the point you touched on earlier with Alex, it isabout trying to create more flexible football for adultsand tap into the changing lifestyles and the waypeople want to consume their football and respondingto that with the new partnership with Mars and thework that we are trying to do with Sport England toturn that round. Facilities is a big one, obviously, andwe can never have enough resources to tackle thedemand on pitches and facilities. But since thestrategy, working in partnership with the foundationand other partners, we have invested over £200million into new or improved facilities.So we know those are the kinds of challenges that weare working really hard to address and we feel wehave made some inroads. Obviously, there is a lotmore to do. We are just out now on the extension ofthe national game strategy to 2015. There is a surveyonline currently at the moment. Over 10,000 peopleinvolved in the game have done it, so we will begetting a really clear steer about how we haveperformed, how they think we have improved whatthey have set out and they have asked us to do, andwhere they think the priorities are going forward.

Q544 Jim Sheridan: Finally, you seem to indicatethat you have a good working, constructiverelationship with the professional game, but just onthe question of resources and powers, hypothetically,if that relationship was not there, do you have therelative powers and resources that you would need?Roger Burden: Powers, yes, because the split of cashis in the articles. We have heard that, haven’t we, with

the 50:50 split of cash? That gives us the power. Wehave 50% of the surplus and the authority is delegatedfrom the board to the national game board. Obviously,we have to report up to the main board. If ourprofessional game colleagues wanted to be difficultthey could protest at the main board. They haven’tdone but, if they did, there are only five of them andthere are five of us and we then have the chairman andthe general secretary. Heaven forbid it would come tothat. It never has, but I do think we have the power.Do we have the resources? It comes back to themoney.

Q545 Jim Sheridan: Has it never happened then?Even out in the corridors of power it has neverhappened?Roger Burden: No, not between us and theprofessional game. They have always been incrediblysupportive. Kelly was telling me at her level it is thesame.Kelly Simmons: The board unanimously supportedthe national game strategy and the investment into it.I came along to the board and presented, along withsupport from Roger, and there was complete supportfor the strategy. We have worked very closely withthe Premier League through the Football Foundation,where I think they are shortly due to announce theyhave invested in projects totalling nearly £1 billion.So that is the kind of relationship we have with theGovernment and the Premier League. At local level,there is some fantastic work going on between thecounty associations and Premier League and FootballLeague clubs and they have been working on drivingthe Football for All agenda. We have just recentlyannounced that through the work we have done withthe clubs there are over 1,000 teams of people with adisability. The new women’s super league, semi-proleague launching in April, five of those clubs aresupported by their men’s Premier League club. So Ithink there are good relationships all the way through.

Q546 Damian Collins: I wanted to go back to theBurns report and the issue of the two independentdirectors. From what you said in response to mycolleagues, it sounds like the Council considered thathaving two independent directors on the board, yourfear was they would be more likely to side with theprofessional game. If that is people’s view, four yearsmay have elapsed, but it is a numbers game. On MrSheridan’s question of power and control, thosenumbers will not change and I do not believe it willbe eloquent words that will convince you to changeyour position. It sounds like you want to cut a dealwith the chairman of the FA if he wants to get hischange through.Roger Burden: No, you misunderstood me. Iunderstand about independent directors. I am non-executive director of the FA, as are nine other people.It is quite a lot of non-executive directors. There is alot of challenge within the boardroom and we havean independent chairman with the experience of theprofessional game, and indeed grassroots. So there isan excellent mix there.This was the first time this had happened when thishad been offered to us and previously we were six-all.




There was concern that somebody who wasindependent of the game may find himself easilyseduced by the professional game. He would muchrather accept an invitation to go to watch Arsenal thanhe would to come down to the King George V inCheltenham. So there was this concern and I think wehave overcome that slightly. I think a lot of that hasgone, and Lord Triesman helped that because LordTriesman had a grassroots background. There was aconcern about what true independence means. I thinkwe all can see the strengths of true independencebringing some real external thinking to a board. Everyboard benefits from that, but that is where ourconcerns were four years ago: would he remainindependent for long?

Q547 Damian Collins: Are people still concerned athow easily independent members of the board may beseduced by the odd corporate freebie?Roger Burden: No, I am talking four or five yearsago. The new idea of “Can we have two independentdirectors?” is a relatively new idea again, because wethought we were doing okay.

Q548 Damian Collins: So your concern is that theindependent directors might mean that theprofessional game ends up having more of a say is notfound any more?Roger Burden: No longer, no, that is no longer thecase and personally I do not have that concern now. Ihave met a lot of people who I think are certainly ofthe stature that they would not allow themselves to beseduced. I think that was an unfounded concern thatwe did have four or five years ago, which I do notbelieve will sit out there now.

Q549 Damian Collins: From what you said, itsounds like if colleagues share your views then MrBernstein may be successful in getting his twoindependent directors?Roger Burden: Yes, I think the Chair has to put thecase to colleagues; it is a strong case. It is not a strongcase to say, “Everybody else will go away and theywill be quiet if we do two independent directors”, orI suspect that is possibly the case. We will have lesscriticism. It is one case, but I would like to understandthe way the board would be strengthened byindependent directors and my colleagues. What arethe reasons, what will they bring to us? I know someof the answers incidentally.

Q550 Damian Collins: What do you think they are?Roger Burden: I think they can bring specialist skillsthat we do not have on the board, but I think that thechief executive of Manchester United brings particularskills 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 beeninvolved in running building societies?Roger Burden: Only one.Paul Farrelly: The picture that we have had paintedto us by a number of people and I think you haverather reinforced today is that there are fiveprofessionals from Gloucester on the board who have

all the money. Then there are five well-meaningpeople from Cheltenham who are on the board; theydo not like to rock the boat because they are rathergrateful for the money they are given. A day or sobefore every board meeting, the five blokes fromGloucester all meet up to decide that what goes on inGloucester has nothing to do with the people fromCheltenham and certainly nothing to do with thatchairman and chief executive who come from neither.The well-meaning people from Cheltenham do notdisagree with that. That is not a recipe, is it, for asuccessful, agile, responsive organisation like abuilding 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 beencreated.Roger Burden: I’m sorry you got that impression, butit is not what I said. I was trying to respond to whywe got stuck four or five years ago and I definitelydid say that is not the view today, we have moved on.I think if you look at the board and the debate andboard agendas—I do not know if we are going to geta chance to see that—I think anyway it’s a properlyrun constituted board where it has the right degree ofchallenge, where we do not all vote en bloc, and Ithink that is the way boards should be. I’m sorry yougot that impression but it’s not what I said.

Q552 Alan Keen: Is Cheltenham & Gloucester stilla mutual?Roger Burden: No, no, no, C&G was bought byLloyds Bank some 10 or 12 years ago. I cannotremember when. I was there. I was at C&G. It isnothing 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 mutualshave been more responsible through the economiccrisis 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 societytoday. It is not Cheltenham & Gloucester but itwouldn’t be right for me to answer it. I’m happy tohave 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. Youmentioned veterans’ football; I understand thatGermany has veterans’ football organised at quite ahigh age-level. Can I ask you why it has never beenlooked at by the FA because there are two benefitsfrom veterans’ football: one is the obvious health one,but the other is less easily recognised by people.Veterans have money to spare compared with youngerpeople and, if you get veterans organised to play theyget them into the clubs themselves, the grassrootsclubs, they can give a lot to it whereas at the moment




they are probably sitting in front of the telly watchingfootball. Why has the FA not been involved inorganising veterans football?Kerry Simmons: It has in the sense that we invest inthe county FAs to develop football right across frommini-soccer through to adult football. They havetargets for adult male as well as adult female. Themale ones have been challenging, as we’ve seen adecline in 11-a-side which we’ve halted now and abig growth in 5-a-side, for the reasons we touched onearlier. A couple of focus areas that a number ofcounties have done is to look at vets’ football andlocal vets’ leagues and keep people active in thegame, but there is a balanced work programme so abig focus for us at the moment is drop-out at theyounger age. As with all sports we are losing a largenumber of players in that sort of 14 to 16 age band.We’re trying to bring children into the game, makesure they don’t drop out, provide them with the rightrange of flexible opportunities to play as an adult, beit 11-a-side, small-sided or the Just Play type ofconcept 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 leagueshave done a lot to keep people in the game and putover 35 leagues in place.Roger Burden: My own county started a veterans’league this season from seeing the same guys playingunaffiliated football. Our development manager wentout there and spoke to people and we have a leagueand now we’ve double-figure teams in it; it’s a fewhundred chaps playing football and I think it’sgrowing.Alan Keen: After the kids have gone to bed, youwould have to use the small pitches, still play withlarge balls but smaller pitches, if you don’t mind.Sorry, Chair.Roger Burden: I do see it as a growing area offootball, you’re right.

Q556 Chair: Can I ask you a final question, MrBurden? As you said, you were acting chairman of theFA for a time and you contemplated applying to—Roger Burden: I did apply.Chair: One of the reasons you gave for withdrawingyour application was that you said that liaison withFIFA was an important part of the job and you weren’tprepared 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 Cupbid where the day I walked out of Wembley, havingaccepted the role as acting chairman, I received a callfrom one of the World Cup teams to ask me if I wouldgo to South Africa and support some of the work theywere doing during the World Cup, which I did, and Iput off my holiday to go. I went twice to South Africabecause the World Cup bid team wanted me to and Ishook hands with important people, in FIFA andothers, as I was asked to do. I met several of the FIFAexecutive committee, both in this country and inSwitzerland. I treated them with respect which Ithought they deserved and I felt they were treating mewith respect. I think they were taking me for a foolbut, at the time, I thought they were treating me withrespect and I was happy to do all that for the English

bid. Then of course on the day we were faced withcoming second; it did not concern me, I thought theRussian bid was a good one; they were always a goodcompetitor, I’ve got no issue with them winning. Itwas the way we lost that I have the issue with and wecame a very poor fourth with only one vote on top ofour own representative, as I expect the Committee iswell aware.It was against that background, as I saw it. First ofall, the background in which our bid was recognisedas being the best by most objective judgements—indeed, some of FIFA’s own judgments—and they setdown the criteria on which judgments were made. Inour group we were at the top, level top. Yet, we onlygot one vote. It felt to me as though they were notbeing fair and they were not being objective and wehad 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’veput us through this and then they’ve just gone anddone something else?” I did not like that and I did notlike the fact that they had promised—I think we wereup to five, it might have been six, but certainly five—Prince William that they would support us and theydid not. We only got one of those; I think most ofthem subsequently rang our chief executive to say thatthey were the one that voted for us. If we had hungon a bit longer we might even have won the vote bythe 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 hasto have a relationship with them and I wasn’t preparedto do that.I’ve worked with people that I’m not sure whether Ican trust—we have all done that in life and business—but this was the governing body. This was animportant set of people. I just could not see myself athaving to negotiate with them, having to agree withthem and then walking away saying, “Well, their wordjust is not worth it; I don’t know if we’ve got a dealor not.” It is something that I’m not used to; I wasn’tprepared to put up with; and I thought it was best if Istood down rather than refuse to meet them or be rudeand sarcastic, which I can do. I’m quite good at that.That wouldn’t be right for the chairman of theFootball Association and I withdrew. I had appliedand I had a first interview but I did not attend it; Iwithdrew before I got to the first interview but thoseare my reasons and I’ve not regretted it.

Q557 Chair: You say that you think that our bid atleast deserved that second place and that we hadpledges from considerably more than the one personwho did eventually vote for it with us. Why do youthink that those others did not support us?Roger Burden: I genuinely do not know. On theobjective assessment, I would have expectedsubstantial support and on the personal commitment Iwould have expected at least five and I haveabsolutely no idea what criteria those who voted usedbecause it was not what they set down. I just do notknow.

Q558 Chair: You must have thought about this.




Roger Burden: Yes, I have and I have my own viewsand they are personal ones and I think, if I understand,you will have heard stories. I’ve heard stories. All Iknow is that they didn’t follow their criteria. Imentioned the people. I attended what we hopedwould be the celebration party, which turned out to bethe wake, working with the World Cup bid team,which was not just the two or three that most peoplesee; there’s a lot of staff on the World Cup bid team,who had given a year to two years of their livesbecause they believed that the England bid was goingto be the best and they believed that the criteria thatthey had been asked to follow would be followed bythose voting. That was an emotional moment, to seethose people having to deal with the fact that we onlygot one vote also brought that failure home to me. Ifind it difficult to explain what was in the minds ofthe people who voted.

Q559 Chair: Without naming individuals, you’vesaid you had your own views, would you like toexpand as to what those are?


Witness: Stewart Regan, Chief Executive, the Scottish Football Association, gave evidence.

Chair: Good morning. For the final part of oursession, can I welcome Stewart Regan, the chiefexecutive of the Scottish Football Association andalso thank you for your patience in waiting to get tothis point. It seems appropriate to ask Jim Sheridanto begin.

Q561 Jim Sheridan: Thanks for coming along,Stewart. I think that it is well recognised that thisSelect Committee inquiry has principally focused onthe English League and the Premier League, but itdoes touch on very important issues relative toScotland in terms of governance, ownership, the roleof supporters et cetera, so we felt it was important thatwe get a Scottish perspective on just exactly how thegame is being played in Scotland. We had the formerFirst Minister, Henry McLeish, down some weeks agoand you know Henry has produced a report. Couldyou give us an analysis or a perception of how youfeel about Henry’s report?Stewart Regan: Henry carried out a report in twoparts focusing on five key areas. Those areas wereperformance, facilities, regional structures,governance and league competitions. There were 103recommendations in all. The board have consideredthem. We’ve prioritised them and we areimplementing two key areas as we speak, one relatingto governance and one relating to performance.From a governance perspective, the proposal isprimarily to reduce the main board from eleven downto seven; to make it less of a representative board andmore of a strategic board, focusing on strategy financein major game decisions and sitting below the mainboard to split the game into two, effectively aprofessional game board and a non-professional gameboard. That would allow both sides of the game toeffectively have delegated powers from the main

Roger Burden: No, no, I would not. Those views areclearly that, for some reason, they chose not to followthe criteria and I genuinely do not know why they didthat. This is not a Russia thing, because we knewRussia had a good bid for all the right reasons. But toget 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 lookof it. It did not say anything about that in the book.There is no point in me in giving you my view. All Iknow is what I’ve told you, that we had the best bid,by most measures, and some members committed tothe prince that they would support us and it did nothappen.

Q560 Jim Sheridan: Did those corridor meetingsnot work?Roger Burden: Some did I expect. There must havebeen some meetings in the corridors by some that gotmore votes than us that worked.Chair: I think that is all we have. Thank you verymuch both of you.

board which would allow them to run the game andinvolve the expertise in the areas of the game that bestsuits the individuals involved.We had a series of recommendations about Counciland the Council, from a structural point of view and aconstitutional point of view, does not have any votingpowers within the Scottish FA. However, we listenedand heard Henry’s recommendations as far as howCouncil could be used, and our proposal is to createCouncil into almost a House of Lords model forinclusion of football writers, supporters, refereesassociations, players, managers, disabled, andwomen’s game and so on, so we have a much moreall-embracing, inclusive view of football in Scotland.That will allow us to have a debating forum thatwould give us a voice from the total Scottish footballlandscape and decide whether that voice, particularlyif it is positive, requires issues to be converted intopolicy. Two weeks ago, the board approved ourgovernance proposals. They are being converted intoresolutions as we speak and will go before our AGMin Scotland on 7 June.

Q562 Jim Sheridan: Did I hear that they are talkingabout reducing the board from eleven to seven? Howwill you achieve that? What are the criteria for that?Stewart Regan: At the moment, the board consistsof representatives from the game rather than electedindividuals, so we have a number of individualsaround the board table who are there because of theirinvolvement or expertise in particular side of thegame, whether it is schools, football or youth football.Our view is that a main board needs to becompetence-based and able to deal with strategic andfinancial matters.The main board will involve the senior officials of theScottish FA. The terminology for these in Scotland is



29 March 2011 Stewart Regan

“president”, and then there is a first and second vicepresident. They are people who effectively comethrough Scottish Football, through the Council; theyhave held senior positions in the game, either at clublevel or association level. There would be the ChiefExecutive, i.e. myself. There will be four automaticplaces on the board. There would then be one seat forthe professional game board and one seat for the non-professional game board. Those two individualswould be elected by their respective boards, and thenone independent non-executive director, whom wouldbe selected based on competence criteria, i.e. if wefeel we need a legal input, we would appoint a legalindividual; it may be HR; it may be strategy. Thatdepends on the competence of the board at the timewe need to make that decision.In four years’ time, we will remove, subject to ourmember clubs’ agreement at the AGM, the secondvice president position and replace that with a secondindependent non-executive director, thus making theboard much more in tune with normal blue chipcompanies and normal corporate codes of governance.

Q563 Jim Sheridan: Apart from the two electedpeople, will the rest of the board be appointed?Stewart Regan: That is correct.

Q564 Jim Sheridan: One of the recommendationsthat Henry McLeish suggested was the reintegrationof the Premier League and the Football League.Would you agree with that?Stewart Regan: I think that is a matter for the PremierLeague and the Football League in terms of what thestructure looks like. We have discussed the matter andwe feel that having one league to deal with in Scotlandmakes much sense. Scotland is a country of only 5million people; it is the same size as Yorkshire, whereI was chief executive previously at Yorkshire CountyCricket Club. With 5 million people and all theprofessional football clubs that exist, it is verycomplex and complicated in terms of getting thingsdone. It would be much simpler to have one league,and equally, from a performance point of view, therelationship between the governing body and theleague, we feel, would be much smoother andprogress could be much swifter.

Q565 Jim Sheridan: Are you also aware of thediscussions that are going on about the size of theleague?Stewart Regan: That is correct.

Q566 Jim Sheridan: Certainly, if newspaper reportsare to be believed and various surveys have beencarried out, the supporting fans really do not want a10-team league but the authorities seem intent onimposing a 10-team league. Is that the case?Stewart Regan: I think the league reconstruction, as Isaid before, is a matter for the leagues themselves.They are in discussion as we speak. It is not as simpleas simply looking at one stakeholder view, i.e. thefans’ view, if you like. We have certainly, from whatI gather, taken fans’ views into account, but theprinciple of a 10-team league is built on the long-termsurvival of Scottish football.

In comparison to football in England, there is not thesame amount of money flowing through the game and,as you know, football in Scotland is dominated byCeltic and Rangers, particularly in the PremierLeague, just in terms of fan base and resources.Money needs to flow down through the game so thatthe landing is softened if a team is relegated from thePremier League to the First Division, because the dropin income is potentially cataclysmic for a club thatfalls out of the Premier League. Therefore, theintention is to try to provide some funding that canflow down through the game from the Premier Leagueinto the First Division, and in order to do that, youneed to create that income from somewhere. Theproposal is on the table to reduce the size of thePremier League from 12 teams down to 10, whichwould create two shares of income that could bedivided across the Football League and thus have amuch more attractive First Division in Scotland.There are also performance criteria to be put in place.Following Henry McLeish’s report, we have recentlycommissioned a performance strategy using AlistairGray from a company called Renaissance, who havedone a lot of work with sport right across the worldand right across a number of different sports. Theperformance strategy is built on four guidingprinciples. One is to create 10,000 hours of contacttime with the ball for younger league players comingup through the system, which actually links to theprovision of sport in schools, which we probably willnot have time to get into, but it is something we feelparticularly strongly about at the Scottish FA. Thesecond principle is around providing “best versusbest”: the opportunity for the best players to playagainst the best players. The third principle is aroundcoaching, and the fourth is around something calledThe New Scotland Way, which is our performancesystem and the infrastructure that we put in place.I was interested earlier to hear one of the commentsabout preventing foreign players coming in anddominating the national team. In Scotland, we are alsoconcerned about that, and we are looking at putting inplace performance-related fee permits for our clubsto incentivise them to actually play young Scottish-qualified players in the first team, to actually bringthem through and provide the “best versus best”opportunities. So, to address your question as far asthe restructure of the League, yes, on the face of it, itdoes mean a reduction in the number of teams, butboth 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 withinour own board, but it is one of those matters that arevery subjective. People either agree with it or they donot, but when you look at it from differentperspectives, there is a lot of common sense to theproposal.Jim Sheridan: So finance has been the dominantfactor, then, in making the decision or the proposals.Stewart Regan: No, that is not what I said. What Isaid was that finance and performance have beenlooked at. Performance, and in particular thedevelopment of Scottish-qualified, home-grown talent,is a key criteria. If you look at recent articles fromCraig Levein, the national team manager, you will see




that he personally is very supportive of that restructurebecause it gives the young players the chance to playagainst the best players in a very much stronger 10-team, top tier of football in Scotland.

Q567 Jim Sheridan: If it goes to a 10-team PremierLeague, how many times will Celtic and Rangers playeach other?Stewart Regan: That is clearly for the ScottishPremier League to decide. This season already theyare playing each other seven times because of thenature of the cups that they have been drawn againsteach other and the progress that they have made. Thenumber of times Celtic and Rangers play each otheris actually a key factor in the broadcasting contract inScotland. Obviously, any structure that is put forwardhas to look at that particular clash as a key contributor.I don’t know where that will end up, but it willcertainly feature strongly in any proposal.

Q568 Jim Sheridan: Have there been anydiscussions about, putting Cup games aside, howmany times in the league Celtic and Rangers willplay?Stewart Regan: Yes, there will have been discussions.As I said, it is the League—

Q569 Jim Sheridan: Do you have any idea howmany times it will be?Stewart Regan: I could not say off hand, because Ihave not been involved in the detail of fixtureplanning. What would need to be discussed,particularly with the Leagues themselves, is anyfixture scheduling that they have put in place.Jim Sheridan: There is a distinct danger there ofbecoming repetitive and boring, and the end result willbe that fans will not come and watch it.Stewart Regan: I think, if you talk to the fans ofCeltic and Rangers, they would probably disagree.They are the biggest-attended matches in Scotland;they are the matches that grab the public interest andtelevision interest around the world. When Celtic andRangers play fans of other Scottish Premier Leagueclubs and also in Cup matches against ScottishFootball League clubs, they are particularly attractiveand generate revenue for the clubs and provideeconomic impact for the local communities where theteams play.

Q570 Jim Sheridan: Henry also suggested theregionalisation of the lower leagues. How do youthink that will work out? How will it help the lowerleagues?Stewart Regan: It has been discussed with theScottish Football League. The principle really comesdown to looking at whether or not a pyramid systemcan be put into Scotland. At the moment, at thebottom of the Football League, there is no opportunityfor any team to come up from amateur football ornon-professional football into the Football League. Ifyou look at the performance strategy, which providesthe opportunity for clubs to play against the very bestclubs, we feel at the Scottish FA that there needs tobe an incentive for clubs that want to invest in theirinfrastructure and want to develop their standards to

aspire to become professional and, therefore, we feelthat the door needs to be opened up for clubs to comethrough the ranks.However, because of the size of Scotland, to createanother division and have clubs travelling from Wickor Elgin right the way down to Dumfries or Berwickjust doesn’t make commercial sense, so there are anumber of options, one of which is regionalisation.When you look at it purely from a financial orcommercial perspective, there is a lot of sense in it.The clubs themselves, however, see that as potentiallychallenging what they have currently, which is to bepart of the national League, to be a national,professional team, and any suggesting of regionalisingis met with the view that it would be a step backwards.That one is still very much a work in progress. Thatone, again, is for the Scottish Football League at lookat the way forward.

Q571 Jim Sheridan: In terms of the revenue from,particularly, television, how will that flow down to thelower League clubs?Stewart Regan: There are two aspects, really. Thereis the television revenue that comes in through theLeagues themselves, and the Leagues make adistribution to their clubs based on a particularformula. Obviously, that would be something for youto discuss with the Leagues, if you feel it appropriate.I can only talk for the television deal for the ScottishFA.We provide a number of distributions based on thingslike the Scottish Cup, based on a distribution award atthe end of every year to clubs, and what we arelooking at doing as part of the governance review isrefocusing how we reward money. What we are keento do is reward clubs for delivering behaviours orinitiatives that are going to contribute to theachievement of our strategy. We want to move frombeing seen as a grant-giving governing body to a bodythat actually measures outcomes, and measuresoutcomes that contribute to the strategy, particularlythe performance strategy and the participationstrategy, which are the two key pillars that we areworking on. We are looking at the sort of outcomesthat we can reward, for example, playing youngScottish-qualified players in the first team, developinga number of coaches in order to provide the necessarycoaching support for young kids, and also toencourage participation, which means having avolunteer strategy and having an officials and coachesstrategy. At the moment, we are probably not as goodas we could be or should be in how we distribute themoney, but we have recognised that and we arelooking to change how we reward clubs in the future.

Q572 Jim Sheridan: Regardless of the attractions ofthe Old Firm, there is no way they are going tocompete financially with Manchester United orLiverpool, et cetera, so given the limited resources interms of Scottish football, do you think that salarycapping would be an appropriate way to go forward?Stewart Regan: I think it is an interesting debate, andit is one that I was involved in when I was at theFootball League. I think you have to look at themarket in which clubs play. If you are in the top tier




of football, you actually view yourself as playing ona world market, and if you have restrictions imposedupon you, you then see yourself as being unable tocompete 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 havecaps, it is potentially restrictive, and that is why Ithink that at the top end of football, it is not somethingthat is easy to achieve. However, at the lower ends ofthe game, I do feel that it is possible, and certainly, Iwas part of the team that looked at implementing thisin the Football League, particularly in League Oneand League Two, when I was on the managementteam at the Football League then. I think it dependson which team you are talking about and how youview the market in which you compete.

Q573 Jim Sheridan: Obviously, there is acompetitive imbalance in the Scottish game, and it isvery predictable. It is either Rangers or Celtic, orCeltic 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 formany, many years and I would argue that, if you lookat most categories of business, you will find aconsolidation taking place to two or three majorplayers in every category, whether it is petrol stations,banks or supermarkets. Football is no different. It isconsolidation down to a small number of big brandsthat have the global power and presence in order todominate their particular market. I think what is reallyhealthy in England is how the Premier League hasseen a widening at the top now to maybe four or fiveclubs, and I think it is important for Scottish footballthat we seek ways of making the top tier morecompetitive. Certainly, Hearts this season have giventhe top two a good run for their money and it wouldbe very healthy for the game to see stronger clubs.That is why I think the reconstruction of the Leagueand the distribution of income could help that andpotentially develop stronger teams for the future.

Q574 Jim Sheridan: There were expectations uponyour good self, when you were appointed, that youwould try to change things so that there would not bethis predictability and there would be some sort ofeffect of competition, but you seem to be suggestingis that it has been like that for years, so we need tokeep it that way.Stewart Regan: No, I think you missed the point. Ithink what I said was that it is not a good thing forthe game, but Rome wasn’t built in a day. I have beenin the post for six months. That has been in place for100 years. I think it will take a little longer than thisfinancial year for me to change it. What we arelooking at doing is putting in place initiatives toprovide income flowing down through the game sothat we can have stronger teams at the top end of thePremier League.

Q575 Jim Sheridan: Can I ask you just to considerthe current financial regulations? This morning, youwill know that Rangers are now effectively being runby the bank, and there are all sorts of speculationabout who should own the club or who is buying the

club and so forth. Do you have any views on thesethings and how the financial regulation should beoperating in Scotland?Stewart Regan: It is not for me to comment onRangers’ individual circumstances. That is a matterfor the club and the Scottish Premier League. We atthe Scottish FA have no direct involvement in the day-to-day running and the day-to-day financial matters.We are very keen to make sure that we have a strongLeague or Leagues and that we have clubs that cansurvive financially, and anything we can do to helpthat, we would support. The idea of things like fit andproper persons tests is something that we have withinour current articles. We have introduced club licensingand we audit all clubs regularly to make sure that wefeel that they are being run efficiently and effectivelyand have standards in place that satisfy supporters, theleague and the association.In terms of other financial regulations, there is nothingat the moment that I am aware of that we are doingor putting in place to change it. It is workingreasonably well at the moment. There are alwaysthings we could do differently and better, but at themoment, there are no immediate plans to change that.

Q576 Jim Sheridan: Do you think that there shouldbe 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 ultimategoverning body in Scotland and we have almost anoverarching responsibility to protect the long termgood of the game so, yes, I think that we should takean interest in these matters, but we have delegatedresponsibility on a day-to-day basis to the leagues toeffectively run their own business, and we would onlyget involved if there were a major appeal or a majorissue. For example, we became involved whenDundee recently went into administration and were infinancial difficulties, so we are the ultimate right ofappeal, but the day-to-day matters are handled by theleagues themselves because they are the bodies ofwhich the clubs are members.

Q577 Damian Collins: I was going to ask aboutDundee. It seems a good point to follow up on interms of questioning. Is Dundee symptomatic of abigger problem in the Scottish game of clubs simplyliving beyond their means?Stewart Regan: I think there is an issue with risinglevels of debt in Scotland and across the gamegenerally. I think my colleague from the FA downhere, Alex Horne, made the point earlier that there isonly a small number of clubs making a profit. InScotland, we have exactly the same issue. The waythat clubs tend to deal with it in Scotland is to try tooperate to a much tighter budget. What you have tounderstand is that in Scotland, the financial numbersthat you are talking about are substantially less. Evenat the top end of the game, the clubs are not gettinganywhere near the money that clubs in England get,and that is largely because of the size of thetelevision deals.




We have some very good examples in Scotland whereclubs run to a tight budget, where they have salarycontrols in place, and where they operate within abudget and stick to that. We have other exampleswhere clubs come in and potentially spend moremoney than they should be spending, particularly onthings like player wages, but I do not think Scotlandis unique in that. If you look across the world offootball, and perhaps other sports as well—cricket, asan example from where I was before, is facing asimilar issue—and as television money flows into thegame, there is a desire to have more of it and to chasethe dream and potentially get into European and worldcompetitions. I think you are always going to havethat, and it comes down to governance. It comes downto having good management and strong leadership onthe boards, so I think there is a problem in Scotlandat certain club levels, but it is no different to anywhereelse and we are trying to encourage clubs to livewithin their means.

Q578 Damian Collins: Just taking what happenedwith Dundee, do you think there should be a reviewof the audit? You said that you audit the clubs. Doyou think that the criteria that the clubs are auditedagainst should be reviewed in light of the problemsthat Dundee has had?Stewart Regan: It is a difficult one, because at whatpoint do you step in and decide that there is aproblem? Clubs can change their performance andshape very quickly if a new director or a newchairman or whatever comes in and has a differentpolicy. You can move from operating within yourmeans to operating outside your means very quicklyand it is at what point you step in. We have todifferentiate the rules of the league bodies from therules of the governing body that effectively is runningthe game, as opposed to the league, which isoverseeing the performance and the management ofthe clubs. Our view is that it is the league’sresponsibility to police and manage their own clubs,and there are numerous ways of doing that, whether itis fit and proper persons tests, salary caps andeffectively taking a much keener interest in things likeprofit-loss accounts and logging audited accounts atthe end of the year. The governing body, the ScottishFA, effectively sits over the top of all of those, andwe would only get involved at the last resort.

Q579 Damian Collins: Just to follow, lastly, Jim’squestions about Celtic and Rangers, do you think, atthe other end of the scale, that Celtic and Rangersstruggle to compete consistently at the high level incompetitions like the Champions League becausethere is not enough money for them to draw from theScottish Premier League?Stewart Regan: I think if you asked the clubs, fansand a number of the stakeholders in Scotland, theywould probably agree with the comment that the gapis widening between the top end of the ScottishPremier League and the top end of the EnglishPremier League, but again, that is happening all across

Europe in particular, simply because down in Englandthey have a very good television deal that has beenexpertly negotiated and money has come into thegame. They have created a very strong brand and theyhave grown it around the world, so naturally thatmoney has come in and clubs have taken advantageof that and built their own club brands.In Scotland, we have not had that luxury. We have amuch smaller League with fewer clubs competing atthe top end, so I do feel the gap has widened. Thatsaid, particularly the Old Firm have competed verywell in the competitions that they have participated in,and clearly, this season, Rangers have made progressin the Europa League until recently, despite havinglimited resources.

Q580 Damian Collins: To adapt a question I askedMartin O’Neill last week, do you think you will eversee a club like Aberdeen winning major Europeanhonours again?Stewart Regan: That is a difficult one, because I donot have a crystal ball and I would not like to predictor otherwise. I think the challenge is much greaternow for a club, particularly a club that has not wonanything recently and does not have the resources orthe infrastructure to risk up through the ranks, but Ithink football is about being able to offer theopportunity to live that dream and the opportunity togo from, as I said, parkland to professional stadium,which is why we think the pyramid system isimportant. We have to open up football and have apathway that goes right the way through so that clubscan aspire to be successful. If you had a club likeAberdeen or Kilmarnock or whatever that is takenover by a Roman Abramovich character, then whoknows where that club may get to in the future? Wehave seen what has happened to the success of thelikes of Manchester City and Chelsea in England inrecent times, when they have had huge investmentsand 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 fora while, and going on your previous experience aschief executive of York Country Cricket Club, arethere any good examples of governance that the SFAand FA could learn from the ECB, whether that isactual governance in decision-making or youthdevelopment?Stewart Regan: Absolutely, and we are alreadystarting to see examples of that with some of theinitiatives we are putting in place in Scotland. A greatexample of that is the principle of performance-relatedfee payments, as I referred to earlier. This issomething that the England and Wales Cricket Boardhave been pushing now for several years, and that issetting out a series of criteria that are important to thegame of cricket in England and Wales, asking clubsto either opt in or opt out of delivering those criteria.If you opt in and deliver them, you get paid. If youdon’t deliver them, you don’t get paid, and it is almostcreating incentives rather than punishments.




On how we manage the handout of cash and thedistribution of cash through the game, I for one am infavour of distributing it based on the achievement ofperformance targets. One good example of that, as Isaid before, is playing Scottish-qualified players inclub first teams to give them first-team opportunitiesrather than signing foreigners or journeyman playersthat can come in and perhaps do a job for a shortperiod of time. I think that makes opportunities openfor all clubs to benefit and not a just a small numberof clubs at the top end of the game.I also think that cricket has managed the independentnon-executive director route very well. The Englandand Wales Cricket Board has a strong diversityagenda. They have representation on the main boardfrom a number of minority groups, and I feel that issomething we can learn from and something that wewould like to develop over time in Scotland.

Q582 Jim Sheridan: In the short period of time thatyou have been there, you have probably seen thepoison of sectarianism in the Scottish game and, to befair to both clubs, they have tried their hardest—andin some ways, succeeded in trying—to endsectarianism, but that poison, that sickness, is stillthere. It would be one half of the city supporting theSFA and the other half supporting the city against theSFA. How do you see things developing in the future?What is your relationship, for instance, with theScottish Premier League these days?Stewart Regan: My relationship with the PremierLeague is excellent and, having listened to the debatethis morning, what is interesting is that there is a verystrong relationship and a willingness to work togetherbetween the Scottish Premier League, the ScottishFootball League and my own body, the ScottishFootball Association. I think Henry McLeish’s report,in many ways, has acted as a catalyst for change andwe are all working together to put the various changesthrough this year.You are right; there are some challenges in Scotlandthat are pretty unique and I think I have faced mostof them in my first six months. The whole sectarianissue is one that reared its head again over the lastcouple of weeks. Tomorrow we are actually meetingwith the Old Firm, the police and members of theScottish Government to discuss what can be done. Itis pretty unique to the west of Scotland, although Iknow the issue is wider than that. It cannot rely onone body to address it; I think it needs a wholeconcerted effort on behalf of everybody and I think itrequires the need to start at school level and look ateducation. Going back to this lady’s point aboutlearning from other sports, the other thing that cricketdid really well was the link with bodies like healthand education and government to use sport to addressa number of key issues. On sectarianism, racism infootball and some of those kinds of areas, I am reallykeen to look at what we can do in Scotland, but it isa big issue. It is one that has been around, again, for100 years or more, and we are not going to solve itovernight, I don’t think.

Q583 Jim Sheridan: Yes, I think most people acceptthat. During this inquiry, we have emphasised theimportance of grassroots football, and you mentionedschools as well. For me, there is nothing moreexciting, from a schoolboy’s or schoolgirl’sperspective, than playing football at their nationalstadium, whether it is at school level or amateur level.Yet, the SFA—I think it is the SFA—for some reasonhave refused permission for the Scottish schools toplay their cup final there, and likewise for the ScottishAmateur League. Could you explain why that is thecase?Stewart Regan: Absolutely: the decision was taken bythe Hampden Park Stadium Board, which I sit on.What many of you will not realise is that HampdenPark is also the home for Queen’s Park Football Club,and they play on it and play a full season of fixturesthere. In addition to that, we stage cup finals, cupsemi-finals, international matches, and we also have aseries of concerts there during the course of the year.We take criticism regularly on the condition of thepitch because of the amount of fixtures and amount ofuse that the pitch is getting. Equally, the HampdenPark board has commercial targets that it has toachieve in order to operate as a profit-making body,so the board decided that playing a match for a fewhundred people in a 56,000-capacity stadium was notviable any longer both from a usage and financialpoint of view. That decision was relayed to both theScottish schools and the Scottish amateurs, andalternative dates were sought for this year, the lastyear, to try to offer support and find alternativevenues, but the decisions have been communicatedand we are still in dialogue with both bodies on that.

Q584 Jim Sheridan: Correct me if I am wrong, butgrassroots football is not there for viability. It is thereto encourage people to participate in the game. Andwhile you make provisions for international games,cup finals and professional games—and taxpayers’money has been used to build Hampden in the firstplace—here the people at the bottom of the pile aresaying, “We would like an opportunity to play at ournational stadium two games: schoolboys and Scottishamateurs”, and they are the only ones who have beenpunished while the professional game put their moneyin there and get their own way.Stewart Regan: I do not think it is about punishinganybody. As I said before, it is about looking at whatgoes on at Hampden Park and how many fixtures areactually playing there during the course of a seasonwith a club team using it as their home ground. Thatis very different to a national stadium like Wembleyor a stadium like the Millennium Stadium where thereis no club team playing there week in, week out. Wehave to look at the quality of the surface, which is keyfor the professional competitions and the internationalteam. We have offered to support the schools andamateurs by trying to find alternative routes, but if Iwere a schoolboy footballer coming through, I wouldbe really excited about playing at any professionalstadium, irrespective of the national stadium. Thechance to play at a major ground is equally attractive,and that is why we feel that there are viable




alternatives to playing at a stadium that is getting anawful lot of hammering from people using the pitch.Jim Sheridan: Just for the record, the last time I wasin Wembley was watching the Scottish v. Englandschoolboys international, played at Wembley, so Iwould hope you would reconsider your position.

Q585 Chair: I think that is probably all we have foryou, so I would like to thank you very much forcoming.

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Members present:


Ms Louise BagshaweDr Thérèse CoffeyDamian CollinsPhilip Davies

________________


Witnesses: Sir Dave Richards, Chairman, the Premier League, and Richard Scudamore, Chief Executive, thePremier League, gave evidence.

Chair: Good morning. This is a further session ofthe Committee’s inquiry into football governance. Iwelcome for the first part of this morning’s sessionthe Chairman of the Premier League, Sir DaveRichards, and the Chief Executive, RichardScudamore. 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 FootballAssociation is the governing body of the Englishgame?Sir Dave Richards: Yes.

Q587 Mr Sanders: Unquestionably?Sir Dave Richards: It is the governance of the game.

Q588 Mr Sanders: Would English football benefitfrom having a stronger Football Association as wellas a strong Premier League, and will you support FAChairman David Bernstein’s efforts to achieve this?Sir Dave Richards:We have always supported the FAin every way we could. The FA is an association ofpeople, but it needs to keep the balance among thosepeople who are associated with it. As regardssupporting David Bernstein, yes, we will supportDavid Bernstein in what he is trying to do.Richard Scudamore: Can I maybe add some detail towhat Sir Dave has said? The FA is the governing bodyof football in this country. Under the FIFA statutes,that is the way it must be and has to be. We are aleague and therefore we come under the auspices ofthe FA and the FA sanctions our rulebook every year.That rulebook is effectively the contract between ourmember clubs and therefore we do support that. Wehave a history, certainly in our time at the PremierLeague, of supporting the reforms of the FA wheneverthey have come along. Sir Dave was instrumental inmoving the board to six and six—national game/professional game—in 1999. That was fourrepresentatives from the Premier League, two fromthe 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 onlypeople who came out and unconditionally acceptedthe Burns report. When Lord Terry Burns did hisreport on the governance of the FA, out it came andwe supported it. Even though there were elements ofit that we would not have, perhaps, as individual items

Paul FarrellyMr Adrian SandersJim Sheridan

have supported, we absolutely supported it. So wehave a history of progressive modernisation ofgovernance and we would be more than happy, as Isay, to support proportionate proposals.But Dave does hit upon the fundamental point that theFootball Association is an association of interests, andthat is its genesis. Its genesis goes way, way back tothe mid-19th century: J.S. Mill—I am sure you are allfamiliar with him—freedom of conscience andopinion, freedom of association, freedom of gettinginvolved in pastimes and interests that interest you.So, 1859. The FA itself was being formed aroundabout 1863 and this is what we are—we are anassociation of interests. It might be difficult, it mightbe tough, but that is what we are. That is where weare today and I would defend the FA. No matter whatother issues we may discuss today or at any point, Iwould absolutely defend the FA’s right to associate asan interested group—those who are interested infootball and those who actually run football to formas an association.

Q589 Mr Sanders: That is an encouraging answer,because the FA has told us that it wants to rethink thearchitecture at the top of the game. Do you thereforeagree that the respective roles of the FA and thePremier League need to be looked at and, if so, howshould the division of responsibilities change?Richard Scudamore: Well, there is a concept ofconstant improvement. We have never, ever rested onour laurels and therefore, in a sense, we are lookingat all things all the time. We have strategic reviews;we have regular dialogue. I think peoplemisunderstand a lot of the relationship between us.We have such regular dialogue. Every two weeks theexecutives of all three football bodies—FootballLeague, Premier League and FA—get together. Weexchange and work together on most initiatives. Yes,if there is ever a discussion around moving the gameon—progressing the game—we want to be activeparticipants in that because we think we have a roleto play, but we are not resistant to change, as I said.Any review that comes along we will take our full partin. I go back to Burns. Burns, as I say, was absolutelyendorsed by us. We were the first to do that and Ithink we were the only body to do it.

Q590 Damian Collins: Sir Dave Richards, do youthink, thinking purely of the England national team,there will be an advantage to having a winter break in

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5 April 2011 Sir Dave Richards and Richard Scudamore

the season or fewer premiership games played in theseason as part of a reduction in the number ofdomestic matches?Sir Dave Richards: It goes a lot deeper than that.Obviously we want to do the very best we can for theEnglish game, being the England team. We want todo the best. We have been discussing ways forwardon how we could introduce a winter break by possiblylooking at the FA Cup, looking at the league, andRichard and the executives of the FA have beenlooking at that to try to find a proper synergy whereit actually works.Richard Scudamore: Damian, your question hitsupon a number of things—helping the England teamand, effectively, fixture congestion. I have to say thatin my time here we have had four goes at this, lookingat the fixture calendar. It is very difficult because ifyou go back, from the formation of the PremierLeague, remember English football was historically22 teams in the top division and each team playing 42matches. That is not now the situation. We are nowdown to 20. If you remember in the season prior tothe Premier League’s formation the FA Cup was open-ended and, therefore, the replays went on ad infinitumor ad nauseam, depending on your particular view ofeach particular match. Now, winning the FA Cup issix matches plus replays, but at least only one replayand it doesn’t go on for ever. The Football LeagueCup used to be eight rounds plus replays to win it,and that has been reduced to seven finite rounds withevery game played to a finish.When you are looking at fixture congestion, whichreally is your question, I think, I am afraid we haveto look at our friends at UEFA and FIFA as more theculprits than ourselves. UEFA used to have—in theseason we started in, 1992–93—13 match dates theyrequired. Now they need 21 match dates to fulfil theirfixtures. FIFA traditionally were about nine or 10international dates, which is now averaging 12. Thedifficulty is somebody has to give something up. Weput on 380 events and those events are watchedaround the world. They are extremely popular. Those380, if you took two teams out, don’t go down by afew; you go down to 306 events. There is no way thatyou would do that in terms of public interest, in termsof fan interest, in terms of the expense of othercompetitions.If you want me to talk about other competitions—theFootball League Cup, for example, or the FA Cup—we have never advocated the radical altering of thosecompetitions because they are hugely, hugelyimportant to the solidarity of football in this country.The FA Cup is worth about £100 million value.Basically, if you mess with that competition, thatreduces. Of that £100 million, £75 million is for thebenefit of the FA and redistribution. The calendar isextremely difficult. We have always said if it could bepractically done we would advocate some sort ofwinter break, but we have failed because it is just hardto come up with a practical suggestion.

Q591 Damian Collins: Thank you for a very fullanswer, and you are right, the general congestion ofthe calendar was part of my question. I did mentionthe English national team and neither of you

mentioned the English national team in the answer tothe question. Sir Dave, do you think all thiscomplexity and all this work that might be undertakenin reducing congestion in the fixture list, if that couldbe achieved, would be to the benefit of the Englishnational team?Sir Dave Richards: I think it is an old answer to giveyou. The winter break would help providing we didn’tput extra games in on friendlies. That is always thedanger, but more and more, our Chief Executive andthe executives of the Football League and the FA arelooking at these scenarios all the time, and looking atnot just what is best for the Premier League, but howwe can develop better youngsters and better playingof the England team.Richard Scudamore: Can I go back to the winterbreak—

Q592 Damian Collins: If I may, Mr Scudamore, Iwould like to follow up on the question before youcome in. In what you are saying in your answer, doyou accept that there is an issue that people in footballhave to address, which is that England players aretired at the end of the season because they play toomuch football and we should look at how they canprepare for major championships by easing some ofthat burden on them?Sir Dave Richards: You say, how can we prepare formajor championships? I can tell you the preparationfor the World Cup was incredible. The training, thehigh altitude training, the training in South Africa—you couldn’t have done any more. It is not about justsaying, “We want to find a little bit more space for theEnglish team to play.” It is about how we can bringthe whole game to a higher level to win competitions.Richard Scudamore: Can I just answer specificallyabout the winter break? We have no body of absoluteevidence that a break around about December/Januarytime, whenever you might choose to do it, wouldmake a physical difference come May/June. That isone of the problems. We have opinion. There is a bodyof opinion on this subject, but there is no empiricalevidence that says take your break then—clearly, anybreak any time. Then there are some doctors who talkabout having to get back to match fitness after thatshort a space of time. It is all quite difficult and wecertainly 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 youwill want to ask us about.

Q593 Damian Collins: Of course. There is anotherpart to my question. The reason I am particularlydirecting it to you, Sir Dave, and the reason I amparticularly asking about the England national team,is whether you think you are conflicted as Chairmanof the Premier League and sitting on the FA board,because the FA is responsible for the national teamand you have responsibility both to the PremierLeague and to the national game. Certainly, youranswer betrays the complexity and the torment thatyou might find within yourself, but I am not surewhether the England national team is uppermost inyour thoughts.

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Sir Dave Richards: I can tell you that when I go onany tournaments or help in organising anytournaments, my uppermost thought is how we can doit best. Not the team, but how we can deliver thefacilities, the training time, the transport, the hotel, thefood, because that was part of my job. My job wasnot to decide how the team trained, when it trained,what the tactics were. That is the manager’s job, butit is our job to give him the time to facilitate all thosethings. People talk about conflict. I don’t reallyunderstand how you get to that because it is anassociation of people. People say, “Well, you wereChairman of Team England during the World Cup.” Itis just a name of a person who had the responsibilityif anything went wrong. Whether a player got injured,whether it was the medical staff, whether it was partof the staff that had to be flown home, they wereresponsibilities that I had, but not the team and theway it played and the way it trained. That was themanager’s job.

Q594 Damian Collins: But if the England teammanager said to you, “I think the players are too tired.We need to reduce congestion in the game,” and theFA board agreed, there was consensus among FApeople that was the right thing to do and we shouldlook at that, would your first reaction be, “Let us goaway and see how the Premier League can make acontribution to that along with other competitions.”?Sir Dave Richards: No, it wouldn’t.

Q595 Damian Collins: Do you not think that doesslightly conflict you? You said no, it wouldn’t; that isnot how you would respond. Do you not think thatgives you a slight conflict being Chairman of thePremier League and being on the FA?Sir Dave Richards: If you just give me some time toanswer you, I will try and answer you the best way Ican. If you say that fixture congestion is too much, wehave to go right back and start looking at how fixturesare made at UEFA, FIFA, the FA and the PremierLeague. The Premier League has tried over manyyears to make the calendar fit to suit everybody’spurpose. It has tried extremely hard. The manager hasnever, in all my years—I have been on the FA since1994—said to me, “The players are too tired, theyhave over-trained,” because it is his job to decide that.The board and everyone else do not have any inputinto that. It is purely what the manager decides.Richard Scudamore: In a sense, Mr Collins, the issuehas moved on because I think you would admit, Dave,you were the reluctant sole representative with thattitle during South Africa, because Lord Triesman hadleft the organisation, and the minute David Bernsteinarrived you handed over that title or that pass hadgone. Some may call it a hospital pass, who knows?But it has been handed on to David Bernstein and thatis right in some ways. In some ways we are talkingabout an issue that has passed.

Q596 Damian Collins: I am not doubting these arevery difficult issues or saying that there are easysolutions to them. A lot of our inquiries have lookedat the FA board and the way it is made up, the peoplewho are on it, the way they make their decisions. Is

there an inherent conflict of interest in your role, SirDave, and would it be better, as has beenrecommended to us by Ian Watmore, that the FA hasa wholly independent board and, therefore, theseconflicts don’t arise?Sir Dave Richards: We would like to discuss thatfurther, but can I say to you the FA needs the wholeof the balance from the Premier League, the FootballLeague, the national game, the Conference. It needsthat because each person brings something a bitspecial to it, where we have accountants, clubchairmen, club chief executives, professional gamechairmen, professional game representatives andsecretaries from the national game, because it createsthat balance inside the FA of what is really needed.What we are not saying is that it doesn’t need someindependence.

Q597 Damian Collins: But you would not go so faras having a wholly independent board or a majorityindependent board?Sir Dave Richards: I think it would be a retrogradestep if you did that.

Q598 Damian Collins: One final question: given youthink there should be a role for independents on theFA board, should there be a role for independentdirectors on your board, like most successfulcompanies have independent directors?Sir Dave Richards: We are governed by shareholders.Richard Scudamore: That is the point. You cannotconflate our board with anything like a business board.Effectively, if you go back to Cadbury or you go tothe Combined Code, it quite clearly says thatindependents are there to represent the shareholders’interests. All our shareholders get to make everymaterial decision that goes on. All our 20 shareholdersmeet at least five times a year, usually six, and wehave ad hoc meetings if an issue arises. I think themaximum we have had is 12 meetings in a year duringcertain times when the European Commission issuewas around. Basically, our constitution, deliberatelywritten by Rick Parry and our forefathers, enabled theshareholders to vote on every material issue. Anythingthat exposes the shareholders to either a £200,000liability or an income, a contract that generates£200,000 or we spend £200,000—we had one onlylast week—all the shareholders have to approve that.Therefore, effectively, our shareholder meetings arethe board meetings. Once a year we agree on arulebook and then, yes, we have summary ability toapply that rulebook during the year where we useextensive external legal advice, so you can’t conflateit.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 formedand it is an association of interests. On the idea thatyou would have a wholly independent board,independent of whom? Representing whom? Thewhole point is with the FA, it might make it moredifficult, but the essence of the FA has to be arepresentative body where representatives of the gamecome together in an association to try and do what isin the best interests of the whole game. I would defend




the FA to the ends of the earth, really, to make surethat it was allowed to associate as an association ofinterests.

Q599 Damian Collins: You both are in favour ofhaving independent representation on the FA board,but you wouldn’t countenance it for the PremierLeague, even if that might bring an outside view,some other expertise?Richard Scudamore: Just so as we are clear, apersonal view: I don’t think independents necessarilyare necessary on the FA board because it is anassociation of interests. However, if that is what MrBernstein, as the FA Chairman, wishes to promote, Ithink we would support that, as we did with Burns. Idid say we didn’t like everything in Burns, but Burnsbasically said, “We think you should haveindependents here.” It said an awful lot of other thingsas well, which I said to you. In the round, we thinkBurns, therefore, was worth adopting.

Q600 Paul Farrelly: Mr Scudamore, have you notjust said of the FA, “We are an association ofinterests.”? In 2008, responding to a speech given bythe now departed Lord Triesman, you said, “We arelike competitors. We compete for sponsorship and fortelevision rights and we are in the same space.” Howdo representatives of the Premier League managethose competitive interests while at the same time, asyou say, recognising the FA as the authority and thegoverning body of the game?Richard Scudamore: Of course, in one sense I can’tdeny we do compete, but there is a difference betweencompeting and it necessarily being conflicting. Ofcourse, when it comes to our broadcasting rights, forexample, we don’t compete directly in the sense of weare out to market together and we are out to market atthe same time and we are taking each other’srevenues. In fact, we Chinese wall that entirediscussion. We are regulated—heavily regulated—inthat sense.But, yes, there is an element on the commercial sidewhere there are properties that we each have, but it isnot a zero-sum game here. When you go back to theway the game has grown, the game has grownimmeasurably in interest. If you look at all the datasince the Premier League was formed, 1992–93 totoday, our revenues have grown; I can’t deny that. Ourtelevision viewing has grown; can’t deny that. But sohave attendances grown. Attendances have grown atthe Football League; attendances have grown certainlyat England matches; television rights have grown atthe Football League; television rights have grown atthe FA. The whole economic interest in Englishfootball has all grown. It is not a zero-sum game. Thegame has generated huge amounts of interest and wehave not just become of national interest. As youknow, we have become of global interest.You raise an interesting point, though, as to where theproperties of the FA sit in terms of the governancestructure because, in effect, like us they arecompetition owners, just like UEFA are competitionowners. That is a very separate issue from thegovernance in terms of disciplinary matters andregulatory matters, and it is also a very different issue

in terms of running the England team. It is a differentissue in terms of running Wembley. Of course, thathas always been the situation where these interestscome together and it is perfectly possible. We, evenwithin our Premier League environment, have tomanage and reconcile individual clubs’ commercialaspirations with our own collective Premier Leagueaspirations. The clubs to date, over the 20 years sincethe Premier League has been in existence, have hadthis interesting dynamic where they have stayed verysolid with the collective on television rights; on othercommercial matters, they are out there looking for thesame sponsors and competing. It doesn’t mean to sayyou can’t reconcile that, you can’t manage that. Thereis space for all of us and I don’t see it is an inherentdifficulty in running the organisation.

Q601 Paul Farrelly: Is it unequivocally a good thingthat the likes of Newcastle Town fromNewcastle-under-Lyme get the opportunity throughthe FA Cup to play the Manchester Uniteds?Richard Scudamore: Absolutely is.

Q602 Paul Farrelly: Is that unequivocally good forthe game?Richard Scudamore: Absolutely unequivocallygood, yes.

Q603 Paul Farrelly: Sir Dave, I put a passage in abook to Lord Triesman, so it is only fair I put thesame passage to you. This goes back to the time ofAdam Crozier, before his resignation. The author ofthe book, David Conn—it is The Beautiful Game?—said of the events at that time, when you werequestioning the potential participation of the clubs andthe future of the FA Cup, “I have it from threemembers of the FA’s main board that Dave Richardswas constantly threatening to withdraw thepremiership clubs from the FA Cup or saying thatclubs would withdraw if he didn’t get his way on anissue, usually over money. The sources complainedthat they would not debate with Richards in any detail.He would fly off, be dismissive or issue a threat. I putthis question, whether he threatened that thepremiership clubs would withdraw from the FA Cup,to Richards through the Premier League press officebecause he never talks publicly. He was walking pastand I asked him and he said, ‘Bollocks’.” That wasthe passage I put to Lord Triesman in the context ofthe picture he was painting of the behaviour of theprofessional game. Could I give you a fair opportunityto 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, wehad lots and lots of debates about what was the bestway forward. I had a particular friend on the FA CupCommittee in Barry Taylor and we had this rivalryabout 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 havingto keep replays, which sometimes we look at and wethink, “That’s odd,” but that is the way it is and weaccept that. It got on to, should clubs be seeded?Should clubs be seeded so that they could pick out of




the box that club against that club? I said, “If you dothat I will take it back to the Premier League and Iknow some of them will not do that and they won’tplay.” That is the kind of statement that was made.When Mr Conn rang and put that statement to ourpress officer, Phil French, I did use those words. I didsay to him it was that word. Yes, sir, I did.

Q604 Paul Farrelly: That is a lovely response and alovely anecdote, but it doesn’t respond to the centralquestion, which is the portrait that is painted of thebehaviour of the professional league representativeson the FA board. Let me give you another instance. Ifyou recognise the FA as the authority in the governingbody, why did you not allow the Football Association,either in the same terms as Lord Triesman wanted orin different amended terms, to make any submissionto Andy Burnham’s questions, rather than simplyreferring to the submissions made by the PremierLeague and the Football League?Sir Dave Richards: Sir, may I give you the actualstory? Andy Burnham came out to the FA and askedfor a submission on the governance of the game. Adialogue was started with the Premier League, theFootball League and the FA. Originally, it was goingto be one submission from all parties, but after alengthy discussion between the three executives theydecided the best way was to co-ordinate a reply fromall three parties, and they did that. They worked on itfor weeks and weeks. There was consultation betweenthe three leagues and between the board, saying, “Dowe believe that is right? No, we should take it backand 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 thesubmissions were made and agreed with theexecutives of the three different bodies, came to theboard with some papers and said, “This is the FA’sresponse to the DCMS.” It had already gone in.Nobody had seen those papers. There had been noconsultation. The deadline had passed, and not justme, but everybody on the board, was astonished at theway that came about. Lord Triesman started to discussthe changes and the board said, “We have submittedthe information that we want. We won’t allow thatto go forward.” Now, that was not just me as oneindependent person; it was 10 people. It is a matter ofrecord in the minutes, sir.Richard Scudamore: Can I add some facts to that,because I think it is important? You certainly, in yourjobs as Members of Parliament, will recognise theneed for proper consultation. When Andy Burnham’sletter arrived in the autumn of that year, we went onan extensive consultation. We held club meetings—insmall groups, wasn’t it? It is hard work when youhave to meet every club on every topic, and we metthem at every club. We had full club consultation. Itwas on our shareholders’ agenda for two of ourmeetings. We produced four drafts of our submission,which the clubs fully approved the final draft. We alsoconsulted with our FA executive colleagues and ourFootball League colleagues. Within the time frameagreed, by 31 March, in went our submissions. It wasMay 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 FAattends our shareholders’ meetings and everythingelse. All of a sudden, Lord Triesman’s paper was lateand it had no consultation process. As I say, it is amatter of history and conjecture as to whether theindividual ideas within that paper had merit; in fact,most of them—I think probably 75% to 80%—werealready covered by way of topic in our papers andhave subsequently been acted upon by both ourselvesand the FA. But it is just no way to run an associationof interests, without consultation.

Q605 Paul Farrelly: I want to ask one final questionof Sir Dave. This is a curiosity question, but it is askedby quite a number of people. You are the Chairmanof the Premier League, but you are not the chairmanof a Premier League club. Has the Premier Leagueever 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 chairmanof a club. The Premier League shareholders—MrParry will be able to fill you in—decided that theyhad to have someone independent of a club. I waselected and I left the club.Richard Scudamore: Our rulebook, our constitutionand our articles are very clear that the board is whollyindependent of any club interest. From the time theseason starts right through to the time the season endswe have to apply that rulebook in a very independentway.

Q606 Paul Farrelly: But that is not good enough forthe FA to be independent?Richard Scudamore: No, we are independent of theshareholders.

Q607 Paul Farrelly: No, but the same model is notgood enough for the FA?Richard Scudamore: Well, it is an association ofinterests. We are a limited company. They are anassociation of interests. As I say, we have nopathological objection to independence, but totalindependence doesn’t work.

Q608 Chair: Sir Dave, you have been a member ofthe FA board for 16 years, I think?Sir Dave Richards: Yes, sir.

Q609 Chair: It has been suggested that part of theproblem is that the FA board is a narrow group ofvarious interests and both the board, and even moreso the Council, are hardly representative of either themodern game or modern Britain. Is that somethingthat causes you any concern?Sir Dave Richards: We have always looked at therepresentation of the board and every single person iselected. They are elected members of the board. Theyare elected by councillors, leagues and the PremierLeague. We have always wondered about inclusionand what it really needs, but we have always followedthe Chairman of the FA, who has been the naturalleader, and followed his wishes. When Burns camealong, we were quite up for all the changes that LordBurns put in because we thought it became very




inclusive and it was good for the game. Unfortunately,it didn’t get through in its entirety. It was piecemealedto give the FA what they wanted at that time. So, arewe up for inclusion? We are always looking at theway things ought to be brought forward.

Q610 Chair: But you say you always followed theChairman of the FA, who takes the lead, and yet oneof the people who made this point most strongly wasLord Triesman, who was Chairman of the FA. Hesuggested that he was blocked, principally by you.Sir Dave Richards: You know, the statement that LordTriesman made really saddened me and made me feela little bit dejected, because on the statement that hemade that I blocked him, first, I have never blockedanyone. It is a free and democratic board at the FAand to think that the Premier League Chairman couldblock nine others is ridiculous.Secondly, Lord Triesman suggested that I bulliedpeople. Well, that really hurt me because for 12 yearsI have been one of the chairmen at the NSPCC, whichraised quarter of a billion pounds for children—forbullied and abused children. Lord David knew thatand he knew how passionate I was about protectingall these different styles of things. It makes me wonderwhy he said such a thing because I thought I wasreasonably close to Lord T because we travelled quiteextensively together. I helped him very much. Whenhe wanted to be introduced to people and wanted tobe taken into different places, I went with him. I wasalways very supportive to him. Why would he everthink that I blocked him? Sir, there may have beendifferences of opinion with me and Lord David, but Inever brought them into the boardroom.Richard Scudamore: Chairman, can I just addsomething? I don’t know Lord Triesman as familiarlyas Sir Dave does—I certainly wouldn’t call him LordT—but the reality is that Lord Triesman, at no pointin his tenure, brought Burns back to the table becausehad he done that we would have absolutely supportedthat initiative, and I think that is very important.I would point you back to Roger Burden’s evidencelast week. He very eloquently, I think, on behalf ofthe FA board, talked about his view of how the FAboard functioned, his view that he was not bullied orthey were not bullied. Ian Watmore also clearlywouldn’t recognise that when he was asked. RogerBurden quite articulately talked about how the FAboard, in his view, worked. We, the Premier League,now have three representatives on the board and thereis no way we have a majority position on that board,as the professional game does not. I think you need tolisten to the evidence from others as well, and I knowyou will do that.

Q611 Chair: Can I just be clear? Sir Dave, you aresaying on Lord Triesman’s efforts to broadenrepresentation, both on the board and on the FACouncil, you were absolutely four square behind himin that?Sir Dave Richards: Lord Triesman only ever oncespoke about it and it was in the original document. Hehad ample opportunity to bring Lord Burns’s proposalback as Chairman and start to work in the FA board

to get where he wanted to be. He had ampleopportunity, but he never did that.

Q612 Chair: Were you disappointed? Were youencouraging him to do so?Sir Dave Richards: Look, I never encouraged him;I never discouraged him. The only thing that I diddiscourage him from doing was becoming ExecutiveChairman of the FA, which probably was one of themain agreements we couldn’t reach. He wanted to beExecutive Chairman of the FA and that was a verydifficult scenario. We did disagree and we did consultwith the other board members about it. But regardingprogress at the FA, no, sir, he cannot say that.Richard Scudamore: I think Sir Dave raises aninteresting point that most of this discussion we havebeen having around Lord Triesman, his submissionsand certainly around the Andy Burnham letter wasdone at a time when, effectively, there was not a ChiefExecutive of the FA. They had announced BrianBarwick’s departure in August of that year, theevening of a friendly against Czechoslovakia and hegave notice that he was leaving. Not wishing topersonalise it to Brian, there was an element of lame-duck nature of his tenure at that time, and again Ithink Lord Triesman did attempt to become ExecutiveChairman on a number of occasions, but the boardresisted that particular move.

Q613 Jim Sheridan: Sir Dave, I can almost feel alump in my throat when you talk about the sincerityand passion you feel about being hurt by LordTriesman. Could I just clarify that the only reason thathis submission was rejected was because it was timebarred?Sir Dave Richards: No, sir, it wasn’t a question ofbeing time barred; it was a question that LordTriesman brought a document to the board that hadnever even—

Q614 Jim Sheridan: Too late?Sir Dave Richards: No, sir, it wasn’t a question; ithad never been discussed. It had never been discussedat all.Richard Scudamore: The facts on that particulardocument are that the entire board—the national gameas much as the professional game—said that that wasan inappropriate document for the FA to submit. Whatwas submitted was a smaller, shorter letter that did getthe approval of the entire FA board, which is goodgovernance.

Q615 Jim Sheridan: But the evidence that LordTriesman gave us is the document that he broughtforward there wasn’t a page turned; it wasn’t evenlooked at. I think you said, Richard, that it was timebarred. It was too late; the date was passed. Is thatthe case?Sir Dave Richards: The submission had been made.The submissions had been made to Government andall agreed.

Q616 Jim Sheridan: No, I am talking about LordTriesman’s submission.




Richard Scudamore: Let us get the facts absolutelyright. The Football League’s and the Premier League’ssubmission had been made within the time that AndyBurnham had set. We had promised him 31 March. Ithink it was May before Lord Triesman’s paper wasproduced, almost with literally no warning. It wasprofessional game board one day, main board the next.The main board of the FA at that time said, “There isno consultation on this paper. We don’t wish you tosubmit this paper.” So, a letter was written, as Iunderstand it, to Andy Burnham, which was for AndyBurnham either to accept or not accept into hisevidence. That was up to him. He can write a letter tothe Secretary of State if he chooses, but on this issueof time barring, I was making the point that it waslate in terms of the deadline we were all set. TheFootball League and the Premier League wereworking with the FA—with the Executive—on thesesubmissions, and it was a surprise to everyone whenthis suddenly arrived at the very last minute.

Q617 Jim Sheridan: What I am trying to establishis, did someone tell Lord Triesman that there was acut-off date at the end of March?Richard Scudamore: Well, he would have known; hehad exactly the same letter from Andy Burnham thatwe had asking to make submissions. His public policyadvisers would have known. They would all haveknown. We all knew we were working to a 31 Marchdeadline, which is why we spent October andNovember consulting all the clubs, conveningregional club meetings in small groups and going backto two board meetings, because we had to get thisdone by 31 March, which is the way we, the PremierLeague, operate. I can only give you by contrast thefact that the genesis of the Lord Triesman paper wasa very different genesis.

Q618 Jim Sheridan: Therefore, Lord Triesman musthave ignored this letter and carried on regardless?Richard Scudamore: I think you would have to askhim that.

Q619 Dr Coffey: Could you just confirm how longyou had sight of the proposals of Lord Triesman? Ihave heard from other sources it was about 48 hoursbefore you were asked to approve this. Is that true?Richard Scudamore: I think it was a professionalgame board meeting where we suddenly saw it. I thinkit was a Wednesday before a Thursday. It wassomewhere between 24 and 48, depending on whereit was, yes. But remember, I have no role in this otherthan I attend the professional game board, where Ithink we saw it first, and it was the next day that themain FA board saw it for the first time.

Q620 Dr Coffey: So a very limited amount of timefor such a substantial paper?Richard Scudamore: That is it, and there was noconsultation.

Q621 Dr Coffey: I want to revisit something Ibrought up last week with the FA about what I thoughtwas a terrible example of governance, which was therenegotiation of the contract of the England manager.

I think you were Chairman of Club England at thetime, Sir Dave?Sir Dave Richards: No.

Q622 Dr Coffey: Okay, but you were involved onthe board. Could you shed a bit more light on yourrole or on what happened?Sir Dave Richards: Yes, I certainly can. FabioCapello’s contract had a clause in it and Mr Capellospoke to Lord Triesman, because Lord Triesman wasthe Chairman of England at the time.Richard Scudamore: Team England.Sir Dave Richards: Yes, Team England. It was on 22April that I was summoned to a meeting with FabioCapello’s son; Adrian Bevington, the companylawyer; Lord Triesman and me to talk about theCapello Index, because Mr Capello had brought outan index on performance of players, which wasagainst his contract and he could not do it. He had toseek permission of the FA and he had been talking tothe Chairman prior to that. He requested a meetingand we went to that meeting. During that meeting, MrCapello’s son brought up the question of the clausebeing taken out of his contract. He said Lord Triesmanagreed that the mutual break clause could be deletedin line with his previous assurance to Fabio Capelloand that he wanted him to stay until 2012. That wasthe very first time we had heard of that, but it waspre-agreed with the Chairman and Mr Capello thatthat would happen. Unfortunately, I had to pick thepieces 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 havetaken 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 youthink it would have been appropriate for you, SirDave, to have said, “We can’t make this decision hereand now, it needs to go to the whole board.”?Sir Dave Richards: I wouldn’t make decisions likethat. You can ask all my colleagues on the board. Ihave always been one to consult: the Premier Leagueboard, the Football Foundation board, the EuropeanLeagues board, the International. I am a consultativeperson. I will not make a decision just like that whichaffects the kind of issues that these involve.

Q624 Ms Bagshawe: Can we talk a little bit aboutPortsmouth? What more could the Premier Leaguehave done to have prevented Portsmouth from goinginto administration?Richard Scudamore: On the genesis of the PremierLeague, if you go back, the rulebook has evolved. Therulebook was 142 rules when it was first crafted; it isnow 814 rules. Given the revenues and given the wayclubs have been run, and basically the way Englishfootball has been since 1888 in many ways, there werethings in the rulebook, certainly, that we neverenvisaged 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 andthe professionalisation of the clubs, certainly over 20years and the time I have been involved, it was hard




to see, I have to say, how a club at the highest levelcould get itself into those particular difficulties.We slightly foresaw it maybe some five or six yearsago when we introduced the sporting sanction rulesthat basically said it is unacceptable for a football clubto go into administration, because clearly there is anot perfect, but an almost perfect, correlation betweenthe amount you spend and your performance. That hasbeen the same since time began. We absolutely putthose rules in, as did the Football League, in saying,if you overstretch yourself, if you spend more moneythan you can afford, if you get yourself into financialdifficulty, we are going to impose a sporting sanctionbecause it is not right with your playing peers that youshould enjoy the same status as you did before. Oursis a nine-point sanction. So we made that step.We had also, through the licensing systems andvarious other systems, improved our financialregulatory position quite considerably, but I have toadmit to this group that we didn’t foresee a club withthat amount of revenue being able to get itself into thesort of difficulties that Portsmouth got into. In fact,we were a train in motion. If you read our submissionto Andy Burnham, if you read what we had alreadyembarked upon, we brought forward to the summermeeting of 2009 considerable changes in our financialregulations, the irony being probably that one of theonly clubs to vote against some of them werePortsmouth. They were members at the time.We then went on to strengthen those rules further inSeptember and then we went on to strengthen themstill further post the Portsmouth situation. Westrengthened them further again at the summermeeting of 2010. Yes, I am admitting we could havedone more, but on good governance, you can’t have arulebook that entirely envisages every situation, justlike you don’t have laws in this country that envisageevery unknown situation. Should we have foreseen it?Perhaps yes, but having seen what happened atPortsmouth we acted very quickly, very swiftly, andwe think the rulebook now is very robust. Certainly,the experience of this summer with club takeovers andacquisitions, we have been put in a much, much betterposition in being able to regulate our way throughthat.

Q625 Ms Bagshawe: On learning the lessons,Portsmouth obviously went through many ownershipchanges before it went into administration. There hasbeen some speculation in the press, Sir Dave, that youapproved successive ownership changes. Do you thinkthat the fit and proper persons test was properlyapplied? In the case of Mr Ali Al-Faraj there has beensome suggestion in the press that not only was he nota fit and proper person, but he wasn’t even a personat all and didn’t in fact exist. Do you recognise thesecriticisms?Richard Scudamore: I recognise that he has beenreferred to as “Mr Al-Mirage” on more than oneoccasion. The reality is that we went through all thetests that one would need to go through to get apassport in this country, and we had his passport. Wehad documentation; we had written documentation.Yes, we didn’t meet him face to face, which is whyour rules have changed. Now we insist on an absolute

meeting. We insist on meeting face to face. The ruleshave changed. But yes, we did not meet that particularperson and that is why that rule has changed. Webelieve he did exist, though, but I can’t say I haveseen him.Sir Dave Richards: Can I make it quite plain I neverapproved anyone? We have a system within theleague. It is very tight. It goes through lawyers anddifferent systems so no one individual could approveit. There was one occasion I was in Rome for aChampions League game and a gentleman asked tosee me. He was an Arab gentleman and he asked tosee me to explain the fit and proper persons test. Hewas the gentleman that was trying to buy it. I went tosee him. I was there no longer than 20 minutes. Iexplained to him it was all about documentation andcoming to the Premier League and presenting who hewas and what his funds were and where the fundswere from, and I left. I had never met the gentlemanbefore and I have never met him since.Richard Scudamore: It is an important topic, aserious topic, and, Chairman, I sent you a letter lastweek that detailed quite a lot of what happens in ournow strengthened owners and directors tests. I thinkit would also be useful if I sent you separately asupplementary piece of information, which is whenanybody wants to look at acquiring a Premier Leagueclub or an interest in a Premier League club there isnow a very detailed checklist and set of checks thatwe make and evidence that is required. I think I willsend you this as supplementary to the letter I sent youlast week, because we don’t underestimate howimportant this topic is.Chair: That would be helpful.

Q626 Ms Bagshawe: I take it on board, MrScudamore, that you have just said that you recognisethere were some failures and you have strengthenedyour governance on that issue because of thosefailures. Can I put it to you that you have just saidthat the Premier League was taken by surprise that aclub at Portsmouth’s level could get itself into suchtrouble? Given that the club was failing and beingtaken over again and again, I take the point that thefit and proper persons test has now been strengthened,but at the time, as these successive changes weregoing through, and with the Premier League clearlyhaving been caught on the hop, did it not occur to youthat, even under the old rules, you should be applyingthe then existing fit and proper persons tests morerigorously than they seem to have been applied atthat time?Richard Scudamore: Except for the fact that the fitand proper persons tests were about establishing,effectively, criminality and unsuitability because ofthat criminality. Therefore, we were unable toestablish that any criminal act or any breaches of theabsolute rule had been undertaken. Remember, it wasthe same time we were introducing the financial rules,which are about sustainability, and they are differentthings, but they are wrapped up in the same thing.

Q627 Jim Sheridan: Before I move on to the nextquestion, can I put on record my surprise that inrelation to the Andy Burnham submission, as we are




now calling it, in the run-up to 31 March there wasn’ta submission that came in from the Chairman of theFA yet no one bothered to ask the question why isthere not a submission from the Chairman of the FA.However, I think you are quite right—that is aquestion for Lord T.You have a number of jobs in football. I am justreading here that you are Chairman of the PremierLeague. You are also on the board of the FA, you areChairman of the European Professional League andyou represent English football on UEFA’s StrategyCouncil. That is a very long list of jobs and it wouldsuggest that you are a very influential and powerfulperson. Do you think that you having all these postsand also the fact that you are paid by the PremierLeague means that you can ensure that there is noconflict of interest when you apply your director andownership tests for prospective new owners?Sir Dave Richards: Can I say to you I have been onthe board of the FA for 16 years. In 16 years we havehad, to my knowledge, only four votes. One of thosevotes was concerning the Premier League. We stoodup, the three Premier League representatives, and said,“We have a conflict of interest. We can’t take part inthis. We will leave the room.” We were told not toleave 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 EuropeanLeagues are elected positions. I didn’t go looking forthem. We are a member of the European Leagues andone might say that the Premier League is a successfulvehicle and that people want to be associated with itand they want to know how it works. When theyelected me Chairman, it was, “Please work with us toshow us how to become as successful as the PremierLeague.” If you look at the progress the EuropeanLeagues have made, it has been very substantial,because we have 30 leagues, 980 clubs, some of themvery tiny, that are all part of our system. We work withUEFA on solidarity payments bringing more solidaritymoney into the smaller leagues. That is the way itworks. It is not a question of whether I am powerfulor not. It is the Premier League. It is the PremierLeague and its brand that attracts people to want to beassociated with it.Richard Scudamore: Mr Sheridan, the reality is SirDave is elected by our clubs to represent us at the FA.He is elected by the European Leagues to beChairman of that, and it is because he is Chairman ofthe Premier League that they respect our league, theyrespect what this league has achieved over the last 20years. Many of the leagues in Europe wish to emulateand copy elements of what we do and I think, as I say,it is the fact of the position that Sir Dave holds thathe gets those elected positions. You will recognise thepower of the electorate in returning people to office.Sir Dave Richards: Can I say I was elected to theStrategy Council of UEFA? Mr Platini I have workedwith for a number of years. When you ask him howSir Dave is, he always says, “Sir Dave has great inputand he is good at what he does.” He quoted that inthe paper and said how well he got on with me.

Q628 Jim Sheridan: As politicians, we know howelections work and we know how you get elected to

powerful positions. Indeed, some of our previouswitnesses suggested that most of these discussionstook place in the corridors, not at the main meetings.Sir Dave Richards: No, sir, they didn’t because theEuropean one—

Q629 Jim Sheridan: You remind me of the electionof the Speaker where he is dragged out from thecrowd.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 theEuropean Leagues ask. I have a term of three years,and that is the term. On the Strategy Council, I havea term of one year and that is it.

Q630 Jim Sheridan: You have mentioned otherEuropean leagues. We recently visited Germany andsaw how the licence system works in Germany, quiteproficient in terms of looking at clubs’ finances inparticular. Do you see a role for similar in England?Sir Dave Richards: That is Mr Scudamore’s becauseit is an executive matter.Richard Scudamore: Of course, the reality is we havea licensing system. We have a very much more robustlicensing system now than we did two or three yearsago. Our rulebook is effectively the licensing systemfor clubs within our league. I go back to those 814rules. That is a licence; it is a contract between themember clubs as to how they are going to conductthemselves with each other. Unless you meet thoserules, effectively you are not licensed.Then, of course, we have UEFA licensing, which hasbeen introduced and we have been instrumental in theintroduction of UEFA licensing, working with ourcolleagues. It is an extremely good example of howyou work with the Football Association. On the bruntof the work, you heard from the Football Associationand Alex Horne last week talked about how theexecutives of the Premier League and the FA worktogether on UEFA licensing. For example, this year,19 out of our 20 clubs have applied for a UEFAlicence. Therefore, you have a licensing system. Youhave the law of the land, which you are collectivelyresponsible for delivering to us. You have our ownrulebook. You have the Football Association’srulebook, which then requires our rulebook to besanctioned, and you have a UEFA licensing systemfor the majority of our clubs. Some of our financialrules are tougher than UEFA’s. In effect, you havea licensing system in this country and we recognisethat concept.

Q631 Jim Sheridan: Both of you have expressed adesire to work with the new Chairman of the FA. Ifhe comes forward and wants to change the rulebookthat you refer to, will you co-operate with him,particularly on the question of licensing, or is therulebook there for ever?Richard Scudamore: We will co-operate in anydiscussion about improving English football. I can’ttell you here and now that I will agree with everythingthat he—




Q632 Jim Sheridan: So you are not ruling out thepossibility of a licence system?Richard Scudamore: We would be foolish—well, wehave a licensing system and the licensing systemworks very well right now. In fact, nobody wouldargue that the UEFA licensing system, as we haveincorporated nearly all of it into our own rulebook tocover every club, isn’t actually applied. In fact, theonly such element of that UEFA licensing system,which is not even in place yet, is the break-evenconcept. It is the only bit that isn’t covered also in ourrulebook. Effectively, we have a licensing system.

Q633 Jim Sheridan: The answer I am trying to getis the Chairman, in his evidence, was open mindedabout the licensing system similar to the one inGermany, but you seem to have a closed mind aboutit.Richard Scudamore: Mr Chairman, we are openminded about anything that improves the governanceof our clubs and English football. We will discussanything.

Q634 Jim Sheridan: Including licensing?Richard Scudamore: But we have a licensing system.Improving that licensing—

Q635 Jim Sheridan: No, I am talking about alicensing system—Richard Scudamore: Improving that licensingsystem, of course we will listen.

Q636 Paul Farrelly: Just very quickly regarding thenew rules, transparency and honesty are key to theireffectiveness. In June 2009 in your evidence, you citethe rule that you brought in that said that, “Clubs mustdisclose not only to the Premier League but alsopublicly who owns interests of 10% or more in theclub.” Does that mean beneficial interests?Richard Scudamore: Yes. It does, yes.

Q637 Paul Farrelly: It has to mean beneficialinterests?Richard Scudamore: Yes, it does.Sir Dave Richards: Yes.

Q638 Paul Farrelly: When does that bite? Let ustake Leeds. Leeds may get into the top two in theChampionship or they may very well be involved inthe play-offs. At what point do you tell Leeds, “If youwish to be a member of the Premier League you mustcomply with this rule.”?Richard Scudamore: 9 or 10 June, whenever ourAGM bites.

Q639 Paul Farrelly: 9 or 10 June?Richard Scudamore: Yes. Our AGM is yet to befixed. It will be on 9 June or 10 June. From that pointthey will be given their share certificate in the PremierLeague. At that point the Premier League rulebookbites. From my understanding of the way our rulesare written, we absolutely will require disclosure fromLeeds United that is over and beyond that which theFootball League requires.

Q640 Paul Farrelly: Why didn’t your rules bitebeforehand?Richard Scudamore: Because they are not ourmember club.

Q641 Paul Farrelly: No, but they are in a positionwhere they want to be a candidate member.Richard Scudamore: No, because they are not boundby our rules until the annual general meeting whenthey become a shareholder.

Q642 Paul Farrelly: So it is quite possible that ifthey were one of the top three and, say, came to theplay-offs, if they didn’t abide by that rule for it to bepublicly seen, it might be the loser of the play-off finalthat might become a member of the Premier League?Richard Scudamore: I think you are, as a lot ofpeople do, leaping to the end of our disciplinaryprocess. What would happen is obviously if wedeemed them to be in breach of rule, a commissionwould have to be formed and that commission wouldindependently decide on what the appropriate sanctionwould be to Leeds United. You are already ratherleaping to the expulsion sanction, which again I wouldcaution you against doing. Certainly, in our view, asdrafted, our rules would require better disclosure ofLeeds United’s ownership situation than is currentlythe case.

Q643 Mr Sanders: Can you see any benefits in thegoverning body of the English game assumingresponsibility, or at least a stronger supervisory role,for the financial regulation of Premier League clubsand also their ownership?Richard Scudamore: I think you have to judge us byour journey and the evidence before you. We havemoved our rulebook appropriately. We have movedour rulebook proportionately and at a speed that canbe done only when you are able to gain consensusfrom what is sometimes quite a difficult group to gainconsensus from. That comes from an awful lot of hardwork, an awful lot of consultation.I think we will live by our track record of havingevolved the rulebook from those 142 rules to 814. Therulebook, can it be improved? Of course. We arealways improving it. We are sitting down now on thenext cycle of rule improvements to discuss what canbe done to improve it. But as I say, we are workingwith the Football Association, and I think DavidBernstein last week was very clear when he said thebest point of regulation is down at the league levelwhere the members are. Whether we like it or not, themembers of the Premier League will take beingmoved along the regulatory curve more readily fromtheir own executive and their own board than theywill necessarily from people one stage removed.Therefore, if self-regulation is the right way to go, itis much more powerful when our 14 clubs have puttheir hands up round the table to say yes toregulatory change.I would ask you to look at the evidence of theevolution of our rulebook. We have a track record ofmoving the rulebook on and I think the best people todo that are us. Are we resistant to other people comingup with ideas, other people coming up with




suggestions, whether it be media pressure or publicpressure? Of course, as with you, opinions are formedfrom many different sources. We have to sit here andtry and act as custodians of this game. We have aconservative constitution quite deliberately. You can’thave a small minority interest group come along andset us off course, but when you get that 14-clubmajority it is a very strong majority and it is a verystrong method of governance and I would commendit to you. As I say, we at operating level have a verygood relationship with the Football Association. Weare always prepared to discuss things and I think theway it works now is good. The idea that somehow weneed somebody external to come along and suddenlyimpose things upon us is not necessarily the wayforward to make progress.

Q644 Mr Sanders: But there is a problem here, isn’tthere? In answer to Paul Farrelly’s question in relationto Leeds, if you have at the moment a rulebook thatsays you have to have a proper test and obviously fulldisclosure of who owns a club, you ought to be ableto say at this juncture that that club would not beaccepted in the Premier League unless it was preparedto disclose.Richard Scudamore: Let’s be very candid. There isan issue here because our rules are the same as theFootball League rules on this topic. The FootballLeague brought their rules into alignment with ourslast summer, but this is the first time the rules havebeen introduced. As I say, there is an issue in onesense between the Premier League rules and theFootball League rules. I can only give you my honestevidence that says the Football League may have oneview of how to interpret that rule and what that rulemeans. We have, I think, a more stern or harsh viewof what that rule means. Let’s go back to the essenceof the rule. The essence of the rule was our clubsabsolutely agreed unanimously that we should tell thepublic who owns a club. That is the essence of therule and, therefore, anything that falls short of that wethink is inadequate. I think my point, Mr Sanders, isin all that we had to get done last summer the FootballLeague took a view about Leeds United that it isentitled to take because it is their rulebook they areapplying. The fact that we might have taken adifferent view is an issue that needs to be resolved ifLeeds get in.

Q645 Mr Sanders: Presumably this must be a realwarning to Crawley Town that they should not beallowed into the Football League because theirownership has not been declared.Richard Scudamore: Again, I ask that you addressthose 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 thatthere is a bit of inconsistency in not being able to stateyour rulebook in relation to Leeds at this point.Richard Scudamore: Except that the people in bothleagues—I commend these people to you, both Andy

Williamson at the Football League, who has beenthere almost since time began, and Mike Foster, myGeneral Secretary, who has been there since the verystart and did 17 years at the Football League beforethat—are the people who have more knowledge, andmore intimate knowledge, of the rules and the waythese rules apply. It is about applying these rules atthe point of most knowledge. I think it has workedpretty well up until now.

Q648 Mr Sanders: I think the public view is theywant to see consistency, and in sport fair play iseverything and, therefore, if it is seen as one rule forone club, it hurts the whole game.Richard Scudamore: I can’t disagree with you, andwhat is also interesting is last summer we had somediscussions with the Football League making exactlythis point. Many of those clubs are ex-Premier Leagueclubs. They are of a size, nature and infrastructure thatthey look like Premier League clubs; it is just theirleague status that says they are not. Therefore, wesaid, “Wouldn’t it be a good idea if there was a rulealignment exercise?”, which is when all these rules—the financial rules, the disclosure rules and ownershiprules—are all aligned. Leagues One and Two, to theircredit, said, “Well, hold on a minute. We don’t wantto be left out of this, because why should we, eventhough in infrastructure we might be smaller. Weaspire to be Championship clubs one day.” TheFootball League voted in those rules of alignment.Therefore, I think what we are seeing is just a veryearly ironing out that needs to be done. I agree withthe point.

Q649 Paul Farrelly: Very briefly, Mr Scudamore, inyour answer to me about Leeds, I don’t think anybodylistening to this Committee will go away without thequestion as to whether your rule on disclosure willreally bite or whether, at the end of the day, it will beas effective as a chocolate fireguard.Richard Scudamore: Well, in fairness, we can onlydeal with that at the point when Leeds United arepromoted. They may not be. We can only deal withthat at the time of our annual general meeting, whenthey come under our jurisdiction. We will have tostand the test of time on that.

Q650 Dr Coffey: Sir Dave, you are elected by thePremier League to be on the FA board, but thatdoesn’t mean you only speak for the Premier League;you speak for all clubs. Is there a reason why youdon’t make the suggestion that this applies to everysingle football club in the land?Sir Dave Richards: We do speak for every footballclub. You have a gentleman on after us, and he willbe able to tell you how much we have spoken for theConference and the way we have tried to assist andthe way we are trying to assist to bring them into thepyramid in a proper way. I do speak up for thosethings.Richard Scudamore: But I think there’s an irony inthis line of questioning—

Q651 Dr Coffey:What I am trying to say is we don’thave that many opportunities to speak to individual




board members. Has this ever been discussed—thefact of the excellent rule that you have in the PremierLeague of making sure ownership is disclosed? Whyhave you not perhaps suggested that for every singlefootball club?Sir Dave Richards: We have tried. We have beentalking to the FA in the last year about aligning allthe rules.Richard Scudamore: Just so that you are clear, wethink we all have the same rule; it is just that theFootball League has chosen to apply the rule in thechaos that is the summer between one season endingand one season starting, when all the rules getchanged. In the chaos of that, the Football League, forits own reasons, has chosen not to apply the rule asrobustly as we think we will be applying it. But theirony of this conversation, where you might besuggesting that the Premier League should beimposing its power in telling other leagues what rulesthey should have and how they should apply them, isnot lost. The reality is the Football League has somedifferent rules that are more appropriate for that levelof football, which is absolutely right. In thesubsidiarity, the Football League must be in somecases able to do that. On issues such as this, of coursethere is merit in having common rules, because if it isa rule that is good for football, it should be inrulebooks.

Q652 Damian Collins: I would like to begin anothertopic, but just to finish on this, it seems to me youmay have clarity on what your rules say, but it is notnecessarily clear on how they are enforced, and onsomething like this we have a very specific examplein Leeds United, who may be promoted. They may bein a situation that, following your independentcommission in the summer, they are told that theycan’t compete in the Premier League. You have notruled that out; you urged us not to go down that path,but you said that remains a sanction that you mayenforce. That would be enforced maybe days beforethe start of the Premiership season. Would it not bepossible for you to give some sort of ruling based onthe situation that Leeds is in at the moment?Richard Scudamore: No, because at the end of theday—well, clearly, the headline will be generatedfrom this session about Leeds’ inability to play in thePremier League next season. As with all miscreantbehaviour, everybody assumes the ultimate sanctionwill apply and that expulsion and points deduction andall these other things will fly. The reality is that suchis the attraction of playing in the Premier League, itis not unknown for people to relent in order to complywith our rules. Therefore, the most likely thing tohappen when clubs get promoted—we have rulesabout press facilities, we have rules about the match,we have rules because of our international nature andthe access that is required to our grounds, we havelots of rules that clubs have to comply with—is thatwe start to talk to clubs, send them formaldocumentation.In January, we write to the top 12 teams in theChampionship, talking about a whole raft of rules thatthey have to comply with in an operational sensewhen they get promoted. I am not going to get

dragged into—you will understand why—the “whatifs”. We will be doing whatever we can, as we alwaysdo in any situation. We would much rather our clubs,our member clubs, stayed within the rules thanstepped outside them so they have to go to sanction.We will be putting on whatever pressure. If it arisesthat Leeds United, on sporting merit, deserve to be inour league, we will be doing all we can to persuadethem to stay within the rules.

Q653 Damian Collins: I appreciate that. What I wasasking—I think probably colleagues have been askingit—is whether you could say, “This rule is so seriousthat if breached it could lead to a club being excludedfrom the league,” or whether it is more of an agewhere it is more likely there will be some sort ofsporting or financial sanction applied.Richard Scudamore: Again, we are not involved inthe sanctioning. I think, without rehearsing this, wewould deem it more serious than could be dealt withunder our summary powers. We only have summarypowers to fine a club up to £25,000. After that, itgoes to an independent commission; that independentcommission will decide. That independentcommission has the range of sanctions available to it,from a small fine up to expulsion. It will be for thatcommission 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 havediscussed, and I suppose it goes back to the spirit ofwhat the rules are and how they are enforced. Yousaid UEFA’s financial fair play rules are an area ofUEFA practice that has not been incorporated intowhat you referred to as the Premier League’s licensingsystem. David Bernstein said in our previous session,“I would like to see financial fair play potentiallyextended across the Premier League and into theFootball League as well.” When we discussed withsome of the Premier League chief executives andchairmen a few weeks ago, they also said they wouldlook favourably towards that. What is your view?Richard Scudamore: We have had full consultationon this. Prior to the rule changes of last year, we wentagain round the houses on a full club discussion. Wewent round again last autumn—September, October,November, individual club discussions. In the main,they are supportive. In fact, we are entirely supportiveof this break-even concept, but given that 19 of ourclubs have applied for the licence anyway this year,they all have to comply with it if they wish to continueto do that. The only thing the clubs have said is, “Yes,it is a good idea, but before we decide to change ourrules for it to apply to everybody, can we not see alittle bit how it might work, and is it not sensible justto see if it actually works?” There are some doubtsstill about what it will achieve, because one of thethings it may achieve is that you lock in the naturalorder where only those that have extremely bigrevenues, of course, can have extremely big expenses.The one thing about our league this season is the joyof seeing everybody who has come up competing. Infact, at no point has a team who has been promotedended up being in the bottom three this season, so




you have a situation where, looking at our league thisseason, the competitiveness within it is because teamshave come up and had a go. One of our issues is, is itso wrong that Mr Al-Fayed or Steve Gibson atMiddlesbrough, when he was with us, or Ellis Shortat Sunderland or Dave Whelan at Wigan—thesepeople who have benefactor funding—should comealong and try and get their club into the next level,into the next echelon, which will bring itself biggerrevenues, which will then enable them to stay withinthe fair play boundaries a bit more? So, we haveshaped UEFA financial fair play criteria. The leewaythat clubs have with the €45 million losses—the waythe rules are now implemented—is, we think,proportionate for those who are in the Europeancompetition.I think our clubs are not objecting to it. They think itmight be a good idea and they agree with break-even,but to launch full scale into applying it everywhere atevery level to stop the local businessman made goodinvesting in his local team really affects the essenceof English football. If you go back to 1888, that ishow we started, what it is about, and I would cautionagainst us suddenly saying, “Yes, that’s a great idea.Let’s put it in everywhere,” because I think the furtheryou go down the pyramid, it gets harder. Having saidthat, cost control, cost containment, break-even—can’t argue, and would never argue, that that is not agood concept.

Q655 Damian Collins: Are you not concerned thatyou could end up with a league where half the teamsin 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 otherhalf are able to get themselves into the Europeanqualifying positions by way of improving theirsporting position, they will have to comply with it. Sothere is no team. Look at now: all 19 have applied,even those that aren’t anywhere near the qualifyingpositions. There are a number of clubs who could wina UEFA Cup place on the basis of fair play. There isno club in our league that has ruled itself out fromEuropean competition, and I can’t imagine a clubqualifying for Europe and not wishing to play inEuropean competition, because that is essentially whatour league is, and every club is out there striving todeliver for its fan base in European competition.

Q656 Damian Collins: But it sounds like it is goingto come in by the back door, so why don’t you find away of implementing it properly?Richard Scudamore: It is just a question of what. Ikeep saying, on balance I think it will come in. It isjust, why would you straitjacket some of your clubs?This is not going to bite or affect many of clubs whohave huge revenues, such as the Manchester Unitedsof this world. The idea that they can’t live within theirmeans—they have £300 million in income, can spend£300 million and still stay within the rules. When youhave smaller clubs that are aspirational—coming upfrom the Championship, for example—why shouldn’tthose clubs, if they have the owners who have thosefunds available, be able to invest them to make their

club slightly better to get them into that thing? Ournervousness about it—we are not objecting to it. Idon’t want it to sound like I am. We think it is a goodconcept, but there is just one, if you like, caution orcautionary note that we are expounding, which is whywould you stop those clubs breaking into that group?

Q657 Damian Collins: I fully understand that, butyou said you think on balance it probably will comein. Do you think that will because the weight of clubsseeking to comply with it will be such that they willendeavour to?Richard Scudamore: Well, effectively, when youhave 19 applying for the licence, we will have it. Itworks the other way, doesn’t it? We don’t see anyneed to extend it right the way down through thesystem, because we want other clubs to be able tobreak into that group.

Q658 Damian Collins: I wanted to touch onsomething that was in your written submission thatrelates to some of the financial sanctions you alreadyhave in regards to HMRC payments. You said that,“Where the board reasonably believes that a club isbehind in its HMRC liabilities, it may impose atransfer embargo and/or require the club to adhere toan agreed budget.” Have you ever been in a dialoguewith a club that means you might be required toenforce those rules?Richard Scudamore: No. This was a post-Portsmouthrule and, quite frankly, we don’t see why in the firstinstance HMRC should treat clubs any more tolerantlythan they do small businesses that they expect to paystraightaway. We would expect them to do that in thefirst instance. We now have a reporting mechanismwhere, effectively, no clubs are allowed to have anyHMRC debt. Since the rule has been in, we have neverseen it, no.

Q659 Damian Collins: There was a press report thatsuggested, following a parliamentary question, thatabout £14 million was owed by Premier League clubsto the taxman. Have you discussed that with any ofthe clubs?Richard Scudamore: No. Well, it is not that at all.That is nearly all Portsmouth from the Portsmouthcreditors.Damian Collins: So it is not new liability, you say?Richard Scudamore: No.

Q660 Damian Collins: In terms of the sanctions thatare imposed, the idea struck me of a transfer embargoon clubs—if clubs have HMRC debt they are probablyin quite a bad financial state anyway. Do you thinkthose sorts of financial sanction are effective? Shouldyou consider using sporting sanctions against clubsthat are clearly in quite serious financial breach?Richard Scudamore: Well, there is what the rulebooksays, and there is also what our ability as the board toget clubs to behave in a certain way also does. Ofcourse, we have significant funding that we give tothe clubs in two main tranches—once in August, oncein January—then we have a monthly stabilised cashflow, which again is not insignificant. I am absolutelysure that before we would need to go to the rulebook,




we would use our good offices to use some of thosefunds that are not legally the clubs’ until they havefulfilled our rulebook. But we would certainly, Iwould think, look to be using those funds to makesure HMRC is—

Q661 Damian Collins: Do you mean you would giveHMRC the money that would otherwise go to the clubat each point?Richard Scudamore: Well, certainly we wouldencourage the clubs to allow us to do that, yes, toavoid them getting into that situation.

Q662 Damian Collins: Is that something you havediscussed?Richard Scudamore: That is exactly how we haveapplied the rules in the past, yes—the ability todeduct.

Q663 Damian Collins: Yes. Obviously you haveoversight to a club’s ability to meet their footballobligations and liabilities, and we have discussed—asI am sure you will be aware—at great length thefootball creditors rule. When we discussed that withDavid Gill and the other club representatives, they feltthat the football creditors rule had served its purpose.In previous sessions, Lord Mawhinney explained howhe had tried to get the Football League to get rid ofit, and the current Chairman of the League said thathe couldn’t find a moral argument for keeping it, butwas 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 ofthe Football League, and his Chief Operating Officer,Andy Williamson—those of us who runcompetitions—will defend it, and we will defend it onthe basis of the chaos that ensues if you don’t have it.We are a closed system. We trade on a closed basisbetween each other. If a business fails, the realsanction should be expulsion.The problem with expulsion is it damages far morethan the club involved. For example, had Portsmouthgone straight into expulsion in the January/Februaryof last year, every single point that they had gainedwould have been taken off the clubs that had alreadybeaten them. More importantly, anybody they hadbeaten would suddenly, effectively, have a three-pointadvantage. So it is absolutely essential that the clubsare forced to play each other and to play out theirfixture list, and therefore it is essential that footballcreditors are paid. Another thing on this: there is nomoral basis for saying that the St John’sambulancemen or the local businesses shouldn’t bepaid. Of course they should, and that is our startingposition—there should be no bad debt.You have more say in the insolvency laws in thiscountry than I have and if you wish to change theinsolvency laws to allow charities or small businesswith a certain turnover threshold to become preferredcreditors or preferential creditors, I would certainlysupport that. But on balance, it is the best of a badsituation. Because we are a closed system, chaoswould ensue if people’s playing records wereeradicated. 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 supportthe football creditors rule. I understand that theintegrity of our league takes precedence over the smallbusiness creditor, which is unfortunate, but I am notever excusing people not paying their debts.

Q664 Damian Collins: I think there is anotherelement to this, and this was a point that David Gillmade when he gave evidence to us. He agreed withthe idea that if the football creditors rule did not existclubs would have to be more open and transparent intheir financial dealings with each other, because therewould be greater risk, and transfers and paymentsbetween clubs, which are a very big part of clubs’expenditure in putting their teams together, may havea helpful and deflationary impact. I think LordMawhinney also talked about the integrity of thecompetition and whether you can protect the integrityof the competition if clubs are using their liabilities toother suppliers to fund their football activities.Richard Scudamore: David Gill is probably the bestchief executive in football. He runs a club, but he isin a fortunate position where he runs a club with theability to trade almost on a cash basis with others.There is the idea that across professional football all92 clubs should go into a full due diligence situationin terms of this. Given we have this system, rememberin our particular case we generate significant centralrevenues. Those contracts are entered into only withthe Premier League, not individual member clubs. Wehave significant funds such that when this situationcomes along, as it did in Portsmouth, we are able tokeep, for example, Watford in business, effectively.Watford were owed money by Portsmouth. We wereable to satisfy other foreign clubs that were owedmoney by Portsmouth, which has given us greatstanding across European football, because I think weare the only league that has ever done that, and hassatisfied club debts. So I think it is easy forManchester United to say, “Everybody should do duediligence,” because they are in a situation where notmany people are buying players from them, and whenthey are buying players themselves it is a verydifferent position. As I say, he comes at it from a clubperspective. I sit in front of you as a league organiserwith a slightly different view.

Q665 Damian Collins: What you seem to be sayingis it is all right for clubs that do not have big cashflows to engage in financial transactions with otherclubs knowing that they may not be able to meet thoseliabilities, but if they can’t they have their VATaccount or other unpaid bills they could pay it from.Richard Scudamore: You go to what is the essenceof the game. I would advise caution—steering clearof over-regulating or over-prescribing something thatmight circumvent the essence of the game. Theessence of the game since it started—the thing thatgets fans most interested—is the buying and sellingof players, the trading of players, on the transferdeadline. You have seen the media hype aroundtransfer deadline. We know more about what is goingon from the media hype sometimes than we do fromthe contract registration documents that are coming




into our office. The essence of the game throughoutmy 14 years in the executive capacity of professionalfootball, whenever you get to a room or the pre-meeting coffee discussions, is players and playermovements: who is buying whom, who is sellingwhom, what is happening? The idea that you wouldsomehow put this administrative blockage of a duediligence process in front of every single trade, clubto club on transfer deadline and everything else, is aplace we wouldn’t want to go.

Q666 Ms Bagshawe: Surely greater transparencywould prevent that. You just gave the example ofWatford being protected. Watford wouldn’t haveallowed Portsmouth to run up such debts with it if ithad clear sight of its balance sheet, and without thefootball creditors rule that would have been the case.Richard Scudamore: Okay. We have transparency,don’t we? You have seen the Deloitte report. There isno other country that can produce the Deloitte annualreport of football finance on the same basis, becausecertainly in US sports you won’t see that level oftransparency. We are all required by regulation. Weare UK-registered companies. That means thateverything has to be filed with Companies House. Ofcourse, it would be good practice for a club toestablish with another club whether they can pay, andthat is why a lot of deals do and don’t go through.That is done now. I don’t think, though, it is thesolution to obfuscating the football creditors rule. AsI say, I am not here defending many aspects of theconsequences of the football creditors rule, but onbalance I think the Football League, the FA and Iagree that, of the options available, it is better to havethe rule than not have the rule.Damian Collins: It does seem a pretty sad state ofaffairs if the—Chair: We need to move on.Jim Sheridan: In my experience, and in theexperience of other elected colleagues in this place,abiding by the rules is not always the best form ofdefence.

Q667 Paul Farrelly: I will be brief on this section,which leads nicely on from your discussion of howimportant it is to have integrity and stability when youare running competitions. When we talked about localbenefactors buying into clubs, would you prefer themto put in equity rather than take on debt?Richard Scudamore: I think in a hierarchicalsituation, yes. That is, you would prefer them just toput in equity, yes, as opposed to debt.

Q668 Paul Farrelly: The oft-mentioned LordTriesman made a contribution in a speech on debt.Why did you and the Premier League take suchexception to what he had to say?Richard Scudamore: Again, you have to put it in thecontext of the timing. We were having what wethought was a very good dialogue with Lord Triesmanand with Andy Burnham, the Secretary of State, allthrough that summer. We started the dialogue in July;we continued it in August. We were all entitled to aholiday and off we went. We came back and thatdialogue stopped, and almost the next thing we had

was these unilateral speeches—both by AndyBurnham and by Lord Triesman—about the state ofEnglish football. If there was any affrontedness, and Idon’t deny there was some, it was a sort of break withthe discussions that we were having. Having saidthat—

Q669 Paul Farrelly: So your reaction, you weredescribed as “tired and emotional”.Richard Scudamore: No, I don’t think it was tiredand emotional at all. We were rather sanguine aboutit. It was others. Clearly, the media enjoyed the theatreof Lord Triesman at a speech called Leaders inFootball—interestingly named—and the issue isaround the fact that clearly we are proud of Englishfootball. I think this comes through. We are proud ofwhat the Premier League has achieved. We are veryproud of what the Football League has achieved. Weare proud of where the FA sits in relation to otherfootball associations around the world, where theEngland team sits. It is the one team—probablyEngland and Brazil—that attracts more internationalinterest than any other team, so when you are veryproud of something, my view in terms of when youare trying to move the agenda on is that you shouldperhaps not criticise it quite as directly. On goodleaders, I think there is an art of leadership. The firstart is to get people to follow. Therefore, if you aregoing to display real leadership—you will have seenthis in your world—you have to get people either tofollow, vote for you or at least engender some support,and I think it is interesting tactics people havedeployed in trying to get that support, but it is not oneof the ways we would have chosen to do it.

Q670 Paul Farrelly: From your answer aboutpreferring equity to debt, who wouldn’t?Richard Scudamore: Yes, exactly.Paul Farrelly: I take it you would agree with SirMartin Broughton, nobody’s fool as we have seenover many years, the Liverpool Chairman, when hesaid, “If you are leveraged”—by which he meanshighly leveraged—“that’s bad for a football club.” Isthat 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, obviouslybetter. Therefore, we are into the proportionality ofdebt, and I think that is something that our new ruleswill bite on, because when you have to put your futurefinancial information in, when you have to put yourbusiness plans in—we didn’t have these rules fouryears ago—but now our rules are tighter on this thanthe UEFA licensing and the UEFA rules, because theUEFA rules don’t per se deal with debt, but ours willdeal with debt, and the appropriateness and level ofdebt. So, yes, clearly it goes without saying it is aboutthe amount of debt and the question, is the club atrisk? Our role is to make sure that clubs aresustainable, that they stay in business, and we don’thave a role that says each club must be able to winthe Champions League. That is beyond our power,beyond our reasonable control, but certainly in termsof sustainability that is the issue, and, yes, clearlythere is a number at which proportionately debt has to




be a risk and that would be covered, I think, by ournew rules.

Q671 Paul Farrelly: The final question, as time ismoving on, relates to your position when it comes toany financial regulation UEFA is involved with. Youhave made strides with your own rulebook, so is thereno role for the Football Association in any financialregulation?Richard Scudamore: Of course there is a role for theFootball Association, because they have anoverarching role in the way it works. But UEFAthemselves are only competition owners; that is whatthey are. They organise their own competitions andthey say to the clubs that want to play in thosecompetitions, “If you want to play, these are therules.” It is the same for us. If there is a lacuna in therules or if there is a gap in the rules, yes, we wouldbe open to that dialogue. We would also be open tothe dialogue as to who applies those rules. We are notagainst that at all.

Q672 Paul Farrelly: Very quickly: has the FootballAssociation any greater role in financial regulationbeyond what you are already doing than justapproving the rules of the FA Premier League?Sir Dave Richards: The executives of the PremierLeague and the Football Association meet everysecond Friday to discuss all the implications of this,and they come up with scenarios—whether it isfinancial or about players. They discuss this everysecond week. They bring it back to their bodies. Theirbodies then agree the formula and it goes to the board.So if the FA wants to talk more about finance, it hasample opportunity to do it at the Friday FMT with thesenior executives.Richard Scudamore: Just so you are all clear, though,and maybe I have not made it clear, the FA are thepeople who are ultimately the licensor of the UEFAlicence, so the work, much of the data gathering andmuch of the evidence is gathered by the PremierLeague Executive. That is all presented to FA, but theultimate people who decide on the UEFA licences arethe FA. They have an integral role in the financialregulation of football.

Q673 Ms Bagshawe: I know there are pressures ontime, so would you comment on two questions atonce. This is related to debt in the English model offootball. Obviously, there is a growing differentialbetween the revenue gap between the Premier Leagueand the Football League. First, do you think thisencourages clubs to overspend, to gamble on success,whether that be staying up in the Premier League orjoining the Premier League and entering theChampions League? As a corollary question, we haveheard evidence to the Committee that the parachutepayments if you are relegated, which now last for fouryears, are distorting competition in the Championship.Do you think that the Premier League has a role toplay in cost control?Richard Scudamore: Clearly, that is why we areadvocates of the concept of break-even, and repeatingthe financial fair play concept of break-even is

unarguable. In terms of a gamble, of course football isan optimistic, upwardly mobile, aspirational business.Ms Bagshawe: Nothing wrong with that.Richard Scudamore: There is nothing wrong withthat. It is entrepreneurial, and Mr Cameron would beproud, and would have been in all his speeches in thelast three weeks, including in Cardiff at your springconference. That is exactly what football is. It is aboutthe aspirational, the entrepreneurial, and saying, “Wethink we can invest our money and we think we canimprove our lot.” So yes, of course, the best thing andworst thing about the Premier League is howsuccessful it has been. It has been a success in termsof its attendance growth—60% since we started—ourviewing and our audience growth, as well as ourrevenue growth. That success has meant more andmore clubs want to be part of us. The Championshipclubs all want to be in it, despite the fact that whenthey are not in it they like to criticise us, but they allwant to be in it, and that is the reality of Englishfootball.Clearly, we are not sitting here advocating that peopleoverstretch themselves to the point of putting them atrisk, which is why we have talked probably more thanwe should about all the rules that are now in place tostop that happening. When it comes to the parachutepayments, they are, again, in a sense a necessarymechanism. They have been in it since the start,because when clubs get promoted we want them tocompete. We don’t want clubs to come up, bag themoney, take it as profits and just go back down again,because it is a sporting competition.We can talk about money and finances and everythingelse, but the integrity of the league this season is morein evidence than ever. The clubs who have come uphave competed: Newcastle have competed. Blackpoolhave had a fantastic run, considering the economicsmean they shouldn’t have won anything like thenumber of points that they have, if you believe thepre-season pundits. West Brom have suddenly gotthemselves into not a comfortable position, but adecent position this weekend. So you want your clubsto come up and compete. That means you want themto spend money, invest. We require them to investheavily in infrastructure. No matter what happens toBlackpool this season, they will have a betterinfrastructure as a club, a better stadium and betterfacilities, because they have invested that money inmaking their club better; they have communityschemes. Every aspect of Blackpool Football Club hasbeen 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 ofthat when they get relegated; they need a softerlanding. What we have done is the parachutepayments, which have always been there. On theextension to four years, it is only half what they wouldhave got, so the positive side of this is that 12 of the24 clubs in the Football League—half of them—enjoythe benefits of the parachute, which is good for thesustainability of those clubs. Basically, if you wantthem to compete when they come up, you have toprotect them when they go down. Interestingly, it hasnot distorted the competition, if you look at theChampionship this season. I haven’t checked the




league table after last night, but I don’t think therewas a team that was relegated. No, there isn’t. NeitherBurnley, Hull nor Portsmouth is in a play-off positionto come back up, so you can’t believe it has giventhem a huge competitive advantage over the others.

Q674 Chair: On the recent European Court of Justicecase, or rather, the opinion of the Advocate-General,that may lead to an ECJ judgment on the sale ofexclusive territorial rights, have you done anassessment of how damaging that will be if it isupheld?Richard Scudamore: We haven’t done an assessmentof how damaging it can be, because I don’t think theopinion is clear enough as to what the outcomes willbe. The opinion is difficult; it is convoluted. Itsuggests certain things that might happen. As you willbe aware, the process of this is that the opinion getsput towards the ECJ, the judges. The judges have toanswer, I think, 18 questions set by Justice Kitchinhere in the UK. Then the answers to those questionscome back and he has to weave them into his ultimatedecision. What is very hard to see at the moment ishow we get all this to add up—even the copyrightissues that have been explained, even this conceptwhere it might be possible to make a legal distinctionin the UK between a domestic card not being allowedto be used in a commercial premises in the UK. So, aUK domestic card might not be allowed to be used ina pub or commercial premises, but somehow a foreigndomestic card could—under some interpretation of thefreedom of movement—be allowed to be used in apub or commercial premises in the UK. It is difficult;it is complicated.What I do know is this. You questioned the Secretaryof State last week on this particular topic, and we arevery grateful for his support on this and UKGovernment support, where it is essential for contentowners to be able to sell their rights in a way thatworks for consumers as opposed to some ideology ofsome pan-European market. We don’t sell the samePremier League product across Europe. We sell ourrights—the components to a Premier Leagueproduct—across Europe. It is then for the people ineach territory and each country to create a product thatthey in that market require.With your other hats on as Culture and Media, youwill understand the territoriality and the essentialnature of territoriality in that regard. So the French,when they produce Premier League coverage inFrance, concentrate often on French players, Frenchclubs. It is scheduled to avoid the French league.Similarly in Italy, in Spain, in other countries, whenthey show our rights, they not only concentrate on anelement of the Premier League that is more relevantto their audience, but schedule it around what is aunique part of each country’s culture.It is the same in this country, which is the reason whywe will fight strongly, for example, against if MrPlatini and others come along with a summer calendarfor football, because we believe it is pretty difficult toplay cricket in this country in the winter—rainstopped play would be rather more prevalent.Therefore, it is things like that, where you have toprotect 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 diversityand protect the culture of each individual territory. Itis an important case, John—Chair: It is an extremely important case.Richard Scudamore: And I think you shouldconcentrate some of your minds and efforts on it.

Q675 Chair: Indeed. That may be your view, it maybe our view, it may be the Secretary of State’s view,but at the end of the day if it is not the EuropeanCourt of Justice’s view, there is not a lot we can doabout it.Richard Scudamore: No, except, as I say, the problemwith this case is that it is possible to sit down andwork out theoretically what we might do about it, butunfortunately every solution is not as good for theconsumer, not as good for the broadcasters in eachcountry as what currently happens. The idea, forexample, that we might have to sell our rights on apan-European basis does rather make a nonsense ofhaving broken our rights down into packages, with ourother European Commission challenge, with Ofcomensuring that we encourage plurality in the mediaworld to make sure that more than one broadcasterhas our rights. All this kind of stuff contradicts all thethings we have been discussing in a regulatory sensewith these people up until now.

Q676 Chair: I entirely understand that, but is that acase that you think you are capable of persuading theEuropean Court of?Richard Scudamore: Unfortunately, we don’t haveany chance now in front of the European Court, dowe? That is the way the process works. They willbe crafting their opinion. If there is anything that theGovernment can do, whether this Government orwhether other Governments across Europe, to weighin with their views, I think that is important, becausewe need to—and that is what my lobby people will do.

Q677 Chair: But you will have begun to think aboutwhat 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 Europeand where you would have to do whatever you do ona pan-European basis, which is a bit odd becauseclearly the UK has more interest in our PremierLeague rights than any other country in Europe, andyou would expect that, wouldn’t you? So the idea thatwe suddenly think of Europe as one market, when itis effectively 53 markets, is possible; it is doable. Itdoesn’t hold any fear to us, but it is just a veryconvoluted, complicated way of going about doingsomething when the current system works perfectlywell.

Q678 Chair: But it is also likely to result in a dropin income.Richard Scudamore: Again, you just can’t make thatstretch. In some ways, the other challenge that wehave in terms of the Ofcom pay TV review and ourappeal to that is important, because it hits right to theheart of a plural media rights market, where, as youknow from that particular case we are arguing, if all




these other media companies have a wholesale offersituation with Sky, which has to wholesale all thissport content to them, their incentive to bid for ourrights will be vastly reduced. In a sense, that has morepotential threat to the income of the Premier Leaguethan 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 RecreationAlliance, that you had signed up to a target ofinvesting 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 maycorrect you. It was net broadcasting income.Chair: Yes.Richard Scudamore: What the code absolutelyenvisages is the cost of putting on that competitionmust be able to be deducted from your gross income.While we can sit and talk about our £1.2 billion worthof revenue, of course we have a huge cost of sale, andthat 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—isallowed to deduct the cost of running the FA, the costof putting on the England matches and the cost ofeverything else, so to be treated like any other sportsgoverning body we have to be allowed to look at netrevenue, which is when you have basically extractedyour cost of sale of putting on the show. We stand upvery well indeed. Our £162 million we gave away byway of solidarity—13.4% of our revenue. There is noother sporting body in the world—no other businessin the world, I don’t think—gives away 13.5% of itsrevenue. Not of its profit, of its revenue. So we standup extremely well to anybody else, whether in asporting context or in a business context.

Q680 Chair: So what is your estimate of netbroadcasting income?Richard Scudamore: Well, it is a net loss, to beabsolutely honest, so goodness knows what thatmeans our percentage to contribute is; it must beinfinite.

Q681 Chair: So it is a pretty meaninglesscommitment to say you are going to give away 30%of what is a net loss.Richard Scudamore: I would ask you to concentrateon our submission: £162 million given away. If youcan show me another sporting body or anothercompany that gives away 13.5% of its gross revenueit will be very interesting.

Q682 Dr Coffey: I wonder if Mr Scudamore couldjust clarify where that kind of money goes? Is thatreferees 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 effectivelygoes—let me check the detail of it. I wouldn’t wantto mislead you. Yes, £162 million of it goes intosolidarity and good causes. That is roughly brokendown as £60 million in parachute payments, about £62

million in solidarity payments—that is both for theFootball League and for the Football Conference, whoyou will be speaking to later—and the rest tocharitable causes, charities.

Q683 Dr Coffey: So about £10 million outside, ifyou like, the professional clubs?Richard Scudamore: No, about £42 million, I think,goes to good causes in the community. That is in oursubmission.Dr Coffey: Oh sorry, £162 million. I wrote down thefigure wrong.Richard Scudamore: Yes, £162 million, with £40million-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 forthe success, whether through Sky subscriptions, ticketprices or similar, but they get terribly frustrated—probably the cause of this whole inquiry—becausethey feel they have no say in the governance of theirclubs. What additional measures can the PremierLeague take to increase that say?Richard Scudamore: Well, again, we wouldabsolutely commend any club having a dialogue, andour rulebook envisages a supporter liaison person ateach club; we would encourage all clubs to have adecent and open dialogue with their fan base. You willalso see—you can do this another time—theappendices that we put into our submission. There isno other sporting body, I think, that does the extensivenature of the research that we do, among our fans andour non-fans. We are absolutely in touch, I think, withwhat all fans feel, and that is difficult because thereare very vastly different opinions. I think in a practicalsense we fund now Supporters Direct, and we havedone for some time.

Q685 Dr Coffey: Will you continue to do that at thecurrent level?Richard Scudamore: We will continue to makeavailable, as you know via the Fans Fund—This is anongoing debate as to whether we, the Premier League,should be funding these organisations. We took up theSupporters Direct funding when Government decidedit didn’t meet the Government’s criteria ofparticipation only. It is the same in all theorganisations, such as the Football SupportersFederation and the National Disabled SupportersFederation: for the central bodies that currentlyexist—associations formed by those like-mindedpeople who wish to share common views—we willcontinue to make funding available to them to achievesome of their aims. They admit by their own effortsthat they would rather find more sustainable sourcesof funding, because they find it awfully odd beingpaid for by the Premier League, but we were certainlyalways open in that dialogue. I have personal dialoguewith the leaders of all those organisations, as do myteam.Ultimately, you cannot argue against having decentfan liaison and decent fan communication, but, as youhave heard in evidence before this Committee, notevery supporters’ trust thinks it is right that theyshould have a seat on the board, because they wish to




remain more removed from the fiduciary duties thatthat would bring. There is a raging debate about this.I would put you back to the evidence. Our evidenceis that since the Premier League was formed, 67%more people are coming through the turnstiles andattending our matches. English football was at itsworst throughout the 1980s in terms of violence, ofhooliganism, stadium disasters and no television deal.On taking the game back from that position—morefans are more interested in our surveys, veryindependently done by Populus, and again I offer upto the Committee access to all those Populussurveys—the reality is there are more peopleinterested in our league and what we do now thanthere were before.

Q686 Dr Coffey: You mentioned that you are a bitof a closed board; there is no other entrance in andout, which was the justification for the creditors rule.I recognise you are all football supporters, but giventhat you are a closed board, how do you get new, freshblood in? I suggest to you that one way, Sir Dave andRichard, would be to say that there is a fixed-termlimit on how long people can be on the PremierLeague board to encourage new blood in, and perhapsa role for supporters on that board as well.Richard Scudamore: If you go back to my originaldescription of what the Premier League board reallyis, the Premier League board is effectively the clubs,and Mr Parry will be able to advise you exactly onthe intentions when the shareholders set the thing up.We have new blood all the time. In fact, we have newblood, we have old blood. We take by rule three newclubs every year, but then the clubs themselves turnover and, effectively, the clubs come along asshareholders and that is the new blood. We are forever being challenged by new blood on what iseffectively our board, which is our clubs.

Q687 Dr Coffey: With respect, Sir Dave—who Ithink has been a distinguished Chairman, and has


Witnesses: Brian Lee, Chairman, the Football Conference, and Dennis Strudwick, General Manager, theFootball Conference, gave evidence.

Q689 Chair: I welcome Brian Lee, Chairman of theFootball Conference and Dennis Strudwick, GeneralManager, and thank you for your patience in waitinguntil we reached this point. We are very pleased youwere able to come and join us this morning. PerhapsI might begin, following on from the theme we werediscussing with the Premier League just now aboutthe involvement of supporters, and in particularsupporters’ trusts and clubs, by asking, what is yourexperience of the success of supporters’ trusts andclubs, and do you find that they are more likely to beinvolved 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.

certainly seen the Premier League grow—has notbeen, if you like, replaced. Is there a view that thechairmanship should be not quite such a long-termelection?Richard Scudamore: I think that is entirely a decisionfor the 20 shareholders. We turn up and say to eachother before every shareholder meeting that it is likereapplying for your job at every single meeting, andour predecessors sometimes went to those meetingsand left without their jobs.

Q688 Dr Coffey: I would be really interested to hearSir Dave’s view.Sir Dave Richards: No, it is absolutely true whatRichard tells you; you are as good as the last meeting.You could turn up at a meeting and find out it is yourvery last. On terms, you get elected every year. If youhave a bad year you don’t get re-elected. There comesa time when you think to yourself, “Well, perhapswe’re okay,” but the Premier League is so fluid, andMr 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 clubsare the governance of the Premier League. The boardhas a set of rules and it is a set of rules that we canwork to, so the board is not like you believe it to be,like a PLC, because the PLC part is the shareholdersand they are the board. We are very limited in howwe can make decisions as the two members of theboard. Mr Parry will tell you that he helped write therules, so he will tell you how difficult it is that youmust work within those parameters. If I break thoseparameters, I can tell you I will be out overnight.Chair: We have to stop there. I thank the two of youvery much.

There have always been supporters’ clubs andsupporters’ clubs have formed themselves intosupporters’ trusts more legally. We have goodexamples at Exeter, which is a supporters’ trust. Ifyou go there, an example is after the game: all thesupporters, having paid their entrance fee, go andclean the terraces, as it were, as their contribution totheir club. I think that is supporting and supporters’trusts. We have AFC Wimbledon, which obviouslycame out of a specific set of circumstances. FC Unitedof Manchester came about in another set ofcircumstances. They are all different.The problem with supporters’ trusts is that they donot have the financial background. They have a lotof enthusiasm and a lot of passion, but unfortunatelyenthusiasm and passion don’t pay the bills, anexample being a club we lost last year, Chester City.



5 April 2011 Brian Lee and Dennis Strudwick

In fact, nobody could save them. They did have agroup of supporters and a supporters’ trust, but thefinances involved were just too great. As you know,they went out of existence and were reformed by thesupporters. They started at the bottom of the ladderand are now top of their division. They are gettingcrowds of 2,000, which is way beyond the averagethere, and are on their way back. Supporters’ trustsreally are supporters’ clubs more professionalised.

Q690 Chair:Where it has not been possible for themto acquire a stake, are you generally in favour of theidea of their being represented on the board?Brian Lee: Yes, indeed. I think nobody could excludegood dialogue between the club and the supporters.Whatever the constitution of the club, they want theirsupporters because those are the people they set outto cater for, those are their customers. My own clubis Wycombe Wanderers; we have a board of five andtwo of those are from the supporters’ trust. They havea say. They are not going to change everythingovernight, but they can practically demonstrate, as Ihave said about Exeter, a major contribution to theclub.

Q691 Mr Sanders: It was said in the last session thatthe big story out of the session would be about LeedsUnited. I think the big story is the possibility that AFCWimbledon, the fans’ own club, could end up gettinginto the league at the cost of Crawley Town becausethey won’t come clean on their ownership. Do youhave ownership rules within the Conference inwanting to know who owns what, or are youconsidering having that as a rule?Dennis Strudwick:We don’t at the moment. It is dealtwith by the Football Association and we liaise withthe Football Association on ownership, so it is not astransparent as we would probably like in theConference. It is something we are prepared toconsider.

Q692 Mr Sanders: Transparency is important.Supporters ought to be entitled to know who ownstheir club, so would you push for this to be a rule?Dennis Strudwick: Yes, I think it is something weneed to take up with the Football Association because,as I say, it is dealt with by them at the moment. If wehave any questions to ask, we ask them and they liaisewith us. We have a rule within our competition aboutconflict of interest or dual ownership as such, and wewould liaise on any issue that we were aware of.

Q693 Mr Sanders: Crawley could end up not goinginto the Football League because they are not meetingthe Football League rules and so wouldn’t meet yourrules.Dennis Strudwick: You have mentioned CrawleyTown, and we suspected that might be on the agendaanyway, but the Football Association, through ourliaison—the Football Conference—has visitedCrawley Town. They are due to go back there. Theyhave established the investment there so it is beingdealt with.Brian Lee: I think it is very difficult, from theConference point of view, if the model at Crawley

Town satisfies the Football Association. It will satisfythe Football League, because they are due to go intothe Football League and you have heard about theFootball League rules. Therefore, if they are satisfiedit is difficult for us to do anything about it because weare completely satisfied from the Football Associationand 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 ofthe National Health Service—the Government will dosomething about encouraging more supporterinvolvement in their local clubs. That covers a widerange of possibilities, from the Maldon Sea Salt’sworks team to Torquay United or even Stoke City.Brian Lee: Who?Paul Farrelly: Stoke City, a club quite close to myheart. But the question is whether the Governmentwere well advised to put this in the coalitionagreement and how should they best go about doingit. What three or four things would be in theGovernment’s grasp to fulfil that coalition pledge?Brian Lee: First, I don’t think there should beintervention. I think there should be co-operation anddevelopment of the game with the governing body. Asyou have heard, the governing body isn’t—I wouldagree with this—the governing body it was or shouldbe, in my view. In terms of governance, it has lost it.It is fair to say that there are other governing bodiesin a similar position—a state of flux—at the moment.Lawn tennis is an example.I think the importance from a Conference point ofview is to give the independence. We are going alonga line, I think, which is satisfying the member clubsand a bit like the evidence you have heard. We arethere to satisfy them. We have 68 clubs. Sorry, wehave 67, because one club went during the yearbecause they were living beyond their means. We aredoing everything we can to get clubs to live withintheir means and we have financial initiatives and wehave co-operation with HMRC. Unlike the previousevidence, we don’t agree with the creditors rule. Wethink that everybody is the same, as far as debt isconcerned, and we will encourage everything we canand we are working at it. We have taken evidence thisyear, as a trial year, to try to implement it in rules nextyear 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 aGovernment’s grasp, what lever can a Governmentpull? Let me give you one example. If you wished toset up an ownership model that encouraged fans to getinvolved, you could make special exemptions fromtax or give tax incentives to invest in football clubs,then the question would be, does football occupy sucha special place in the country’s life that the sameshouldn’t happen with cricket or rugby? That is oneexample. I am just trying to see what your thoughtsare, from the lower reaches of the leagues, on how theGovernment can implement this manifesto pledge.Brian Lee: It can certainly give relief to sports clubsand football clubs, bearing in mind the clubs are not




just there for themselves; they are there for thecommunities. The Premier League has been extremelyhelpful to the Football Conference and this year wehave, for example, £800,000, and that is for threeyears, so that’s £2.4 million we are putting into ourclubs via the communities. Therefore, the Governmentmay well say, “Yes, that’s good, we might look atsome rate relief on that.” That will be quite logicalbecause we are making a financial contribution. Indoing so, each club is allowed £12,000 over threeyears, but that is 50%, so if somebody else is puttingin the other £12,000 there is a partnership, often thelocal 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 developingplayers—and those players eventually are going to besupporters. They all have parents involved. There areall sorts of things that are happening.Dennis Strudwick: I think every club—we have 67 atthe moment, as you have heard—is an autonomousbody. If the Government wished to make that an aimor an objective, as a Conference we would welcomesome advice on what might be a good business modelfor supporters’ involvement because we have to sellthe idea to these autonomous bodies, which are rununder a variety of business models. If it is such a goodidea to have that degree of supporter involvement, wehave to sell the idea. There is the Football Associationand there are major leagues like us to get thismessage across.

Q697 Paul Farrelly: Final question, because we areat an impasse here. You are asking the Government togive you some advice and the Government is askingfor some advice, in part through a Select Committeeinquiry, so we are no further forward.Dennis Strudwick: Okay, there is a discussion pointthat 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 torevenue ratio in the Football Conference?Brian Lee: We are working on it so that it will beabout 60%, but some are above that, some well belowit. That is part of our exercise—gathering informationthis year to implement next year.

Q699 Damian Collins: Is that to be implemented asa 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 independentcommittee on which the Football Association also hasrepresentation from its financial regulationdepartment. That is how that is being devolved andbeing aimed at—roughly 60% after turnover.

Q700 Damian Collins: If clubs are in breach of thatguidance, is that a matter for them?

Brian Lee: It is not in the rules at the moment, butthat is where we are working to in terms of adviceand 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 couldbe sanctions for breaching the rules?Brian Lee: Yes, but we are gathering evidence at themoment.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 budgetscheme and it was a comparison between expenditureon wages with turnover and the yardstick figure was60%. It was quite labour intensive to work. We reliedon the information that we were given by the clubs,which we would naturally expect, and it was difficultto prove the figures in support.What we have done since then—we found it quitelaborious, that system—is move on in our reportingsystem so that each quarter a club will report debt,HMRC debt and what the position is, whether it hasagreed arrears and whether it is paying it off. But wehave not abandoned the first idea. What we have inthere is turnover and salary, player wages. What weare finding though is—it emphasises our reason formoving away from the very focused structure of theAPB system—that some clubs who spend below 60%of turnover on wages might be perceived to be insome financial trouble when other clubs who arespending above 60% perhaps are not. The 60% reallymeans that some clubs might run very prudently onvoluntary labour and may be able to afford to paymore than 60% while others are a bit more labourintensive and can’t. We have shifted the reportingsystem on to a broader base and it has proven quiteinteresting in the last two years.Brian Lee: I think the interesting thing, if I may say,about the Conference is we have all these clubscoming down from the Football League, well-established clubs with their own models, and we havethe clubs coming up in the pyramid that aredeveloping their models, possibly more sensibly butat the same time being ambitious. Each year we hopethat one of those clubs will go into the FootballLeague, and that one of the clubs that comes downwill have rehabilitated.

Q703 Damian Collins: Obviously you have aconcern about unsustainable models of finance thatclubs have, but it seems that even at the Conferenceand at lower levels there have been incidences ofclubs that have a wealthy owner—Crawley has beentalked about; a couple of divisions below you havethe problems with Croydon Athletic as well—whopumps in a lot of cash in the short term to try and getthe club into the league. That money goes away andthe club comes crashing back down to the groundagain. Is that part of your thinking in trying to createa more sustainable business model?Brian Lee: Absolutely, those are the things to aim atand to defeat. We also have to make sure we have




greater knowledge, I think; that is really what wewant.

Q704 Damian Collins: You said, Mr Lee, that youdisagree with the football creditors rule. Is there afootball creditors rule that applies in the Conferenceat 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 anempathy with the theory of football creditors becausea football club does most of its business with otherfootball clubs. There is this empathy on understandingof the rule. However, in the broader system, ourreporting and our rules are geared to paying all thebills.

Q705 Damian Collins: Just so I am clear, in theconditions of membership of the league, if you like,or the Conference, football creditors don’t have apreferred status?Brian Lee: No.Damian Collins: So they are treated the same as allother creditors?Dennis Strudwick: There is an observed status. Wewant people to pay the other football clubs, the clubsthey are competing against. They are the ones whohave this integrity problem with the competition, butthe bottom line is we want the football clubs to payall their bills.

Q706 Chair: You will have heard we spent sometime this morning discussing the structure andcomposition of the FA, particularly the Board and theCouncil. Do you feel that your interests are givenproper weight in the deliberations of the FA?Brian Lee: We have representation, following LordBurns’s report. We have representation on the FACouncil, so we have two members. The three feederleagues also have one representative. At our level ofthe game, if you can call it that, there are fiveMembers of Council. Council, on the other hand, is118 people, which is far too big. The board is far toobig and we don’t have any representation on theboard. We find ourselves betwixt and between: thePremier League is up there and we have the nationalgame down here, and we are at the point there and atthe bottom there.We feel that our level of the game deserves and needsits own board, so we would become a board of 266clubs—the Alliance Game Board, as has beensuggested. When the Premier League disappeared,everything was on its own—the Premier League andthe Football League. We were non-league, but whenwe started we were non-league from the FootballLeague, when it had four divisions. Non-leaguenow—what does it mean? We are supposedly at thetop of the national game alongside the teams that playin the Bolton and District Sunday League. That can’tbe right, particularly as the professional clubs are

coming down from the Football League and we haveclubs who are ambitious to move. There is a fairamount of money involved.We are pressing the Football Association, but, as anexample, the decision has been agreed by all the fourcompetitions and gone to the Football Association andthe board. The board has deferred it for comment, asit were, from the national game. I find that that isone of the problems. When you have all the membersagreeing, I feel that we should be able to carry on anddo it for the benefit of those member clubs—266 clubsall agree, but no. The Football Association shouldn’thold it back; it should encourage it.Dennis Strudwick: Chairman, if I could try andillustrate a little more about our position. At themoment, it is the professional game and the rest isthe national game. We all understand the professionalgame; we have met those two gentlemen today. Thenational game embraces the rest. We believe, with theFootball Conference having 19 full-time clubs out ofits top 24 in its top division, and being semi-professional at least for the rest of it, that there is aniche to recognise that level of football, even with ourfeeder leagues below, which would fit in below theprofessional game, but above the national game. Wethink there is a niche there.I think your question was about how we feel our levelof the game is being represented. To give an exampleof our level of the game, our fixture calendar hasrecently been published. It is very comprehensive,from all the matches taking place at international levelto under-15 girls’ team friendlies. Nothing wrong inthat, 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 justwon a series of international matches in what isknown 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 thegame, which is being overlooked and under-represented.

Q707 Mr Sanders: The television coverage that theConference was getting seemed to give it a higherprofile for a while. It was ESPN, wasn’t it?Brian Lee: Setanta.Mr Sanders: Setanta, yes. ESPN has taken overSetanta, but not the contract, so you don’t benefit fromthat. But was it helpful to have that profile?Brian Lee: Yes, you can’t argue really aboutpresenting the game. We now have an agreement withPremier Sports Television—they film just over 30matches during the season, but it is not of financialbenefit to all the clubs as the Setanta agreement was.The only clubs that benefit from the present agreementare the competing clubs, but it does give us the profile.

Q708 Paul Farrelly: One question, and I won’t callit a breakaway or a break-in, but you mentioned 266clubs. How far does that extend?




Brian Lee: That extends to what are known as steps1 to 4, so that would take in the Conference and theNorth and South divisions. Then it would take in theEvo-Stik, the Ryman League and the Southern Leagueand their divisions. That group also plays in the FATrophy and they are also probably the end ofcontracted players, if you think about the—

Q709 Paul Farrelly: Would that be permanent? The266 wouldn’t be an exclusive club?Brian Lee: People are coming in and out of it, justthe same as in promotion and relegation, absolutely.Dr Coffey: My local club, I hope, will be promotedtonight into the bottom league of Ryman South.

Q710 Jim Sheridan: Apologies, Chairman, if thequestion was asked when I was out of the room, butyou may have heard the accusations this morningabout bullying. Are you aware of any bullying withinthe FA structure?Brian Lee: Bullying? A lot of it has been levelled atSir Dave Richards and I found it astounding. I havebeen a member of the professional game board andseen it happen, and I find it amazing. They have beenunbelievably co-operative as far as we are concerned.They need not do it but they have, and we have a verygood relationship. We have a good relationship withthe Football League because of the promotion andrelegation there and I think we also have a goodrelationship with the Football Association because wepartially represent them, as you have just heard.

Q711 Jim Sheridan: The reason I am asking is thatin earlier evidence some people suggested that thelower league clubs would be reminded of theirobligations when anything was going on in the FA andthey would have their freebies withdrawn if theydidn’t co-operate. You have never heard anything?Brian Lee: Absolutely not. Never heard anything likethat, no.

Q712 Chair: The only other suggestion, I think, wasthat Cambridge United were critical of the fact that

their up and coming players immediately got poachedby Football League clubs. Is that just inevitable?Brian Lee: It is a problem because we have beenencouraged to do it. We have a Football ConferenceYouth Alliance that is aimed at the 72 clubs in it; it isfor the 16-to-18 group, but only boys at the moment.No reason why girls shouldn’t join in—we wouldencourage that—but at the moment there are boys, 16to 18, who are going to college, so it is an educationand a football course. They do so many hours ofcoaching per week.The problem with the development of youth footballis travel and the cost of travel, but that is one thing.The problem really is one of losing those good playersat clubs. An example is Weymouth, which almostwent out of existence last year, but continues to run26 clubs in the community of lower age range, startingwith the under-sevens. Despite the big club going,there is sufficient encouragement and enthusiasmthere, so the parents rallied round, but you don’t hearthat story.I think the important message on youth iscompensation when a player is taken from a lowerclub to a higher club. There is some formula beingworked out through UEFA and it is being discussedin England. I hope that true, proper compensation willensue based on some sort of formula. I think that isbeing worked on.Dennis Strudwick: Can I go back to Mr Sheridan’squestion? I don’t want to go back into the too-distantpast, but I have heard of sanctions from county FAs,many years ago. I have never heard of it from theFootball Association, but it was, “If you don’t play inthe County Cup or Senior Cup, you won’t get yourFA Cup tickets.” It was that kind of thing. I havelooked upon those as, perhaps, sanctions, but neverheard of bullying. If nobody is listening, working withthe FA is a bit like running through treacle sometimes,but it is not bullying.Jim Sheridan: There are about 2 million peoplelistening.Chair: I think that is probably all we have. Thankyou both very much for coming.

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Members present:


Ms Louise BagshaweDr Thérèse CoffeyDamian Collins

________________


Witness: William Gaillard, Adviser to the President, UEFA, gave evidence.

Q713 Chair: Good morning. This is a further sessionof the Committee’s inquiry into football governance,and for the first part of our evidence this morning Iwould like to welcome William Gaillard who is theadviser to the President of UEFA. Can I invite ThérèseCoffey to begin?Dr Coffey: Welcome, Monsieur Gaillard. Why is itimportant for UEFA to introduce Financial Fair PlayRegulations at this time for its competitions?William Gaillard: Thank you. Certainly, it is not tooearly to introduce Financial Fair Play measures. Itmay be a bit late but I think the financial crisis hasinduced us to probably quicken the pace of thefinancial reforms that we were contemplating for thepast two or three years. We felt, in particular, that thegrowing inflation of wages and transfers, the largenumber of clubs facing an unsustainable debt burdenand the fact that a number of clubs Europe-wide weregoing into administration, meant that the systemneeded some reform. We felt that the countries wherea strong licensing system had been in place were notfacing the same problem as the ones where licensingwas weak or nonexistent and, therefore, we felt that,through our licensing mechanism for our owncompetitions, we could introduce some order andmore rationality into professional football.

Q714 Dr Coffey: So what would you suggest UEFAis doing to avoid unintended consequences, likeincreased ticket prices? UEFA has already come undercriticism for the high cost of Champions Leaguetickets that are open for purchase. What about theclubs?William Gaillard: In terms of the Champions Leaguefinal tickets, our President has already said in Londonthat he is quite aware that we made a mistake. We gotit wrong while getting it right. That is, we got it rightin terms of fighting ticket touting but we got it wrongin terms of the prices that supporters would have topay, albeit only the 10,000 that are not getting ticketsthrough their clubs.We have said that in future years we will be lookingat, say, like a fourth tier of tickets that would beaccessible to families. We have spoken quite a bit onthis and we apologise for the mistake we made. It isalways very difficult to get the right balance betweenticket prices and what will be a disincentive to theblack market and ticket touting. In the past we havehad lots of problems with that, with tickets that wereoffered at convenient prices for families being sold 10times more expensive or 15 times more expensive,and that again does not solve the problem.

Paul FarrellyMr Adrian Sanders

Now for clubs, high ticket prices are not always arecipe for sustainability and the German Bundesliga—the German First Division League—proves that youcan keep ticket prices at a fair level that are accessibleto most people in society while at the same timebreaking even or better, as far as the clubs areconcerned. So we believe that there may be somegood influence of Financial Fair Play on ticket prices,although there is no direct link to ticket prices. Wefeel that financial licensing will introduce morerationality in the way clubs are being administered.It is basically a question of incentives. There areincentives to behave in a more rational financial waythrough Financial Fair Play, and if the clubs heed ouradvice they will find themselves in a better overallfinancial position.

Q715 Dr Coffey: So what will UEFA do to ensureclubs are not circumventing the rules? I give you theexample of a team—I can’t remember off the top ofmy head—who we discussed in Germany whereinstead of, if you like, ownership money they receivedsponsorship money of a very large amount.Damian Collins: It was Schalke.Dr Coffey: It was Schalke. Okay, that is highlyrelevant for tonight. So Gazprom I think gave them€100 million. How will you end up ensuring clubsdon’t circumvent the rules?William Gaillard: Yes, there is another example thatis always given in Germany, where the controlauthorities intervened. It was the case of Wolfsburgand Volkswagen. The person in charge of FinancialFair Play at UEFA had answered a question at theSoccerex conference. He said, “Look, like with anyrules there will be loopholes. We will just have to bevery quick at plugging them.”Dr Coffey: Quick at plugging the rules. You arestarting to sound like a tax lawyer now; it is quiteinteresting.William Gaillard: Exactly.

Q716 Dr Coffey: How transparent will themonitoring for the regulations be?William Gaillard: It should be fully transparent. Thatis our intention. That is what we want to do. Thefigures will be published. This is one of the challengesbecause, as you know, Europe is a single market butit is not a single taxation area. We have lots ofcountries that do not belong, for example, to theEuropean Union that may have less than transparenttax systems. So for us this is one of the big challengesto get accounts that are readable, transparent and clear

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26 April 2011 William Gaillard

to everyone. We have a multi-national panel offinancial experts that will be looking at this data, andour experience over licensing tells us that we can getto the bottom rather efficiently.By the way, the chairman of this independentcommittee that will be supervising Financial Fair Playis a colleague of yours. He is a Member of Parliament,from the European Parliament, Jean-Luc Dehaene,who was—Dr Coffey: The former Prime Minister of Belgium?William Gaillard: Yes, five times Prime Minister ofBelgium.

Q717 Dr Coffey: At the moment UEFA will be thesole people policing this; you will not be asking theFA, as the governing body of football in this country,to do that on your behalf, you will be doing thatdirectly?William Gaillard: The FA is already responsible fordelivering licences to English clubs participating inour competitions, so this will go on. That is there willstill be the licensing process for the clubs that arecompeting in Europe, at the same time we will havean overseeing process far more complex and thoroughthan it has been in the past through the Financial FairPlay mechanisms. There is no licensing as such forclubs in England. Of course, if licensing is introducedin the way it exists, for example, in Germany, theNetherlands, Switzerland, France and many othercountries, it is obvious that it will make our task alot easier.

Q718 Dr Coffey: I think the FA and the PremierLeague do suggest that they do effectively have alicensing system. Could you explain why you see—William Gaillard: They have bits and pieces oflicensing. They don’t have a licensing system overthe whole professional game. It is divided. It is notstreamlined as such. There is nothing like what existsin the Netherlands or in Germany. Some othercountries are in the same situation but very few.

Q719 Dr Coffey: One final question on this: clearly,one of the motivations is it seems to be to try—howcan I put it?—to stop, say, Roman Abramovichcoming in and pouring money into a team. What iswrong with somebody—in my view it is a differentkind of philanthropy—saying, “I want to get this teamfrom here to here”. What is wrong with that?William Gaillard: There is nothing wrong with thatif it has no consequences on the overall picture forprofessional football. What we have seen is thatwhenever you get an investor who invests his ownmoney at a loss, it drives transfer prices up; it driveswages up; it pushes other clubs that probably couldnot afford it to try to match that club that has becomesuddenly rich, and it creates a lot of imbalances and alot of danger in the system.We have seen over the last 10 years more than 80clubs in Europe going into administration, which is alarge number. We also feel that there is great danger—

Q720 Dr Coffey: Is that 80 clubs who compete inUEFA competitions or generally?

William Gaillard: Generally in Europe, yes. We feelalso that if the person brings equity it is of course amuch better situation than if he only brings debt,which we have seen a lot. We have seen these leveragebuyouts that have been rather disastrous for Europeanfootball, especially English football. We also feel thateven if a person brings equity if he suddenly losesinterest, either in the club or in football, and finds itmore attractive to invest in baseball in the US, forexample, the club will be left with a wage bill that itwill never be able to pay, even a couple of monthsafter the sugar daddy is gone. We feel that a modelbased on sugar daddies is not sustainable in thecurrent financial situation. The model has to be basedon clubs at least breaking even.Now we have introduced flexibility. For the first threeyears there will be a €45 million flexible line thatclubs may not break even and be in deficit for €45million. The three years after will be €30 million andthen lower as we go on with the process. We feel thatit gives enough flexibility for someone who wouldlike to, for example, support his own local club witha large influx of money once and for all. He or shecould do that under the system.Also, we have left the door wide open for capitalinvestments. We know that one of the great featuresof English professional football is that most of theclubs own their own grounds. That is a major sourceof income. You can always build new grounds,modernise them and make them more profitable. Forcapital investments there is an exception to theFinancial Fair Play Rule. That is anyone who wantsto give a stadium or a training facility to a club willbe able to do so.

Q721 Damian Collins: Do you think there is alegitimate concern that UEFA has greatly extended itsremit by introducing these rules?William Gaillard: By whose standards?Damian Collins: Given that UEFA exists to organiseinternational competitions between Europeancountries, and what you are effectively doing now isenforcing financial regulations on clubs right acrossEurope, effectively through the backdoor, and you aredoing that because of the financial lure of playing inthe Champions League.William Gaillard: The system that prevails in footballis a pyramidal system with at the bottom the 53national associations, which of course rest on anotherpyramidal system that springs from the counties, thedepartments, the provinces, depending on the country.Above that you have UEFA as the Europeangoverning body and above that, of course, you haveFIFA as the world governing body.

Q722 Dr Coffey: Can you clarify that, please,because I thought UEFA only governed its owncompetitions rather than—William Gaillard: We run our own competitions, butwe are—Dr Coffey: Yes, you don’t oversee the FA do you, orthe Scottish FA?William Gaillard: Well, we do not contemplateoverseeing national associations although we doregulate them in terms of their statutes; their statutes

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have to be in line with our statutes and our statuteshave to be in line with FIFA statutes. So from astatutory point of view we do oversee them, but webelieve in subsidarity.We could impose simple financial rules through ourCongress and so could FIFA, and that would extendto the 208 national associations that they control, forexample. They have not done that. We have not donethat because we believe in the subsidarity principle.

Q723 Damian Collins: So, on that basis, would therules be interpreted differently in different domesticassociations because, as you have said in yourevidence so far, the traditions and the financial modelsof clubs vary greatly in different European countries?William Gaillard: You are absolutely right on this.What we will do—and we said it very clearly—is thatFinancial Fair Play Rules will apply to clubs that wantto compete in our competitions, which is not only theChampions League but also the European League.That means that over three years in a country or anassociation like England you probably have 15 clubsthat would be involved out of the 20 of the PremierLeague.We will look into the peculiarities of the internationalsystem. We have to do that because, as I said, the taxlaws are not the same from country-to-country. Thefinancial regulations are not the same. They all operatein the same market but they are not regulated in thesame way, including by Government regulation. Sowe are well aware of that. We have a long experiencein licensing already. The European Commission haspraised our licensing system and has approved theFinancial Fair Play mechanisms in its recentcommunication, so we feel we are on solid groundfrom a legal point of view.

Q724 Damian Collins: Would you expand that andhave a rule on the distribution of television rights?Because major European clubs might say that theyhave competed in recent years against the inflationarypractices of Real Madrid and Barcelona who negotiatetheir own TV fees and, therefore, have a much, muchlarger slice of income from that than British clubswould have.William Gaillard: The whole issue of TV rights is avery complex one. It is creating a rather unsustainablesituation for many leagues in smaller associations thatbasically don’t have the critical mass of audiences inorder to finance their football. If you compare theincome of a league like the Belgium League, whichlet us say in the 1950s and 1960s was certainly a verycompetitive league with clubs doing extremely well inEurope, their income is about 30 times smaller thanthe Premier League. What you are pointing to is theissue of Spain, which is kind of a standalone thesedays in Europe, where clubs sell their own rights. TheEuropean Commission has clearly stated, in the samecommunication I mentioned before, that the best wayto sell rights is to sell them collectively. We stronglybelieve that too.Again, under the principle of subsidarity, we have notintervened on the Spanish scene although we havealways made it very clear that we felt it was not avery efficient way of distributing the money coming

from TV rights. At the same time, for example, westill have a situation that may change with the possibleruling by the Court of Justice in the next few months.For example, English clubs tend to get proportionatelya higher return from the Champions League becausethe English TV pool is richer. This could changeunder European law.

Q725 Damian Collins: I appreciate this is a complexarea and we couldn’t explore all of it in this session.We will probably try, but let us go back to my originalquestion, which is: the unintended consequences ofwhat—or maybe they were intended—you areeffectively doing is introducing financial regulation ofthe European leagues through the backdoor. The ChiefExecutive of the Premier League said that, becausemost of the clubs will want to apply for UEFA,effectively they are going to be complying with iteven though it is not required by the Premier League,and that once you go down this road you have asystem that has been designed to deal with certainissues—largely debt issues that you have raised—butyou inevitably are getting drawn into all sorts of othervariances and differences that may distort competitionbetween football clubs.William Gaillard: That is not our primary aimbecause there is all kinds of debt: there is debt that isthere to finance future sustainability, like investinginto infrastructure like a stadium or a footballacademy; and there is debt that is basically there tosupport free spending on wages or transfers, and thatis—I would call it—rather negative debt. There is alsodebt that may be legitimate but not serviceablebecause of the financial situation of the club. So if wewanted to deal with debt we could have made a rulethat focused on debt. We chose not to do so, not evento introduce a ratio that would be acceptable based ondebt or even a ratio that would be based on the shareof transfers and wages on total expenditure or onturnover. We wanted to give flexibility, understandingthat clubs operate in very different environments inEurope and, as I said, especially the fiscalenvironment.The Italian clubs complained to us. They said, “Well,it is very difficult for us to own our own stadiumsbecause municipal governments won’t let us do thatand our Olympic Committee won’t let us do that, soEnglish clubs have a tremendous advantage” and theysay, “We cannot sell beer and they can”. Wheneveryou talk to clubs from different countries they alwaysfind what puts them at a disadvantage. They never tellyou, “Well, there is this great loophole that puts us toa great advantage”. So what we will be doing ismaking sure that we are fair and that we take intoaccount some peculiarities that may exist in onecountry and not in another. Then experience will tellwhether we succeed or not.

Q726 Damian Collins: Yes, two more questions: myconcern is you are becoming, effectively, a Europeanfinancial regulator for football. I am not entirelycertain that is what UEFA was set up to do and Ithink it is sort of “mission creep” on your part, but doyou think—




William Gaillard: Well, no, in 1955 most clubs werepaying television to show their games. The worldhas changed.Damian Collins: Yes, indeed, but Michel Platini hasimplied that the debt financing models of Englishclubs, like Chelsea and Manchester United—who,despite the iniquities of their leverage buyout, areabout to play in the semi finals of the ChampionsLeague tonight—that these models of financing areeffectively cheating. Is that UEFA’s view?William Gaillard: No, I think our view is a lot moresophisticated then just what could be summarised witha three word headline.Damian Collins: I can read you what he said. Hesays, “Look at Chelsea and Manchester United’s debt.FIFA and UEFA have to do something to combat that,because today the ones that cheat are going on towin”. He said that just after—William Gaillard: Four years ago.Damian Collins:—Manchester United playedChelsea in the Champions League final. So it is apretty direct reference to them.William Gaillard: Yes, we looked at this issue of debtand certainly you won’t find that in our regulations.What we are saying is that the leverage buyouts endedup for many clubs in a disaster. Just take Liverpool.You have owners who came, contracted debt—both ofthe previous owners—and saddled the club with thedebt. The club has been rescued, thank God, becauseof the tremendous heritage that Liverpool actuallyrepresents, but it was a close call.

Q727 Damian Collins: If I may, one of the thingswe discussed is where this pressure for competitioncomes from. Do you accept that it could be said thatit is the Champions League that has been the majordistorting influence on European football? Becausethe money you get from playing in the ChampionsLeague regularly is so great and the competition inNational Leagues is now not to be champions but isto primarily finish in England in the top four so youare playing Champions League football. That is wherethe real money comes. That is why clubs take all thebig gambles and that in time—and your newregulations may lock this in place—you are creatingan elite league of the top clubs that regularly play inChampions League football and pulling thedrawbridge up to stop anyone else breaking into thatgroup, or making it harder for people to break intothat group.William Gaillard: According to our calculations theChampions League is not the big prize for the clubseason. In England, for example, it represents lessthan 10% of major club income.Damian Collins: But you know there is a lot morethat goes to that: there is the international exploitationof that, and the marketing and benefits that come fromthat is worth a lot more than that.William Gaillard: In terms of image I think it isextremely important, but in the present system youcan have a club that basically has never participatedin the Champions League and still can be a very richclub; take Manchester City, for example.

Q728 Damian Collins: So you are saying that youdon’t think Manchester City would have taken on thedebt they have taken on if it wasn’t for the prize ofqualifying for the Champions League?William Gaillard: I don’t know what the motivationis on the part of the owners of Manchester City.Damian Collins: Most people do.William Gaillard: The fact is—look at Liverpool theysaid very clearly that for this year maybe theChampions League is not the objective, consolidation,getting the club back on its feet—Damian Collins: But the problems they have had,most problems, have stemmed from the failure toqualify for Champions League and that is why theyhad a crisis in finance that they did.William Gaillard: Look, they have qualified I think10 times in the last 11 years, so this is not whatbrought them down. What brought them down is thatthey suddenly found themselves being owned by twofailed banks that had been nationalised. You had thisextraordinary situation of an English club beingowned by the British and the American Governments,because Wachovia was taken over by the USGovernment and RBS was taken over by the BritishGovernment and they were the main owners ofLiverpool debt.

Q729 Damian Collins: You could say it is notexclusively a British problem, look at BorussiaDortmund and Schalke in Germany. Those clubs thathave taken on debt; in the case of Schalke, have takenon a very big sponsorship deal from Gazprom to helpfinance them to get them into the Champions League,and that is the commercial focus of most majorEuropean clubs.William Gaillard: I would think that this focus wouldbe stronger in leagues that are less rich than theEnglish Premier League. I would imagine that for aBelgium club—and I know for a Belgium club—participating in the group stage of the ChampionsLeague is tremendously meaningful, or for aNorwegian club, just because the income from theirown national football is so low. In England it is notan issue. As I said it is less than 10% of the turnoverof a major English club. I think in terms of prestige,yes, it is important. After all, people should be infootball not in order to make money but to wintrophies. That is what supporters expect.

Q730 Damian Collins: Finally, Monsieur Gaillard,this has taken some time, but there is a real danger—and this may not be the motivation behind theFinancial Fair Play Regulations but it may be aconsequence of them—that the Champions League isperpetuating the dominance of Bayern Munich, RealMadrid, Barcelona, Manchester United and otherclubs that regularly qualify, and making it harder forother clubs to break through into those top tiers in ameaningful way because they simply don’t get theextra revenue that comes from playing in theChampions League. The options of securing a UEFAlicence and financing the expansion and investment intheir clubs through debt or other mechanisms are nowgoing to be much more restricted.




William Gaillard: Unfortunately, unlike in the US,European football has always been unbalanced. Evenif you look at the 1920s and the 1950s you always haddominant clubs even before the Champions Leagueexisted or before it was a meaningful source ofrevenue. Real Madrid won the Champions League fivetimes in a row; Bayern Munich, Ajax, ManchesterUnited won it at a time where Champions Leaguerevenue was tiny.

Q731 Damian Collins: We asked Martin O’Neillwould a club like Nottingham Forest ever win theChampions League again and there is a strong viewthat they wouldn’t, and probably a club like Celticwould never win the Champions League again.William Gaillard: I completely agree with you. I amjust as worried as you are that our system can nolonger deliver the kind of champions that we had, likeCeltic and Nottingham Forest, or even Aston Villa.Certainly, we will never see Anderlecht win anEuropean competition probably ever again if it staysall the same; I mean if there are no changes that comein to change the picture, especially in the nationalleagues because today practically you have six orseven national leagues that financially support theirclubs and all the others—40 or so in Europe—arestruggling. I can think of Sweden, for example, thatMalmö was in the final against Nottingham Forest. Icannot see any circumstance that, under the currentsystem, could see Malmö in the final of a Europeancompetition ever again, and that is quite sad.Damian Collins: Yes. I could go on but I must handover.

Q732 Mr Sanders: There are conflicting messagesthere because on one hand you are saying that themoney in the Champions League is only worth 10%to the Manchester Uniteds of this world, but in realityit isn’t the money that is attracting the ManchesterCities and Manchester Uniteds, it is actually theworldwide reach that comes from being thechampions of Europe. That is where the Americanbuyers seem to be coming in because in America ifyou own a sporting enterprise, whether it is Americansoccer or baseball, it is pretty restricted as to how youcan expand your market, whereas with football it isthe truly global sporting game. That is whyManchester United have expanded into the far eastand India. Throughout Africa, you will findManchester United shirts, Chelsea shirts andnowadays Manchester City shirts. I don’t think wehave seen any Ajax shirts or Boston Red Sox shirts.The leveraged buyout seems to have been aconsequence of that attraction and you don’t seem tobe doing anything to stop leverage buyouts. I wonderif UEFA said, “We would not allow a club that wasthe subject of a leverage buyout to enter a Europeancompetition” you would actually end leverage buyoutsat a stroke. Have you ever considered that?William Gaillard: We felt that under the subsidarityprinciple this kind of interdiction should comenationally. Our system as it is would deal with thatbecause if a club doesn’t break even, that is becauseof servicing a large amount of debt, it will end up onthe wrong side of the Financial Fair Play Rules.

In terms of the interest by prospective Americanowners, it is quite interesting that both John Henryand Tom DiBenedetto—John Henry just bought theconsortium that bought Liverpool FC and TomDiBenedetto recently bought AS Roma—said that thereason they were investing in European football wasbecause of the new Financial Fair Play Rules. It is amuch more predictable environment; more similar towhat they are used to in American sports. It is a moreregulated, safer environment than the kind of, let’ssay, crazy environment—as they perceived it—thatexisted before.

Q733 Dr Coffey: So, Monsieur Gaillard, when thecrunch comes, Man U might have made a loss, youare very confident UEFA will say, “We appreciate thatbut you are staying at home and you are notcompeting in our competition”? I am just thinking ifyou have a politician running the monitoring system,I think he was Prime Minister of Belgium when—howcan I say?—the rules were flexed to allow Belgiumand other countries to join the euro, are you sayingthat Man U—William Gaillard: Not Belgium.Dr Coffey:—if they continue as they are with theirfinancial position they will not be playing in theChampions League?William Gaillard: I think the litmus test of whetherwe are serious or not in implementing the rules ofFinancial Fair Play will come on the day when a majorEuropean club will fall foul of the rules. If that daywe do not sanction them with what is in the book, wewill have failed. If we sanction them it will mean thatthe rules have worked. A better way for the rules towork is for the club suddenly to be unsanctionableand complying with the rules and this is our dearestwish. We don’t wish to have to sanction clubs,especially not by excluding them from ourcompetitions. We wish that they will understandexactly what they have to do over the next five yearsin order to comply with the rules.

Q734 Chair: So you will apply them with a degreeof flexibility? If a club is heading in the right directionand is giving you assurances that it is addressing theproblem, the fact that they have breached the ruleswill not necessarily mean that they will be excluded?William Gaillard: You are absolutely right. Our rulesare looking at every single situation. We already havefor the first three years the €45 million flexibilitypoint but we also have different gradations insanctions, some may be withdrawal of cash from theChampions League or Europa League profits, endingfor really serious cases with exclusion fromcompetition. So we have, let’s say, a slope that leadsto hell, which is exclusion from competition, but ourwish is never to have to go that far and we will makesure that the sanctions are appropriate to the kind ofviolations that we discover.

Q735 Chair: You say your wish is never to go thatfar. You said earlier that people will only see that youare completely serious about this when a major clubis excluded. So in order to demonstrate your




seriousness you are going to have to excludesomebody.William Gaillard: We may get into a situation whenunfortunately one or two clubs don’t believe that wewill apply the rules, and this is when we will have tomake one or two examples. Right now our dialoguewith the clubs tells us that they all understand the kindof situation that they are facing, that the Financial FairPlay Rules are a big help in managing theirexpectations and the expectations of their fans.

Q736 Chair: But you expect that there may well bea situation where you are going to have to exclude aclub at some point?William Gaillard: Yes, we have to be ready for that.

Q737 Chair: In relation to a question from Adrianyou have talked about debt, that essentially UEFAaccepts the subsidarity principle. You have alsoindicated that you are not very happy about thenumber of clubs being bought by overseas owners. Isthat something again, while you may not like it verymuch, where you don’t feel there is anything you cando about it?William Gaillard: I think our President stated itclearly. He said, as far as he was personallyconcerned, he didn’t like very much the idea of a clubhaving a foreign owner, a foreign coach and foreignplayers, but he knew that he could do nothing aboutit and this was the situation, the way football hasevolved, and so be it. We are absolutely neutral, interms of our regulations, as far as who owns the club,who manages it, who plays for it. Let’s say we areagnostic on the matter.

Q738 Damian Collins: But didn’t he play for Italyhimself?William Gaillard: Yes, he did, but he said, “Always Ileft when I was 27”, so—

Q739 Chair: But if one looked at the German model,the 50 plus one rule that essentially prevents it, youwouldn’t suggest that that was a better model or thatkind of restriction might be implemented elsewhere?William Gaillard: We feel that what is good in theGerman model, and some other models, is supporters’participation, because in the end the identity of a clubis its own fans. When you have a foreign owner, aforeign coach and mostly foreign players, what is leftthat is local? The history, the spirit of the club is basedon its supporters and the identity of its supporters.Therefore, we feel that what is really positive aboutthe German models, and other models, is the fact thatsupporters are involved in club management and inmany cases own club equity.Chair: Since we are on the question of supporters, Imight go to Adrian who wants to continue that.

Q740 Mr Sanders: What role if any shouldsupporters’ trusts play in the governance arrangementsof their club?William Gaillard: We have taken steps at UEFA tofinancially support an organisation that is Britishbased to Supporters Direct, and they are implementingfor us a project in 14 different European countries

where they are encouraging, helping and teachingsupporters the virtues of supporters’ trusts andparticipation in the ownership of their clubs and in themanagement of their clubs. We think that SupportersDirect in England and Scotland have done a fantasticjob at rescuing clubs, but also at injecting a lot ofrationality and positive supervision, thanks to theirparticipation in club boards.We are also a little bit worried that the financial futureof Supporters Direct is not safe. I think they havereceived around £4.5 million over the years in termsof direct funding from public sources, Premier Leagueand the FA. That has generated over £60 million offunds for clubs through supporters’ trusts. Ourexperience with them is that they are highly qualifiedand determined people with an excellent track recordin managing projects, and we feel that if theexperiment is to succeed it cannot be left to just abunch of volunteers who would basically give someof their time to the cause. We need a coreorganisation—a small one albeit—to run SupportersDirect. We do our part with the European side and Ithink it would be a tremendous loss for Englishfootball if this great experiment, which has alreadygiven so much to this country’s football, wasdiscontinued or was less efficient than it has been justbecause of a lack of funding.

Q741 Mr Sanders: Are there any examples ofsuccessful supporter ownership in Europe that—William Gaillard: FC Barcelona is not a bad example.Mr Sanders: It is a fairly exceptional one, though.William Gaillard: Real Madrid is also a supporters’trust. Many German clubs include supporters’ownership. There are other examples is in Spain ofsupporters’ trusts, but I think what, for example—

Q742 Mr Sanders: How are their umbrellaorganisations funded?William Gaillard: In the case of the Spanish they areco-operatives, so they are completely independent.They have a long tradition of it. They always were—

Q743 Mr Sanders: They are not supporters’ trusts,though, are they?William Gaillard: They are different. Yes, they areco-operatives.Mr Sanders: They have membership.William Gaillard: Yes, exactly, but the way it hasdeveloped in England and the way we feel we canhelp it develop in a place like Italy, for example,which is very interested in the model, is through thesupporters’ trusts model. It is a lot easier than startinganother Real Madrid or FC Barcelona in a differentcountry, just because the idiosyncrasies of the Spanishsituation are not easy to reproduce elsewhere.

Q744 Mr Sanders: Is there a Supporters Direct inItaly and, if so, how is that funded compared with theone in the UK?William Gaillard: Yes, right now through our fundingof Supporters Direct Europe, which is really a branchof Supporters Direct UK, we have been able to help anumber of Italian clubs set up supporters’ trusts andin the next few years we will be intensifying our




efforts in order to do so. Also we have created in ourlicensing the post of Supporters Liaison Officer forclubs in Europe. Clubs that want to compete inEuropean competitions down the line will need tohave a Supporters Liaison Officer that will connectthe club better to its own fans.

Q745 Mr Sanders: Where is the funding comingfrom?William Gaillard: The funding is coming from us.

Q746 Mr Sanders: So not from the public sector inItaly?William Gaillard: No. Well, in Italy there has been alot of public sector funding for clubs. For example,most of the stadiums are owned by municipalauthorities. So in the past it has been in quite a fewEuropean countries, much less now, some publicfunding for clubs.

Q747 Mr Sanders: You would not want to comparethe state of the grounds in Italy with the state of thegrounds in the UK—William Gaillard: Absolutely.Mr Sanders:—today, would you?William Gaillard: It is one of the Achilles heels ofItalian football, the fact that public authorities nolonger have the kind of money that will allow them toeven maintain those facilities. This is why we haveintroduced in our Financial Fair Play Rules thepossibility for an owner to invest directly outside ofthe Financial Fair Play Rules into the renovations orthe construction of a football ground, because wethink in this English football is far more advancedthan in other countries—not all countries but in mostcountries—in terms of club ownership which is a verypositive factor.

Q748 Dr Coffey: Monsieur Gaillard, moving on tosports legislation. I will give you my personalperspective: there is quite a lot of talk, and it isreferred to in the evidence, about enabling legislationperhaps would be helpful. England and Walesparticularly have kind of a code of law that is differentto the rest of Europe, in that you don’t havepermission to do things in this country. Our law isframed about what you cannot do as opposed toperhaps the other way round with the NapoleonicCode. But you particularly refer to you feel thatenabling legislation would reduce pyrrhic turf warsbetween sports bodies and things like that. Can youtell me a bit about why you feel legislation would helpthat, because my concern is it could all end up withjudicial reviews in the courts?William Gaillard: This is the downside of legislationobviously. I think the intention of the Government inthe UK is to give some time to the football family tosort out its turf wars and come up with reforms frominside. At the same time I understand that if this doesnot come out as a result of turf wars, then legislationmay be enacted in order to help the process. There isa myriad of legislation all over Europe, including inthis country. You do legislate in terms of sports orenabling legislation in order to help sports. The

Olympics is a great example of that, but sometimesyou need legislation.We feel, for example, that very often in this countryyou have many different separate initiatives, let’s saylike in the field of grassroots football and playerdevelopment and player education, where in mostEuropean countries you have one authority, thenational association, that basically oversees all theseefforts.Here it is split between the clubs, the leagues, thePFA, the FA, which are probably a lot of overlappingefforts, a lot of redundancy, probably a waste ofmoney, certainly a lack of streamlining in getting theeducation done, which is part of the reason whyEngland is a bit lagging behind certain countries infootball education. I share your doubts about what isthe outcome of legislation but there may be caseswhere it is unfortunately necessary for the publicauthorities to step in.

Q749 Dr Coffey: Can you think of another examplethen, perhaps within Europe or wider afield, wherelegislation has made that difference as opposed tochallenging the FA, or whoever, to get their acttogether?William Gaillard: For example, there is legislation inmy country, which is an example I know well, whereit is clearly stated what is the role of the nationalassociation, the clubs, the leagues, and so on, andtherefore you avoid the turf wars that have been goingon in this country. Clearly each institution has itsresponsibilities and that has been set by legislationdecades ago, which avoids conflicts because in a free-for-all everyone is always trying to encroach on theterritory of the other, which is the normal situationthat you find in the private sector. It is a naturalsituation, which may not be the most efficient wayto fulfil football’s social and educational obligationsto society.

Q750 Paul Farrelly: I wanted to ask you a fewquestions about our own football association. To whatextent does UEFA believe that England and Wales hasa strong football association, in the sense of beingeffective and setting out a clear direction of the gamein these countries?William Gaillard: It is obvious that the turf wars thatthe Honourable Member was referring to before, andwhich is in our written statement, have damagedEnglish football. In particular today, the English FA isprobably in a weaker spot than any other FA inEurope. This is probably the result of theoverwhelming power of professional football,especially as expressed by the Premier League andalso the Football League. In other countries you havea more balanced situation where the status of thegoverning body that the FA holds is better protected.The FAs in continental countries tend to rule over allaspects of football, from grassroots in educationalpurposes to professional games going through thenational team, and so on and so forth.There have been attempts at reforming the FA. We areall familiar with Lord Burns’ report. We havediscussed these matters with the English FA a numberof times. I think there is a genuine commitment to




improve the efficiency of the organisation and torestore a more independent status, and we are verymuch in favour of that.

Q751 Paul Farrelly: When you say some of theother associations are better protected, in which waysare they better protected?William Gaillard: In most of the other associationsthe place for the professional game is not sooverwhelming. In most cases it is a minority positionand priority is given to the social and educational roleof sports and, therefore, to the grassroots movementand the local associations.

Q752 Paul Farrelly: So it is not necessarily aboutlegislation. It is not necessarily about putting in rulesthat enforce it. Do we have a problem here of respect?Does the Premier League have a problem of respectfor the FA that is not present in—William Gaillard: I think “respect” may not be theright word. It is a question of the overwhelmingfinancial power of professional football. One mustrealise that English professional football has beentremendously successful in generating revenues; inprojecting itself outside; in building up an image andwe have to be very grateful for the efforts that both thePremier League and the Football League have made inthis direction.At the same time it has not resulted in a bettersituation for English football in general. Theperformances of the national team have not beenoutstanding and, again, there are serious deficienciesin football education and in football development inthis country. Now I believe that the method that hasbeen chosen by the Government, that is to let thefootball family try to sort out its problems, and thenonly legislate if it cannot, is probably the right one inthis respect. But again, as I said before, it is obviousthat sometimes some kind of enabling legislation thatbasically limits turf wars between different echelonsof the football family may be helpful if nothing comesout of the football family’s efforts.

Q753 Paul Farrelly: The Premier League here wasvery clear in describing the Football Association asan association of interests. In your terminology, thatdefines a turf war. It is an institutionalised turf war.William Gaillard: The Premier League represents theinterests of its clubs. The FA is supposed to representthe interests of all football loving people in thiscountry. It is about a different situation.

Q754 Paul Farrelly: When we went to Germany wewere quite impressed by the ethos there thateverybody spoke about, in particular their reaction totheir national teams’ disappointments in Euro 2000.They told us what they had done about it, and ofcourse they all have their rivalries in different levelsof the game. When we pushed them on how theydeveloped their model they were quite open. Theysaid, “We copied the French”. So the question forUEFA, as far as our FA is concerned—just like theGermans, without putting themselves down orsingling anyone out for particular merit, they said,“Yes, we copied the French”—which country should

we best copy, do you think, in terms of footballgovernance?William Gaillard: You should copy the Dutch.Paul Farrelly: The Dutch?William Gaillard: Because they have the advantageof speaking English most of the time. It might be aneasier task.

Q755 Paul Farrelly: Who would be your models ofbest practice, in terms—William Gaillard: I think, as I mentioned, I wasrecently in the Netherlands and they have an excellentgrassroots model. I think the key issue is that thereshould be—what exists in most European countrieswithin the FA—a national technical director thatwould be fully in charge of football development,football education and grassroots for the wholecountry, and then of course would delegate part of thework to the local associations to the clubs, maybeeven to the leagues, but would remain in command ofthe overall picture. I think that is what exists in mostof the good educational models in Europe, and thatshould extend of course to football education for bothboys and girls.

Q756 Paul Farrelly: One of the characterisations ofthe FA with the Premier League is that the tail—avery big tail—wags the dog. The dog has an awful lotof old whiskers but is determined to hang on in there,which are the FA Council who can act as a block fromthe amateur game on any progress or reform. Do thedogs in Europe have such old and crusty whiskersgenerally or are they more professional—William Gaillard: You have probably seen it but it isa relative exercise for a dog to bite its own tail, andsometimes this is what it would need to do when thetail is wagging it.Paul Farrelly: I do not want to get too far—William Gaillard: No, there have been situations inEurope that I can easily qualify in which the amateurgame has been perhaps too dominant, and there havebeen situations that have been more balanced. I thinkthat is what should be aimed at. It is obvious todaythat perhaps the idea that has been floating around ofintroducing independent directors can be a positiveone. The model that is being fostered by the Burnsreport is not completely compliant with, let us say,FIFA statutes because the election process is reducedto a minimum. The chairman is basically selected bya committee of head hunters and then it is approved.The election process is just that approval process. Soit is not completely compliant with FIFA statutes.At the same time most people are telling me that thisis the best way out for England, the best way to reformitself. I am no authority in judging who is right. Iwould tend to listen to the local people because theyknow their situation better than we could from acrossthe Channel.

Q757 Paul Farrelly: Time is moving on, I only haveone final question. You talked about the grassroots andif we take Spain, Spain is a country that has two clubswhich sell their own TV rights, which are verydominant. Yet, by the same token, we have seen theSpanish team develop and Spain is held as a paragon




of virtue in terms of the coaching and thedevelopment, all the way up from the grassroots.Whereas we, on all the statistics, from the nationalteam to the number of coaches and youthdevelopment, seem to have lagged behind. Why arewe not as good as other countries, like Spain andEurope?William Gaillard: I think Spain is a paradox in manyways because in some ways maybe the dog has lostits tail in Spain. We have on the one hand thisdomination of two clubs, which again has been therefor decades, and on the other hand we have a strongFA that does not really get itself involved too muchin the professional game but on the other hand hasdeveloped a tremendous education system withbranches all over the country; very centralised with agreat technical centre near Madrid in Las Rozas, andwith overwhelming results. I think for men they havewon all different competitions in Europe that there areto win; less successful with women. Germany is thereal model there.


Witnesses: Hugh Robertson MP, Minister for Sport, Department for Culture, Media and Sport, andHenry Burgess, Head of Professional and International Sport, Department for Culture, Media and Sport,gave evidence.

Q760 Chair: Can I welcome for the second part ofthis morning’s session the Minister for Sport, HughRobertson, and Henry Burgess of the DCMS. AdrianSanders is going to start.

Q761 Mr Sanders: Good morning. Can I ask, whatwas your rationale for calling English football “theworst-governed sport in the country”?Hugh Robertson: The fact that when I looked at thecorporate governance arrangements that govern majorsports in this country, in particular the big five, thecorporate governance arrangements surrounding theFootball Association are noticeably worse than theyare in other sport. They had no independent non-executive directors on their main board, despite therecommendations of the Burns Review. At the time Imade the remark, I think there was some doubt thatthey would even get an independent non-executivechairman. Every single one of their directors is white,male and late middle-aged, at the risk of being a littlebit indelicate. There is nobody on the board who hasplayed the game to any reasonable level, no women,nobody who represents the black or minority ethniccommunities.In addition, we have just had a very disappointingWorld Cup campaign in South Africa. We had spent£15 million launching a bid to bring the World Cupback to this country and, after two years’ lobbyingand £15 million, had succeeded solely in garneringone extra vote, apart from our own. In addition, theChairman of the Football Foundation has just resignedin despair at the politicking going on in and aroundthe game. I have lost count of the number ofGovernment reviews, football taskforces, lettersexchanged between the Secretary of State and thefootball authorities, Burns reviews and the rest that

Q758 Paul Farrelly: Why have we not been sosuccessful, what has held us back?William Gaillard: I think this is what I was pointingout to you before: the lack of streamlining; the lackof a single authority over football education anddevelopment; the weakness of the FA in this sense;the fact that there is no national technical director; thefact that the FA, the different leagues, the PFA, runtheir own show as far as football education isconcerned, and that is a weakness.Chair: Do you want to do youth development?Paul Farrelly: I discussed—Chair: You don’t want any more?Paul Farrelly: No.

Q759 Chair: In that case, Mr Gaillard, can I thankyou very much.William Gaillard: Thank you.

come and go, and yet there has been no substantivechange. I think I would be right in saying the evidenceis pretty clear.

Q762 Mr Sanders: So what exactly are your powersto do something about it?Hugh Robertson: Well, that is a good question, and Ithink as the Minister, you probably have tworeasonable areas of responsibility. The first is that anyMinister for Sport should have at the centre of hisbrief the performance of the national team. So I thinkif our national teams are under-performing, then it isperfectly reasonable for the Minister to ask thequestion why.I think secondly, we invest quite a considerableamount of public money in football, and so I think itis my responsibility as the Minister to make sure thatthe corporate governance arrangements surroundingthe spending of that money are as they ought to be.Thirdly, of course football is the national game. It isway ahead of any other game in this country in termsof the number of people who play it and follow it, soit would have to be a concern for the Minister forSport if he didn’t feel that that game was correctlygoverned.

Q763 Mr Sanders: But you sound pretty convincingthat something has to be done. The question is whatcan be done by a Minister for Sport for a game that isself-governing?Hugh Robertson: Well, in that we could, in extremis,pass legislation, as indeed a number of other countrieshave done. That would be, in my view, a last resort. Ithink there is a fine line between where Governmentcan go and where it cannot, and it is emphatically notfor Government to run football, absolutely



26 April 2011 Hugh Robertson MP and Henry Burgess

emphatically not. I think it is for Government to makesure that football is in the best possible condition torun itself. So I think I certainly have an influencingand persuading role. You certainly could not accuseme of not making my views clear on this particularsubject. If indeed we judge in the end of that thesituation is so bad and so immovable that legislationis the only way, some form of sports law—as in thecase in many other countries around the world—thenthat would be an option we would have to consider.

Q764 Paul Farrelly: Just following on from thatquestion, which is that your views are quite clear, butyour solutions are not.Hugh Robertson: No, and that is a perfectly goodpoint. I do have my own views about it, but just to bevery clear about the role that I think you are playingin all of this, successive governments have tried tocrack this particular nut, whether it was by lettersfrom Andy Burnham or the Burns Review or footballtaskforces or so on and so forth. Many of thejournalists who cover this area keep on saying,“Where is the evidence that anything is going tochange this time around?” So where I think we are ina different situation now, my hallelujah moment wasa Wednesday morning back last July, when I turnedup at Westminster Hall to reply to the 9.30am debate.The chief whip always used to say if you have morethan 10 MPs at the Westminster Hall debate early ona Wednesday morning, something was in the water.There were over 60 there to complain about footballgovernance. It has been the single recurrent issueraised by Members of this House, and indeed, in allthe correspondence we have received since thatmoment. There is a real feeling in Parliament thatsomething should be done about it.The options available to me to move this on wereeither to have another internal Government review, orto encourage you, the Select Committee, as theparliamentary Committee responsible for this, to havea look into the whole affair. I was delighted when youagreed to take that on. I don’t want to sit here andoutline necessarily all my particular solutions. I wantto wait and see what you come up with and then havethe opportunity to respond to it. Indeed, I think that isin both our interests to do that. I don’t want to—Paul Farrelly: I think it is in our interests throughoutthe session on the different subjects, because we areall well versed how Governments respond to SelectCommittee inquiries, and respectfully, Minister, if youdon’t outline your solutions, this might be a ratherlarge waste of time.Hugh Robertson: No, I don’t think it will at all,because I would hope at the end of your inquiry, youwill come forward with a series of solutions. I wouldbe very surprised if those solutions did not address thecorporate governance arrangements surrounding theFA, and then the sort of slightly clever flip that has tobe done thereafter, which is once you have sorted outthe corporate governance arrangements around theFA, how you re-empower them to act as a proper sportnational governing body—football is a very differentgame to the game that it was 20, 30, 40 years ago—and then the impact of that on the other bodies thatexist in the football landscape.

Paul Farrelly: I want to come in a moment to whatis in the coalition—Hugh Robertson: It is about the regulatoryarchitecture, I think is quite a good phrase.Paul Farrelly: But first of all, just on what powersyou have that Adrian introduced, when AndyBurnham looked at this with the taskforce years ago,he had some leverage, because he had the Office ofFair Trading inquiry and the issue of how football TVrights are sold, and out of those negotiations came theFootball Foundation. I wanted to just ask you aboutthe Football Foundation, but I don’t want to steal theglory of my colleague, Thérèse Coffey, who has anissue about the Football Foundation, which she mightwant to introduce now.

Q765 Dr Coffey: The query about the FootballFoundation is that I understand that Governmentmoney to Sport England is a third, Premier League isa third and the FA is a third, and there have beenvarious criticisms about the lack of financing towardsthe Football Foundation; you have just mentioned theChairman resigning, politicking. Who is it thatinitiates the actual funding amounts and is it only theFA or can the Government through Sport England say,“Instead of only giving £5 million” or whatever it is,“Sport England is going to give £20 million, so thatmeans the FA has to give £20 million and the PremierLeague has to give £20 million”?Hugh Robertson: There are two separate fundingsources. The first is the funding that goes directly tothe Football Foundation, and currently £10 millionfrom us, £12 million from the FA and the PremierLeague. There is then a second chunk of Governmentmoney that goes into the FA through something calledWhole Sport Plans. That is, over the 2009 to 2013period, some £25.6 million.

Q766 Dr Coffey: So it is my understanding thoughthat the contributions effectively match each other, soif you wanted to see more money go into grassroots,why don’t you just up the money going into theFootball Foundation?Hugh Robertson: If I could, I would, Thérèse. Wedon’t have the money is the short answer to that.When we were faced with the—Dr Coffey: Can I clarify just on the agreement then?So you are capped because of financial constraint, Iget that.Hugh Robertson: Yes.Dr Coffey: Does that then limit what the FA and thePremier League can do?Hugh Robertson: No, it doesn’t, in the event.Dr Coffey: No, not from your understanding?Hugh Robertson: No. I mean, if either the FA or thePremier League decided out of the goodness of theirhearts to increase their contributions to £20 million, Iwould be absolutely delighted. It is just that we inGovernment at the moment, in the current financial—if I had the money, I would do that, because I think theFootball Foundation does absolutely fantastic work, itis just that in the current—we managed to get it intowhat we call “the preserved pot” so we took only atiny cut off it, but the fact is given the spendingconstraints, we had to give it a cut.




Dr Coffey: Thank you. That clears up my question.

Q767 Paul Farrelly: This is precisely my question,and to do with your powers and leverage, because wefound the Premier League said, “Well, we only agreedit would be net and it didn’t include any slice ofoverseas rights”. You can of course say, “Well, theyshould look again” and they can choose to take youradvice or not. But they are all saying that, “We onlyagreed anyway to match what the Government gaveand what the Government is giving is falling”. So fora relatively small amount of money, if this isimportant enough to be in the Coalition Agreement,you can blaze a trail and show some leadership andtherefore exert some leverage.Hugh Robertson: What, in terms of increasing—Paul Farrelly: Your contribution to the FootballFoundation.Hugh Robertson:—the contribution that the otherpartners made to the Football Foundation? We havehad that conversation with them on a number ofoccasions. You know, I always encourage every singlesport to invest the maximum amount of money in itsgrassroots. Indeed, one of the first things I did as asettlement to the listing agreement last summer wasto get a voluntary agreement, independently policedby a QC, of the sport and recreation allowance to put30% of their UK broadcasting income into grassroots.

Q768 Paul Farrelly: But you are not, as a sportsman,leading by example if the Government is not doingthe same.Hugh Robertson: Well, the Government only has acertain amount of money, Paul, and we have to makedecisions accordingly. The two decisions that we tookright at the outset in the Comprehensive SpendingReview were to preserve the elite athlete funding forLondon 2012, because there are all sorts ofcommercial and other imperatives. It would have beencompletely wrong to allow an athlete to have had acertain level of funding and then to cut it off for thelast two years of the Olympic cycle before a homeOlympics, and to preserve the Whole Sport Plans,which drive up participation through the sportgoverning bodies.

Q769 Paul Farrelly: Yes, I think the point has beenmade. The Coalition Agreement says, “We willencourage the reform of football governance rules tosupport the co-operative ownership of football clubsby supporters”. How?Hugh Robertson: Well, that is a good question,because the problem you have here is that theownership of football clubs in this country is notuniversal. There isn’t one structure that applies toevery different one. They are all owned in slightlydifferent ways. There is a range of options availablehere from schemes that work really well, such as theArsenal Supporters’ Trust at one end of the spectrum,through to a solution that simply involves a supporterliaison officer or something like that, a speciallyappointed person, in every single board. Once I haveyour report in front of me, then I will look to see howwe can move this forward, what is the best way to dothis forward, but I am not convinced that there is

going to be one single solution that is going to fit forevery single football club.

Q770 Paul Farrelly: What are your favouredoptions?Hugh Robertson: I have a very open mind about it,if I am honest. I don’t have one is the short answer,because I don’t think that there is one favoured optionthat will work for everybody. I think the ArsenalSupporters’ Trust is a fantastic organisation and thatworks very well for that club, but it works very wellin part because of the particular ownership structureof Arsenal Football Club, and indeed, I hope it willcontinue in the years ahead under new ownershiparrangements. Arsenal Football Club is a verydifferent organisation to one at the bottom of theleagues, and therefore one solution will not work foreverybody.

Q771 Paul Farrelly: So did the authors of thispassage in the Coalition Agreement not really knowwhat they meant by it?Hugh Robertson: No, I think they knew exactly whatthey meant, which is that is over the course of thisParliament, the Government will bring forwardmeasures to encourage supporters to have a biggerstake in the running of their clubs. We could havedone this. If we had done this ourselves while youwere having a Select Committee inquiry into it, I thinkyou might have been quite annoyed with me andaccused me of not paying enough attention toParliament.

Q772 Paul Farrelly: I am sure we would never dothat. In the submission that you have made, Minister,regarding supporters—it is on page 3, and it is thefinal line of paragraph 3 on page 3—you say, “Equallyinteresting would be a view on the value ofopportunities to incentivise supporter involvement viaa different approach to the treatment of anygovernment facing debts”. Now, can you tell us whatyou mean by that? What is going through your mind?Hugh Robertson: Well, what is going through mymind? What I am prepared to do is to look at anyoption that moves us forward. You have to recognisein all these situations that all this is being done againstthe financial backdrop that this country faces, so I amprepared to look—and I am prepared to work withfootball and others—at any sensible solution thatenables us to move this forward. But I come back towhat I said in answer to your last question: you haveto recognise that English football isn’t like football inother countries, where they have one ownershipstructure that works for everybody. We have differentstructures for every single club, and therefore thesame solution will not work for everybody.

Q773 Paul Farrelly: I am generally trying tounderstand what that sentence means.Hugh Robertson: Well, pretty much what it says, Iwould say.Paul Farrelly: What does it mean, “Via a differentapproach to the treatment of any government facingdebt”?




Hugh Robertson: Well, in that we would look at anysensible suggestions that come forward in terms of thetreatment that the Treasury applies to football debt,if there was a way that that would enable supporterinvolvement. You know, quite what that will preciselymean remains to be seen.

Q774 Paul Farrelly: Is that a quid pro quo or is it—because clubs owe the debt, not supporters?Hugh Robertson: Indeed, they do. But as I have saidbefore, there are a number of possible models here.There was one that the last Government looked at veryclosely, by which you tried to give an element ofequity in every single Premier League club tosupporters. When you priced that out, that was goingto prohibitively expensive. I think the figure wasaround about 10% and the total cost of doing it wasover £1 billion. We clearly do not have that sort ofmoney at the moment. If there were sensible movesthat we could make either to encourage owners tomake available shares to supporters—and that hasbeen suggested by many people—for favourable taxtreatment or something like that, that would besomething we would look at. But you do have toremember in all of this that we are doing it againstthis very tough financial backdrop, and I would haveto say, if you said to me as the Minister for Sports,“Do you want a tax break to encourage more youngpeople to play sport or to help supporters’ trusts?” theanswer is probably is to encourage more young peopleto play sport.

Q775 Paul Farrelly: Yes, that is a different question,but I am sure my colleague, Damian Collins, will askyou whether that means a quid pro quo for notchallenging the football creditors rule, for instance.But I just wanted to come on to some of thecomplaints that have been made by some of the trusts,the Arsenal trust and others, that the FinancialServices and Markets Act acts as a barrier to raisingmoney cheaply and effectively, and clearly, theregulation of the City and investment schemes hasbeen there for very good reason, but they argue thatthere could be specific solutions that might help withthe various protections that would need to be thereagainst fraud and the like. One is that the FSMAmight easily be amended to include industrial andprovidence societies, or community interestcompanies raising money for sport. Is that somethingthat you have looked at?Hugh Robertson: Well, have we looked at actively todate? No. Is it something we could look at if wethought it was a sensible solution? Yes.

Q776 Paul Farrelly: So there have been nodiscussions with the Treasury?Hugh Robertson: No, there haven’t, and you comeback to this key point: if I was going to go theTreasury and ask for a tax break for sport, I want toget a tax break for sport that gets more young peopleplaying sport, and that is my key and overridingpriority. There is a fantastic opportunity on the backof London 2012 to do that. Yes, this would arguablybe worth doing, but if I were being honest I would

say it is a lesser priority than getting more peopleplaying sport.Paul Farrelly: It would have to be for sport, not justfor—Hugh Robertson: Correct, yes.

Q777 Paul Farrelly: My final question, there areoptions in the Localism Bill, but I imagine youhaven’t explored them in any detail. Do you think thatreally that majority supporter ownership is really onlyrealistic for smaller clubs, that where we get into bigmoney situations, it is just not going to be—Hugh Robertson: In terms of majority ownership ofthe club, if you have extraordinarily valuable bigfootball clubs—unless you have a lot of very wealthysupporters—it is going to be very difficult to affect atakeover. Just look at the issues that the Red Knightshad with Manchester United. That is not to say thatsmaller holdings cannot be disproportionatelyinfluential, and I think in its short life the ArsenalSupporters’ Club has shown itself to be a sensible andworthwhile influence on the running of ArsenalFootball Club, and I hope it will continue to do so.You know, there is an argument in a sense that itwould be great to see supporters having a much biggerstake in football clubs. I just suspect given thefinances involved, that is quite a big ask. If we couldget to there, it would be fantastic, but I don’t thinkwe are going to, so much better to concentrate on anobjective that is achievable, which is to get as manyof them involved in a way like the ArsenalSupporters’ Trust have done.

Q778 Chair: You have cited the Arsenal Supporters’Trust a number of times this morning and I don’t thinkwe would disagree on the basis of what we have seen,but, as you also pointed out, the management or theownership, rather, of Arsenal has changed. Youexpressed the hope that it continues. Presumably onecan do no more than hope?Hugh Robertson: One can do no more than hope anduse my influence as Sports Minister to encourage it,to encourage Arsenal Football Club to continue toallow the Arsenal Supporters’ Trust to exist.

Q779 Chair: How do you do that?Hugh Robertson: In the same way that anyGovernment Minister applies influence, by usingoccasions such as this to say that I think it is a goodand worthwhile institution and hope that ArsenalFootball Club pay note.Chair: You wouldn’t make a call to the new owner totell them that?Hugh Robertson: I would consider that, yes.Chair: You would consider that.

Q780 Damian Collins: Firstly, just to recap on wherewe are, would it be fair to say that your view onfootball governance is that no change is no option?Hugh Robertson: Correct. Well, it is an option,because in the end if they all bury their heads in thesand, we are going to have to do something about it,so I suppose to the backwoodsmen it is a possibleoption, but as far as I am concerned, as the Minister,no change is no option.




Q781 Damian Collins: Yes, so whether it comesthrough persuasion, recommendation or ultimatelyGovernment direct action, there will be change?Hugh Robertson: Yes. In saying that, I should saythat this is not a fight I particularly want or in manyways would have chosen. There is quite enough goingon in the sport and the Olympic world at the momentwithout having a prolonged battle with football overgovernance, but I think things—as I said in answer tothe first question—are sufficiently bad that we have todo something about it. And the key to this is not tooverstep the mark. The responsibility of Governmentis to get football into a position where it is better ableto run itself. It is not—it is crucially not—forGovernment to run football.

Q782 Damian Collins: We have discussed so farother areas of governance and I know there were othertopics we want to come on to, but we discussed withUEFA in the previous session the issue of debt andobviously their Financial Fair Play Regulations. Is thissomething you have a view on? Obviously in otherareas of public life, like the reform of banks, theGovernment takes a very strong view on debt ratios,capital ratios and performance. Do you think it shouldtake a similar view with football clubs?Hugh Robertson: Yes. Broadly speaking, the answerto that is yes. There is a range of options over wherewe get from where we are now to where we wouldlike to be and how you bring that about, and of courseit should be for football to regulate itself. So we haveto get football into a position where it is able to dothat, and 19 of the 20 Premier League clubs arealready UEFA Financially Fair Play compliant.Clearly, I would like to see all of them compliant andthen a range of suitable financial regulations as youmove down through the league.

Q783 Damian Collins: Do you think it is a source ofregret that the Premier League clubs have adopted theFinancial Fair Play Rules themselves, but the PremierLeague itself has no such comparable code? The ChiefExecutive of the Premier League said that they wouldnot look to adopt it formally as code of practice forthe Premier League, but that all the clubs themselvesare compliant. Is it a source of regret that this had tocome from UEFA rather than being something wehave introduced ourselves?Hugh Robertson: If the question you are asking meis: is it a source of regret that a European footballinstitution had to do this because we were unable toforesee this coming and do it ourselves? Yes, it is,because I want to see the governance of football inthis country being in a position where it is able tomake these decisions and act as a regulator for thenational game. So yes, that is a matter of regret. If Iam honest, I am probably less hung up about how theyget there than the fact that they do get there, becauseI think that where they are now is a better place thanwhere they were.

Q784 Damian Collins: My colleague, Mr Farrelly,referenced the football creditors rule, which issomething I have probably raised in at least themajority of the sessions we have had. What has

happened with Her Majesty’s Revenue and Customscourt case challenging the football creditors rule?Hugh Robertson: They are ongoing.

Q785 Damian Collins: What would you hope wouldbe the conclusion of that ongoing process?Hugh Robertson: Well, you are inviting me to treadon slightly dangerous ground there. Although it isprobably not for me to instruct a court what outcomethey should achieve at the end of a case, to answeryour question in a more general way, I think a lot ofthe evidence that you have received as a Committeeabout the football creditors rule has been prettypersuasive. I thought the remarks that David Gillmade probably said it all. I can’t remember who itwas who said it was a second-order solution to a first-order problem. It will not go without a fight, but Ithink it is morally quite difficult to defend.

Q786 Damian Collins: We were talking aboutfinancial regulation. This is presumably an area wherethe Government can take a lead if it can’t persuade?Hugh Robertson: No, because it is an internal footballrule. It is not an HMRC rule.

Q787 Damian Collins: But could you considerlegislation to abolish the football creditors rule if thefootball bodies wouldn’t give it up?Hugh Robertson: Technically, yes.Damian Collins: So that would be an option,essentially.Hugh Robertson: That would be an option. But it isquite interesting studying the transcript of the inquiryhere. There is a considerable body of opinion insidefootball that this rule has had its day and I think thatis the most encouraging sign I have seen of that forsome while.Damian Collins: I think if we had a window on tothe world of football, it was when the Football Leaguesaid they couldn’t find any moral case for keeping thefootball creditors rule, but nevertheless they thoughtit should stay anyway.Hugh Robertson: Right. Well, there you go, yes. Youcould probably add that to the answer to the firstquestion.

Q788 Chair: Can I come on to the judgment whichwe are awaiting from the European court in thebroadcasting rights in the Premier League KarenMurphy case? How serious do you think it would befor football if the court upholds the opinion expressedby the Advocate General?Hugh Robertson: I might bring in my official in, heworks on this closely.Henry Burgess: Thank you. I suppose it is right to beclear about what the status of that view is so far. So farwe have had the opinion from the Advocate General.Chair: Indeed.Henry Burgess: In many cases, the court will followthe opinion of the Advocate General, but by no meansin all. I think it is fair to say that were the court tofollow in every particular the opinion that theAdvocate General has given, that would make quite asubstantial difference to the way that the commercialfootball broadcasting rights and selling deals operate




here, quite a significant impact. It would makepotentially less impact on the legislative frameworkwithin the United Kingdom, so it is unlikely that therewill need to be a huge amount of legislative changewithin the UK, but the actual commercial implicationscould be very significant indeed. But the court doesn’tfollow the Advocate’s judgment or opinion in everycase, and not in every case, even if they decide tofollow it do they follow all the arguments through.They could potentially pick up some of the argumentsin that case and reach the same conclusion as theAdvocate General without following all of themthrough to their logical conclusion. So they could pickup a particular part of it and make their decision onthat basis rather than follow them all the way through.But yes, potentially, were the court to follow everyparticular view of the Advocate General, that wouldmake a very significant difference here.

Q789 Chair: Very significant? Have you made anyassessment of exactly how much it will cost Englishfootball?Henry Burgess: I haven’t seen that assessment and ithas not been done by me or my colleagues. I thinkuntil the court reaches its judgment—and it isimportant to remember that the judgment is thenpassed back to the High Court in this country tointerpret that view—until we get to that stage, it willbe premature to make a significant assessment.

Q790 Chair: But in terms of persuading the court, itis not sensible to at least have a vague idea of what itis going to cost football?Henry Burgess: I think we have reached the stagenow where there are no longer any formalopportunities to influence the court. The court had anoral hearing before Christmas, at which the UK wasrepresented, and made its view clear that were thereto be significant change within this area, then changeshould happen as a result of the appropriate Europeanand Commission processes, rather than through an adhoc change or a reinterpretation of the legislativeposition. So I don’t think we are at the stage yet ofhaving quite enough information in order to be ableto assess what the likely financial impact would bein any way that would be meaningful or helpful tothe Committee.

Q791 Chair: Is the Government supporting thePremier League in seeking to persuade the court notto go down the route advocated?Henry Burgess: The Government’s intervention inthis case has supported the broad principles putforward by the Premier League, but the primary UKintervention point was to do with the law as it standsat the moment and for any change in that law to gothrough the appropriate Commission processes, andnot to be affected in a way that was not sufficientlytransparent or procedural through the court itself.

Q792 Chair: Can I put it to the Minister that theEuropean Court of Justice at the end of the day weknow is not entirely immune from political influence?Are we using what political influence we have to

persuade the court that this would not be a sensiblejudgment to reach?Hugh Robertson: We are, and indeed I have takenthe issue up myself with the European Commissionerresponsible for this, Mrs Vassiliou.Chair: Are we alone in making that?Hugh Robertson: As far as I am aware, yes is theanswer to that, but even if it were, that is not a goodreason for us not to make the point, and we believethat to be in the national interest.

Q793 Chair: Can I come on to—or return perhaps,in some sense—some of the areas we were talkingabout before, which is the regulation and potentiallicensing of clubs. You will be aware that theCommittee visited Germany and talked to the GermanFootball Association about the system which existsthere, which is obviously a much more formalisedlicensing one. Do you see any attractions in that kindof model?Hugh Robertson: Yes, I do, if I am honest, and I willbe very interested to see your conclusions in thisregard. But yes, I do, and I see it as part of a two-stageprocess, where I think at the moment the problem youhave is that because the corporate governancearrangements are not satisfactory that it is very, verydifficult to give the FA extra powers until thecorporate governance arrangements are satisfactory.Once you have sorted that out, you then have to sortof re-enable them to act as a proper sport nationalgoverning body, and that means regulating its owngame. One of the ways in which it could do that wouldbe to have such a licensing system that would sort ofact, I suppose, as a skeleton off which you could hanga number of other issues, proper rules on fit andproper owners, on debt as allied to turnover on sportinvolvement and the rest of it.

Q794 Chair: The German requirements go quite along way, and obviously the headline one isessentially not allowing the clubs to fall into debt, butthere are a lot of other different requirements,including things like investment in youth sport, youthfootball. Is that something you would also—Hugh Robertson: Yes, absolutely. I would want anysuch licensing system to be reasonably light touch, buta basic set of principles that all clubs should agree toin order to be allowed to compete in the competitionwould, I think, be one of potential ways forward.

Q795 Chair:Who would you see administering that?Hugh Robertson: Any system like that has logicallyto be administered by the sport national governingbody.Chair: The FA?Hugh Robertson: The FA.

Q796 Chair: How far would you see it extend interms of the—Hugh Robertson: A properly functioning sportnational governing body is responsible for running thesport in the country, and indeed, that is the functioncarried out by every other sport national governingbody. It would be unthinkable that such a thing shouldhappen in rugby and should not be administered by




the RFU, or in cricket, and not be administered by theECB. So, you know, logically, it would have to sitwith the FA. I think the slight reluctance or the slightsense of caution that you would get is that everybodyneeds to be convinced that the FA is itself properlygoverned and able to carry out that function before itwas given that part. In some ways, the tragedy of allthis is that at a level, there are some extraordinarilyable people who work in the FA. I deal with a numberof their executives and there are some very, very goodpeople there. I think they would welcome this if theywere given this opportunity, but it could only comeafter they had reformed their governance.Chair: Continuing in this area, Damian.

Q797 Damian Collins: Do you think it is reasonablefor Leeds United fans to want to know who ownstheir club?Hugh Robertson: Yes.

Q798 Damian Collins: Are you concerned that thisrather simple information seems so hard to come byand is it something that football’s enforcement of itsown regulations of club ownership has to be lookedat again here?Hugh Robertson: Yes. I think the transparency is agood principle in the modern age, so yes. I thinkanybody involved with the game of football shouldknow who owns big football clubs, yes.

Q799 Damian Collins: When the FA gave evidenceto us, they told us that they did know but could nottell us, and now they have written back to say it turnsout they do not anyway. The Chief Executive of thePremier League said that if they were not told byLeeds, they weren’t certain what they would do andwould have to have an inquiry that would take monthsand maybe even sort of overrun the start of the season.Do you share our concerns this is a fairly shambolicstate of affairs?Hugh Robertson: Yes.Damian Collins:Well, that is all I have to say on that.Hugh Robertson: It has to be a patent absurdity thatmany people who save up all week, pass throughturnstiles to go and watch that football game can’t findout who owns it. It is ridiculous.

Q800 Paul Farrelly: I think that yesterday’s resultmay mean that the question of Leeds being promotedis less likely, but we invited the Premier League tosay very clearly that in the interests of integrity of itscompetitions that, “If you don’t abide by thistransparency rule, we consider it sufficiently seriousto say you will not join our club if you qualify”, andtherefore the Premier League will have certainty aboutwho else might be playing, as will the other clubs inthe championship. But the response was that, “Well,we would have to go through a long process, at theend of which expulsion may or may not be theupshot”. It seemed to us that the Premier League wasa dog that not only really had no effective bite, itcould only really dish out a good gumming to KenBates and the people who are hiding behind thissecrecy and mystery.

Hugh Robertson: Well, you have come back, in asense, to my previous answer, which is that, yes, Ithink it is perfectly reasonable for fans to expect toknow who owns their football club. And if they donot know who owns their football club, as the fans ofLeeds do not, then that is something that ought to becorrected sooner rather than later. If you were to godown the path of having a licensing system, then Iwould have thought a fairly basic requirement of thatlicensing system was that people should know whoowns their football clubs. It is not asking the world,after all, is it?Paul Farrelly: I am not going to use any more doganalogies either.

Q801 Dr Coffey: How do you view the relationshipbetween the FA and the Premier League?Hugh Robertson: I think variably is probably the bestanswer to that. It seems to go through a number ofiterations, and I have only watched it from afar in thefive years I studied this in opposition, and I havewatched it more closely since then. When they cometogether and work together for the interests offootball, as they did during the latter stages of the2018 World Cup bid, it makes for a very powerfulforce, and part of any changes that we do make tofootball governance after this, must be to make thatrelationship stronger. It is tempting to forget in all ofthis, you know, you can get into a sort of—and Borishas a good phrase for it, doesn’t he? He doesn’t quitecall it “gloom-mongers” but you can get a bitmiserable about the state of English football andforget that in the Premier League we have thiscountry’s most successful sporting export and it isfollowed around the globe. It is a fantastic competitionand there is much that is good about it. What we reallywant to do is to harness that good for the bettermentof football.

Q802 Dr Coffey: So this, well, it is probably thesame way of asking the questions that have beenasked earlier, but what do you think Government cando to strengthen the FA that wouldn’t requirelegislation?Hugh Robertson: Well, I think the first thing is youhave to tackle the FA Board. I think that is the key tounlocking all of this, or it is the first part of unlockingall this. It will not do it on its own, but it is the firstand very necessary step. The way forward wassignposted very clearly in the Burns Review, and thefact is that however many years on since that—andBurns indeed, I think, said—I don’t know whether itwas said in this Committee, he certainly said it tome—that he wished he had been bolder, to someextent. I think there is a range of solutions from theFA Board, from building on the independent non-executive chairman and to independent non-executivedirectors that we have, and then balancing thoseagainst three from the professional game and threefrom the amateur game to create a board of nine withthe chairman having the casting vote, through toadding some of the executives on to that board andthen reducing the numbers from the amateur game andthe professional game, through to the Ian Watmoresolution, which is simply to have a series of




executives facing a series of independent non-executives who challenge those executives over theway they take their decisions, the more commercialmodel. I think it most unlikely that we would get tothat without legislation. I would hope that bypersuasion and influence we might move towards thefirst model.

Q803 Dr Coffey: The German FA or football boardhas no independent executives. It manages to haveseen, if you like, the light on certain of its aspects.Why do you think—you in particular have seemed to,particularly following the Burns Review—theintroduction of non-executives will make adifference? We have already heard today about howthe former Prime Minister of Belgium is going tomonitor the regulation of finances in UEFA. I can’tsay that was a ringing endorsement, but why is it thatyou feel that the non-executives will make thatdifference?Hugh Robertson: I come back to your first question,which was that you asked about the relationshipbetween the FA and the Premier League. At themoment, you have a board that is potentially subjectto being locked between the professional game andthe amateur game. Independents break that stalemate.Clearly, the more of them you have, the moreinfluential they will be. Sport across the board is byno means a beacon of good practice in this regard,but if you look at corporate governance models in thecommercial world—and football is a very, very bigbusiness indeed, and it is a business, one would hope,with a social conscience, but it is a very big businessindeed—to have that sort of independent expertisecoming from outside football has only to be good forthe governance of the game.

Q804 Dr Coffey: So if I was to put to you Englandwinning Euro 2012 or independent board, what wouldyou prefer?Hugh Robertson: England winning in 2012. There isabsolutely no doubt about it. My job as SportsMinister is to make sure that this country’s sportingstock is as high as possible, and it will be a great dealhigher if we win the World Cup or the European Cupthan it will be if we have two independent non-executives on the FA Board, keen though I am achievethe latter.

Q805 Dr Coffey: A slight detour from this: in termsof the Olympic Games and trying to have a Britishteam, what have you been able to do to try and makethat happen?Hugh Robertson: Try and persuade my counterpartsin Wales, Scotland and Northern Ireland of what FIFAhave said, which is that there is no threat to theirindependence by contributing to a Great Britishfootball team. Strangely enough, I think the greatestlosers if we are unable to get over the line on this willbe women’s football, which would get an unbelievableshowcase through London 2012 in a way that itdoesn’t always get otherwise.

Q806 Dr Coffey: To that end, do you think it is ashame the BBC isn’t showing women’s World Cuplive, like they did four years ago?Hugh Robertson: Yes, I do. My job as Sports Ministeris to make sure that every single young athlete, maleor female, gets the best possible chance to representtheir country and the pity about some of the politicsthat is going on around this Team GB business is Idon’t think it is going to make an iota of difference interms of FIFA. It will simply deny the opportunity tocompete in the London Games to young men andwomen born in Wales, Scotland and Northern Ireland,and I think that is a very great shame. If it was in mymeans to stop it, I would.

Q807 Damian Collins: Just to go back to some ofthe governance issues with the Football Associationand their relationship with the Premier League, if thePremier League had a seat on the FA Board, do youthink that should be reciprocated?Hugh Robertson: I don’t know that I have a firm viewon that in any way, if I am honest. When I describedthe possible models to which you could move, fromthree, three, three, professional, amateur andindependent non-executives, through to executiveschallenged by independents, there is a range of modelsthere. The first one recognises that football, howeveruneasy at times, however strongly at others when it isworking together, is a sort of alliance of all those areinterested in the game. So the argument for having thePremier League on the FA Board is that they are thiscountry’s most powerful sporting export. More peoplewatch the Premier League than, I think, any otherfootball league anywhere around the world. If youlook at the number of people who run around on thecontinent of Africa or in Asia with Premier Leaguefootball shirts on their backs, its reach is enormous,and the Premier League should have great credit forhaving achieved that during its time. When you havean organisation as powerful as that it makes sense, atone end of the spectrum, to make sure that it isinvolved with the regulation of this game. So to havethem involved in some way is sensible. If that leadsto a complete blocking of any progress—and I am notsaying that it has done—then that is going to beslightly counter-productive, isn’t it?

Q808 Damian Collins: But the question was aboutreciprocation, should the FA as football’s governingbody, have a seat on the board of the Premier League?Hugh Robertson: I think I would be inclined to tacklethe first issue first, which I think is getting the FA’scorporate governance sorted out. If the by-product ofthat, if we could get to this happy situation, was thatthe two organisations—and indeed the FootballLeague as well—were able to operate moreharmoniously together for the good of football, thatwould be fantastic news.

Q809 Damian Collins: But based on your earlierremarks, if the FA were to be responsible for, if youlike, financial performance, as the governing body ofthe game—if you like, the FA is responsible for thegame and the Premier League runs a competition




within the game—wouldn’t that necessitate some sortof formal relationship between them?Hugh Robertson: I would have thought in an idealworld, yes. Indeed, if you look at the arrangementsthat govern the London 2012, the British OlympicAssociation, as the athletes’ representative, have a seaton the local board or at least did until recently. Thatis precisely so that you get all the partners who areinvolved in the delivery of the process round the sametable. In an ideal world, yes, that would be the case. Ithink there are one or two other issues we need totackle first, like getting the central governance of theFA Board correct.

Q810 Damian Collins: In some ways the previouswitness from UEFA hinted at this, that what you haveon the FA Board is a series of vested interests fightingwith each other rather than a single body that takes aunified view of how the game should be run. Is thatyour experience of it?Hugh Robertson: Yes, I think he is right. I think thatis absolutely right. That is of course the importanceof—to come back to the question asked earlier—independent non-executive directors because they canbreak that logjam, because the vested interests,however hard they try, will—vested interests, therepresentatives from the professional game and fromthe amateur game will necessarily stick out for theparts of the game that have put them on there. So theywill create that sort of vested interest situation. Theonly way you can break that is by havingindependence on who can take a more general view.That indeed was of course why Burns made therecommendations that he did.

Q811 Damian Collins: From what you are saying, itsounds like you wouldn’t go the whole hog, in termsof what Ian Watmore would do, and have a totallyindependent board?Hugh Robertson: No. I don’t think I yet have a firmview on it. It has been enough of a struggle to get towhere we are at the moment, and you look at howmany years we have been going at this. I think thereis an opportunity now, through this inquiry, throughthe response we will have to make of it, to set footballthe challenge of achieving something; something thatreally makes a quantifiable difference here. There is arange to which they can go from 333 at one end,through adding some executives on to it, through tothe Watmore solution at the far end of the spectrum.I would strongly encourage football to realise thatthere is a strength of feeling about this, that peoplewant something done. I hope they will see the light;that they will make these changes and that we will nothave to legislate. But if they prove unable to do it—and the track record isn’t massively encouraging—then legislate we will.

Q812 Damian Collins: Just two final questions.Something we discussed with Premier League whenthey gave evidence is: do you have a concern thatthe role of someone like Sir Dave Richards, who wasinvolved in the bids, the FA Board, and Chairman ofthe Premier League, that anyone in that position could

be conflicted between the various different intereststhey are being asked to serve?Hugh Robertson: Boards should do everythingpossible to avoid conflicts of interest, and I think themove that the new chairman of the FA made to takeback control of the England team is the correct one.The chairman of a sport governing body should be, defacto, responsible for the performance of the nationalteam. It is as simple as that. It is inconceivable thatthe chairman of the RFU would not be responsible forthe performance of the England rugby team or thatGiles Clarke would not be responsible for theperformance of the England cricket team. It isridiculous.

Q813 Damian Collins: Finally, although a lot of theissues about governance have been directed towardsthe FA—I think that is right and I think we all respectthe Premier League’s credible commercial success—do you think there is a role for greater independentscrutiny of the performance of the Premier League;the issue of whether they have an independent directoron their board, which they were resistant to, and evenif some of the details—the issue raised in the presslast week about the company that Sir Dave Richardswas a director of and his son ran receiving contractsfrom the World Cup bid, the FA and the PremierLeague and the question of have people beeninformed of that relationship? What sort of rules fordeclaring those interests exist? No one is implyingnecessarily anything was wrong but there seems to bea lack of clarity in terms of how those sorts ofdecisions are made, and if that lack of clarity doesexist would that be a role for an independent director?Hugh Robertson: Yes. Football—let me put it thisway—it occurs to me is a sort of game in transition.Quite a lot of the structures that govern the game offootball relate to a previous time. I will try and saythat gently. Football is a very big business now that isfollowed by 11 million people, or whatever it is, whoplay it or follow it every weekend. You have to havethe very best corporate governance arrangementsaround the boards that control our major games. Soyes, a properly run board will have rules in place thatwould deal with conflicts of interest, and so on, likeany other board does. We have this with the LondonOlympics. Where there are conflicts of interest peopleleave the room for the relevant agenda items, and soon. It is perfectly well established commercial practicein almost every other field and it should apply tofootball.

Q814 Paul Farrelly: One final question on thestructure. In your written evidence you say, “In ourview modern boards should have eight to 10 membersand include non-executives”, and that covers the rangeof options that you would like to see.Hugh Robertson: That is encouraging, isn’t it?Paul Farrelly: When we saw the FA at Wembley itseemed as if the two independent non-executives ispretty much a done deal for the Premier League, butthey don’t feel it is a done deal yet for their FACouncil and they were being very cautious becausethey want to coax us through the FA Council withpeople from the counties, the vice presidents who




carry on like judges, on and on and on, but what theyare proposing at the moment—what they are trying tocoach through the FA Council—is adding the twonon-execs on top of what is already there and that isnot good enough, is it?Hugh Robertson: No. I mean I absolutely stick bywhat we said in the earlier evidence, that I think thebest sort of boards are eight to 10 and have asignificant number of non-executives on them. As youcorrectly say, the FA is a long way off that at themoment, so anything would be an improvement. Iwelcome the steps that David Bernstein has madesince he took over, both in terms of removing theconflict of interest at that central board and by hisstated desire to add two non-executive directors on tothe board.If he can now thin down the representation from theamateur game and the professional game so you havethe three, three, three, that would be a veryworthwhile outcome. If we could achieve that throughconsensus and bring football along that might obviatethe need to resort to legislation and go for a moreradical solution. I do want to work with football toachieve this and it is just a question of getting themto realise that this needs to happen.

Q815 Dr Coffey: One of the ways to think aboutbeing a representative on the FA Board or Council isto have a cap or a term limit. Do you have a view onthat? You know, if you have been on the council for10 years you should—Hugh Robertson: Generally speaking—I don’t thinkthere is anything terribly controversial in this—withanybody who does anything, possibly even politicians,there comes a time when you spend a certain amountof time getting up-to-speed on a given subject, youthen have a productive period and there thensometimes can become a slightly sleepier period at theend of it. So I think term limits are a good thing inalmost all walks of life. They certainly are withdirectors in the commercial world and, again, I can’tsee why that principle applied to football should beany different.

Q816 Chair: Minister, you started in your firstanswer by referring to the plethora of reports,

inquiries and commissions that have crawled over thisground repeatedly and nothing has changed. Are youdetermined that on your watch something is going tochange?Hugh Robertson: Yes, I am. Whether I can actuallydo that of course remains to be seen because, likeeverything in politics, that will require backing. Iwould not for a moment underestimate the difficultyof this. I think there is going to be an awful lot ofbackbiting and unpleasantness before we get fromhere to where we are trying to get to. If I am honestthat is not something I particularly welcome, eitherpersonally or would have welcomed at the time whenwe are trying to deliver the London 2012 Olympics,but I have thought about this at considerable length. Idid have an eight month period to think this allthrough while the World Cup was going on becausewe had agreed that we wouldn’t embark on this beforethat. As I say, a number of either my directpredecessors or previous Secretaries of State havetried to crack this nut and failed. I recognise that and,as I say, it is not going to be pleasant or a great dealof fun but it needs doing for the good of the gameof football.Actually, what I want to do, I want to make sure thatat the end of my time as a Minister that football is ina better position than it was when I took it over. Ithink the most serious issues relate to governance andthe way the game is run, and I do not want to see itat the time that I leave, or get sacked or whateverhappens to me, that we haven’t tackled—because it istoo much trouble or it is too much effort, oranything—something that needs to be done in what isafter all our national game. I simply want to makesure that we have the best possible chance of winninga World Cup in due course.

Q817 Chair: In order to force change it is sometimesnecessary to have an alternative which you don’tnecessarily wish to deploy but which you could resortto if change didn’t happen.Hugh Robertson: Called legislation.Chair: Called legislation, and is that your position?Hugh Robertson: It is my position, Chair.Chair: Thank you.

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Written evidence

Written evidence submitted by Exeter City AFC Supporters Society Ltd

The following submission is that of The Exeter City AFC Supporters’ Society Limited (The Trust), whichis an Industrial and Provident Society (IPS) registered with the Financial Services Authority (FSA).

The Trust took majority ownership of Exeter City Association Football Club in 2004. The Trust currentlyhas in excess of 3,200 members who collectively own the shareholding in the football club. That shareholdingis represented by an elected board of Trustees and The Trust is represented on the Football Club board by twonon executive directors, the Chair of The Trust and another elected Trustee who is also the current companysecretary of Exeter City AFC Ltd.

Executive Summary— Football clubs should not generally be treated differently to other commercial organisations.

However, there should be a benefit from special considerations if the Club is controlled by asupporters’ trust and/or is run as a community enterprise.

— Current football governance rules are too weak and poorly applied. These rules require modernisingand reinforcing by an effective enforcement regime.

— There is far too much debt in the professional game, largely brought about by chasing a dream byunsustainable means. More effective support for and the enforcement of the laws of insolvencyare required.

— The supporters’ trust shareholding model has much to recommend it and official support shouldbe considered for football clubs run in such a way. The community and social benefits dovetailneatly with the government promoted “big society” and “localism” ethos.

— Government intervention could be valuable, but should not be ongoing. It is government’s duty toset the environment and climate for good practice and to ensure that the correct and appropriatelegal measures and enforcements are in place.

— There is little variance of existing governance models within the UK. Examples from othercountries give a wider insight towards the possible, but would not seen as being easily applicablein the UK, as their legal and operational models are not always compatible with legal and culturaloperating climate that exists in the UK.

Detailed Submission

1.0 Should football clubs in the UK be treated differently from other commercial organisations?

1.1 Essentially, no. It is difficult to see why a professional football club should be treated differently if isrun on a purely commercial model. Football is a sport that sells its product—entertainment—to its customers(ie, the supporters who choose to follow their club). This is no different to a supermarket or any other businesswhich sells commercial products to its paying customers.

1.2 Equally, most football clubs have a long history, many going back well over 100 years and there areoften allegiances attached that are greater than those relating to other consumer products. Hence the recenttrend to “brand” football clubs with a commercial product image.

1.3 Sadly, the tendency in recent times has been for some football clubs to seek success at the expense ofgood business practice and, at times, even good common sense. This has done little that is positive for thoseclubs, many of whom have sacrificed financial prudence and a sensible commercial ethic for unsustainable andcostly transient “fame and fortune”. It is this tendency, more than any other which marks football clubs out asdifferent from the normal commercial business as, although many businesses of all kinds fail every year, theyrarely do so as a result of such wanton profligacy. This is frequently the hallmark of struggling football clubs.The question that then arises; is there an alternative way?

1.4 The very nature of football clubs is that they are solid, identifiable and popular institutions that encourageboth interest in and enthusiasm for sport and which are frequently very close to the hearts of local people,even those who do not regularly attend matches. Naturally the scale of this effect is related to the area wherethe particular club exists, the size of the local conurbation and the catchments hinterland. What remains aconstant throughout is the passion and loyalty which the local people feel for their football club, be they oneof a thousand or less following a non-league club or many thousands following a Premier league club. This isreal “localism” identified by the Government as a desirable factor in the growth of the “big society”.

1.5 There is a growing trend for football clubs developing connections with their local communities andbecome much more involved in many aspects of community life and, in particular, social inclusion issuesconcerning young people, the unemployed and needy.

1.6 It is perhaps in connection with the community inclusion aspects and, in particular, where clubs aregenuinely following the supporters’ trust/mutual route, as opposed to the traditional purely commercial model,where there is a case for clear and positive government incentives to encourage clubs to improve and expand.



2.0 Are football governance rules in England and Wales, and the governing bodies which set and apply them,fit for purpose?

2.1 Herein, in our opinion, lies the biggest single problem with football in England and Wales.

2.2 Any basic study of football clubs in general would indicate a clear pattern of involvement in the runningof a significant number of clubs by persons with questionable backgrounds and business records where theyare clearly unsuitable and legally and morally unfit to do so. There are many examples of where ailing clubshave been identified as easy targets for the less scrupulous investors, who bring with them a covert agenda ofasset stripping, which only becomes apparent when substantial long term financial and structural damage hasbeen done.

2.3 As a fairly recent example, under any test of solvency, adequate governance and honest dealings thereis no case for Portsmouth Football Club to still exist, but yet it does. No ordinary company with such a legacywould have been allowed to continue to trade.

2.4 It is our considered view that the governance rules urgently need to be tightened in relation to footballclub ownership, with meaningful and detailed checks on the background and suitability of investors to ensurethat those who fail the “fit and proper person” test are unable to gain the opportunity to injure clubs at anylevel of the football pyramid. We feel that the current “fit and proper person” test is not rigorous enough, isnot being properly or consistently applied and is not “fit for purpose”.

2.5 What must not be lost sight of in particular is that community responsibility must always be involved.The fundamentals of good governance should be that the FA, at the top of the football pyramid, ensures interms of its rules and their use, that good community relations, community development and communityinspiration always remain paramount above all other considerations.

2.6 Governing bodies in English football have an overriding aura of parochialism and lack of understandingof the realities of the management and administration of the modern game. We do not believe that any othersport would tolerate unfit and improper persons to become involved in the ownership of clubs. Strangelyfootball seems to consistently flout this widespread, if unwritten, rule. Why is it that such governance rulesthat are already in place are not applied by the very governing bodies that set them?

2.7 Looking at the situation elsewhere in Europe; Spanish football has a law on transparency and in Francethe law gives access to examine the financial operations. In Germany, the Bundesliga is currently running at aprofit. Under Bundesliga rules, if a club is not in profit it is automatically relegated. The Swedish league isin profit.

3.0 Is there too much debt in the professional game?

3.1 Yes, of course there is too much debt. Most of the debt is totally unsustainable and is, more often thannot, dependent upon an artificial valuation of player assets. This unreal method of valuation of players is oneof the ways that the courts have been persuaded to rule in favour of those who have gained from their selfishprofligacy. One of the biggest changes needed in governance concerns financial viability and the basic principleof living within your means. There should be clear rules with far greater transparency, stronger auditing andadequate and proportionate enforcement.

3.2 Some 60% of European football debt lies within English football. It is not be too difficult to see a linkbetween the speculative risk-taking and financial impropriety of the banking sector and a similar approachwithin football and it is clearly the task of government to take a lead against this damaging culture and restoreconfidence and equity to the entire business world. Football gives government an opportunity to demonstratewhat can be achieved within this “closed” commercial sector, and that can have longer term applications to thewider economy.

3.3 In English football, money has been spent on football in a wantonly reckless manner by owners whoseem to have lost their business rationality when applying their fiscal prowess to the world of football. It isoften a case of individuals seeking to build a dream on unsustainable financial footings. Players at the top levelare being paid what appears to the average person as outrageous and obscene amounts of money and thisprofligacy then spirals through the football pyramid. Not only do players aspire to earn such unimaginablesums (who wouldn’t find the prospect of earning £200,000+ a week attractive?) but the incentive of playing ata high level primarily for the pride and sense of achievement is effectively destroyed.

3.4 It follows that, with the financial ripple on down to the lower leagues, where the relatively wages aresignificantly less, the system will always favour those clubs that have the financial backing and investment topay ever higher wages than others can. That is of course, the natural law of commerce and would probablynot be greatly called into question if it were not for the fact that the indiscriminate influx of asset strippersposing as “investors” into the game at almost every level, is doing nothing to improve or develop it. It isactually slowly eating away at the foundations of the game and the sheer volume of clubs that have, or arecurrently, suffering the ignominy of administration, points deductions, relegation or, at worst, liquidation andremoval from the football pyramid completely, is the net result.

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3.5 Over the past 15 years more than 50% of the football clubs in the English Football League have goneinto administration. This occurring during a time when football has been enjoying something of a renaissanceand England has been rebuilding its international status and credentials in the football world. This does notpaint a pretty picture and is a sad reflection on what the game has become since its inception. Almost everyentertainment industry has been forced to cut its cloth according to its financial state and we have seen manyareas contract and develop new and innovative ways of producing a product and remaining relatively solvent.Football is the one area which appears to have headed in the reverse direction and attempted to develop itsproduct with careless abandon and profligacy.

3.6 This is quite clearly unsustainable in the long term and, what is worse, is tending to damage both theimage and credibility of the game. It cannot continue and new methods and ideas need to be implemented ifthe game is to survive, grow, improve and prosper in other than a purely financial sense in the 21st century.

4.0 What are the pros and cons of the Supporter Trust share-holding model?

4.1 Clearly, with this being a submission from one of only two Supporters’ Trusts in the Football Leaguethat own their football clubs as the majority shareholders, our response is based on considerable practicalexperience and knowledge. We are very proud of our record of both sustained membership growth and effectivegovernance. We believe that our model is limited only by the historic system within which UK football operatesand the competition from clubs operating from a frequently unsustainable financial base.

4.2 It is fair to say that, having taken over ownership of the club in 2004 and seen the club progress fromits then position in the Conference (Blue Square Premiership) through promotion to League Two and onwardsto League One many changes have had to be made to the way the club is run, the number of staff employedand the improvement and development of funding sources to sustain that improvement in fortune.

4.3 The big unanswered question now is whether the model that we have, which has been relativelysuccessful for our club, is (a) sustainable long-term and (b) able to compete successfully with clubs that havemuch bigger budgets and a much more developed and modern stadium and overall infrastructure. Our club hassuffered from many, many years of under-investment and inattention and, other than partial stadiumimprovements which took place in the mid to late 1990s, many of the other improvements have taken placeunder the auspices of The Trust. A great many of such improvements have been funded by and/or physicallyundertaken by numerous volunteers. A local example of “big society”.

4.4 The one single thing which sets the supporters’ trust model apart from the conventional ownershipscenario is the sense of ownership and togetherness which pervades almost everything that club does andachieves. Naturally we feel this is tremendously important. Whether the future lies in clubs owned andcontrolled by supporters’ trusts or a modified conventional model where there is substantial supporterrepresentation (provided through properly set up and administered trusts) with a real say in the way theclub is run is a detail for the Committee to assess and although currently untested, is an initiative worthyof promotion.

4.5 At some stage it is likely that external investment would be necessary but we would advocate, as in ourown situation, this could only occur with the full consent of the membership of the supporters’ trust as themajority shareholder. The reality is that there will be an inevitable “ceiling” somewhere, where the lack offinance will tend to hold back a supporters’ trust owned club, though it should be remembered that this isrelative to the availability of investment, sustainable or not, at other clubs where the “normal” ownership modelprevails. We would engage the fans to bring the required investment, including offering Community Sharesissues, as this fits with the “Big Society” concept. In this regard tax relief for the CS investors would be apositive inducement.

4.6 In our opinion the following are the primary benefits of the Supporters’ Trust model:— It brings sustainability because there are no “long stop” riches to be drawn down in times of

crisis or to fuel unrealistic expectations and ambitions.— The consideration of risk in all it guises is more widely spread and is subject to democratic

processes.— It relies on a practical, emotional and psychological “buy in” by the football community and

the opportunity to use the football club as a focus for a greater community engagement in awide range of projects, both football and more generally.

— There is genuine control, participation, volunteering and engagement: the “Big Society” and“localism” at work.

— It can act as a vehicle for social change.— It can provide a framework to provide equitable solutions to the issues raised in Questions1,

2 and 3 above.— Greater supporter involvement and the removal of owners whose sole aim is personal

financial gain.



— Setting a framework for managing fans expectations on information flows; this can be a majorchallenge because of a lack of understanding regarding commercial sensitivity and a desire toknow everything about everything.

4.7 The 2009 report entitled “English Football and its Governance” published by the All Party ParliamentaryFootball Group considered the subject of supporter representation and recommended that, amongst all 92 clubsin the Football League and Premier League, there should be an elected supporters’ representative on the club’sboard or equivalent body. We support that recommendation, but feel that just one representative is insufficientand likely to be ineffective, without detailed safeguards.

4.8 That same report comments; “… six of the last 15 Champions League winners have been club ownedand run by fans and it is only a cultural difference which separates us from the idea that football clubs aresocial and cultural institutions.” The reference to cultural difference there is an important one as, in our view;it reflects a missed opportunity in this country’s football structure.

5.0 Is Government intervention justified and, if so, what form should it take?

5.1 In the sense that government should take an overview and sponsor and monitor the regulatory system(which in itself should be independent of the football authorities), yes. This is because, in the main, the FA etal are composed of those with a vested interest in perpetuating the status quo. There is an argument thatprimary legislation may possibly be required to set the regulation and reporting framework and to give it realteeth and sanctions.

5.2 Any intervention would probably not be appropriate on an ongoing basis. Governments rarely intervenein business and ongoing intervention could potentially stifle growth, but, as football is not an ordinary business,a level of intervention is needed to bring about reform.

5.3 There is, of course, a question mark hanging over how the football authorities and the wider footballworld in this country would react to any significant government intervention. It is probably that the FA at alwould become defensive because, such a move would almost inevitably result in pressure for reform and aweakening of the control currently enjoyed by the FA.

5.4 As regards the form that it should take, undoubtedly there needs to much clearer and more rigidly appliedcriteria applied relating to the “fit and proper person” test. In our view this is failing to work adequately asmany clubs continue to suffer from the involvement of people who are clearly not fit and proper persons whenit comes to running a football club.

5.5 The other area that desperately needs reform is that of supporter representation on football club boards.It is in the interests of many of those on club boards to exclude such representation because it will almostinevitably be the supporters who will tend to ask the difficult questions and seek justification for many of theBoard’s actions. Without government sponsorship there will be no widespread supporter representation atBoard level.

6.0 Are there lessons to be learned from football governance models across the UK and abroad, and fromgovernance models in other sports?

6.1 There are always lessons to be gained from the way that others do things, but there is also the need toshow caution and understand that most sports governance has essentially “developed” from experience ratherthan the logical and intellectual application of core principles. There are both advantages and disadvantages intaking evolution lead changes. Advantages in that they are driven from good and bad experiences butdisadvantages in that “vested self interest” is also a serious motivator for change and control. Many sportsgoverning bodies are peopled by those active in the individual clubs and associations and are likely to be“narrow” in their consideration of what is best for the community at large (including the tax payer).

6.2 There are few major variations in football governance within the UK. There is the “standard” commercialmodel of many years’ standing and the trust control model and, whilst there may be variations within eachtype—often as a result of the influence of particular personalities and their policies and decisions withinindividual clubs—otherwise, there are really no other true models to draw experience from.

6.3 Looking overseas, whilst the peculiar German football governance structure may be well suited to preventintegrity problems resulting from ownership by “undesired” persons or entities, this effect comes at a price. Inthe vacuum of power generated within large member associations, residual rights of control are allocated torepresentatives who do not hold residual claims. Because these representatives externalise substantial parts ofthe risk associated with investment decisions, they are particularly ill-suited for managing the business ofprofessional football, which has been transformed into a “gamble on success” by ever-increasing revenuedifferentials between winners and losers. At the same time, low accounting standards for members clubs,combined with “soft” law enforcement, invite club representatives to hide their consumption on the jobbehaviour until their clubs are insolvent.

6.4 In April 2010 there was a threatened strike by Spanish footballers. The strike was intended to drawattention to the plight of 85% of footballers in Spain’s top three divisions whose wages are paid late or not atall. The reality of the financial situation in Spanish football is that Barcelona and Real Madrid earn more than



four times as much from the domestic TV deal alone as any other La Liga side and their turnover is more thansix times as high. The Spanish system has been labelled as profoundly unequal and top-heavy. The reason thestrike was called was because of the massive debts which have been accumulated by the football clubs.

6.5 From the above and other examples we conclude that there is probably little to be learned from howother countries operate either their football leagues or the governance thereof that can assist us in the shortterm. Better then to concentrate on our own structure in the UK which, after all, is one of the very oldest inthe world, and seek to adapt, modify and govern it in such a way that it both improves the experience of thesupporter (effectively the customer), makes him/her feel an integral part of the club and part of its lifebloodand ensures that the system encourages the development, progress and improvement of young playersthroughout the game.

January 2011

Written evidence submitted by Dr Malcolm Clarke, FRSA, supporter representative on the FA Council

Biographical Note

1. I have been a match-going football fan for about 50 years, attending approximately 50 games per season.I am Chair of the Football Supporters Federation but in carrying out my duties on the FA Council, which Ijoined in 2007 as the first ever supporter representative following the Burns review, I liaise with and reportsback to other specialist national supporters organisations.

2. I am a former NHS Chief Executive and Local Authority Chief Officer, who is now a self-employedquality consultant and policy analyst. I hold or have held a range of public appointments including sitting ontwo national Tribunals; sitting as a member of the General Social Care Council, the regulator for the socialcare workforce; sitting as an NHS Non-executive Director and acting as Trustee of a Charity. In these roles, inmy former employment and in my consultancy work I have had extensive experience of both regulation andgovernance issues.

Summary of Recommendations

— Further detailed review of FA regulatory processes and the role and composition of the FootballRegulatory Authority (paras 5–6).

— Consideration of measures to improve diversity on the FA Council (para 13).— Immediate appointment of two independent non-executive directors to the FA Board (paras 15–17).— Inclusion of the Alliance as part of the professional game (para 21).— Removal of second class status by enfranchisement of the six “Football family” representatives

(para 22).— Alignment into a single body of the shareholders and Council (para 24).— Consideration of new independent FA Board composition (para 25).— Consideration of new smaller “Council” (or some other name) to enable effective representation

of all stakeholders and advise the Board and hold it to account (paras 26–27).

Statement of Evidence

3. I endorse the evidence of the Football Supporters Federation and Supporters Direct. This is a statementof evidence based specifically on my experience as the supporter representative on the FA Council.

4. There are many dedicated staff working for the FA who produce high quality work across the enormousrange of activities which are necessary for the promotion, development, regulation and governance of the gamein England, much of it out of the public eye. Similarly, on the FA Council, there are many members who makea valuable input at Council and Committee level based on a wealth of experience of running football in a widerange of roles. My views on the need for reform are based on structural arguments not personalities.

5. The former Chief Executive, Ian Whatmore, gave an (in my view) insightful presentation to the FACouncil on the problems, weaknesses and conflicts with the current regulatory arrangements in the FA, at whatturned out, unfortunately in my view, to be his last FA Council meeting before he resigned for reasons whichwere never reported to the Council. Neither did we hear his proposed solutions. I believe that there is a casefor a further detailed review of the regulatory processes, in the light of the experience since the changesintroduced following the Burns changes.

6. This should include a review of the effectiveness of The Football Regulatory Authority which was set upas an arms length unit in pursuance of Burns recommendations, but the interesting, and often unnoticed thing,is that its role is different to that envisage by Burns, who saw it as a regulation and compliance unit, not onewhich determined regulatory policy.



The FA Council

7. Lord Burns envisaged two roles for the FA Council. First, that of holding the Board to account and,second, acting as the Parliament of Football to debate key issues in the game. I agree with that analysis.Unfortunately, at present Council does not, because it cannot, fulfil either role effectively, for several reasons.

8. First, it is far too big. There are 118 members of Council. This inevitably means that such discussions asoccur on decisions or recommendations of the Board or Committees are based around formal questions to thetop table, and that it is very difficult for a member to pursue a point or engage in exploratory dialogue withthe Board members, the executive or Committee Chairmen.

9. Twenty-five of these, ie almost a quarter of Council, are Vice-Presidents or Life Vice-Presidents. Thereare six Vice-Presidents and 19 life Vice Presidents. Life Vice-Presidents are those who have served 20 yearson Council and, somewhat bizarrely, have reached the age of 72 (ageism in reverse !). Their appointing bodycan the backfill the resultant vacancy, thus increasing the size of Council considerably. Burns suggested aCouncil of Honour to recognise the contribution of longstanding members of Council, but this was not adopted.

10. Second, the format of the meeting is the approval or otherwise of a large number of sets of Board andCommittee minutes. The Council does not receive detailed written reports from the executive on key issuesand does not routinely see the background papers which went to the Board or committees. It is therefore verydifficult for Council members to brief themselves on the background to key decisions before Council meetings.This means that it is very difficult for the Board to “report on its activities and performance and to be questionedand challenged” (to use Burns’ language) at the Council.

11. Third, it only meets five times a year. This means that sometimes the minutes of the Board andCommittees refer to meetings which took place literally months previously, and the matter has passed ordeveloped significantly.

12. Fourth, significant time is not allocated for debate on the key issues facing football. There are sometimespresentations on particular topics, followed by questions but there is rarely time for extended debate on thesetopics. The meetings start at 11.00 am and finish with lunch. Considering that it costs about £20k to stage themeeting and bring members from all over the country, it would seem appropriate to at least allocate a wholeday to it.

13. Fifth, there are legitimate questions about the diversity of Council. Out of the 118 members, 114 arewhite men, two are women and two are non-white. Although there is an age limit of 75 for membership ofCouncil, it does not apply to the currently 24 members who were on the Council in 1990. I am aged 64 andtwo-thirds of the members of Council are older than me.

The FA Board

14. The Board comprises the Independent Chairman, the General Secretary, five members from theprofessional game (three from the Premier League; two from the Football League) and five members from theNational Game.

15. I believe that the Board would benefit from additional independent non-executive input, in line withBurns’ recommendation and good governance practice. I can do no better than repeat Lord Burns’ words onthis “The essence of being independent is that such directors do not face conflicts of interest, unlike othermembers of the Board, whether they be executive, from the national game or from the professional game………being independent they are uniquely well-placed to judge difficult issues from the perspective of the FA, ratherthan that of the bodies represented on the FA”.

16. Therefore last autumn I asked the Board to place a proposal to add two additional independent non-executive directors, on the agenda of the special shareholders meeting called to abolish the so-called one-yearrule (which required the independent chairman to have not held another role in football in the previous year).The Board did not agree to do so. I therefore wrote to all shareholders in an attempt to gain support from the5% of shareholders necessary to have it placed on the agenda. I only succeeded in gaining the support ofapproximately 1%, although this may, in part, have been for two reasons. First, Recipients only had seven daysin which to respond, and therefore little time to consult their own Boards, and second, this was an unusualprocess to launch.

17. I have repeated the exercise for the AGM on 25 May 2011, this time giving respondents three monthsin which to reply. I am hopeful that on this occasion I will succeed in at least getting the issue on to the AGMagenda for debate, although it would require 75% support from shareholders to make the change.

18. For the reasons outlined above, effective power on key strategic issues in the FA lies with the Boardrather than the Council and it is almost impossible for the Council to hold the Board to account in anymeaningful way.

19. I believe that there are issues of conflicts of interest in the composition of the Board. To take oneexample, the FA is the governing body of the game which regulates and sanctions leagues. One of the currentVice-chairmen of the FA is also the Chairman of the Premier League. I believe this is undesirable and contraryto the practice of good governance.



20. The Board is based on a representative principle, with equal numbers of representatives from, theprofessional and national games. However, there are some deficiencies in this. I give two examples.

21. First, the so-called Alliance leagues, the leagues immediately below the Football League (The FootballConference and the leagues below it) comprise full-time and part-time professional clubs. They are howeverclassed as part of the national game, not the professional game, which seems clearly inappropriate. The nationalgame representatives elected to the Board all come from the county FAs who hold the larger voting power, andso the Alliance, despite their importance to the football pyramid, are effectively unrepresented on the Board.

22. Second, the six representatives of the wider football family, myself as the supporter representative,together with the representatives of the professional players, the managers, the referees, the Disability EqualityAdvisory Group and the Race Equality Advisory Group, are the only category of Council members who arenot represented on the Board, and cannot stand for it, nominate for it or vote for it. In that sense we are secondclass members of Council.

An Alternative Model

23. Space does not permit the detailed exposition of alternative models for the FA, but I present the outlineof a possible alternative approach.

24. I support Lord Burns’ view that there is a case for reviewing the potentially confusing situation of havingtwo oversight bodies, the shareholders and the Council, and aligning the two.

25. I think there is a strong case for the Board to be comprised of only independent members and executivedirectors, along the lines of the Australian Football League Commission as outlined in the submission fromthe Football Supporters Federation. This would remove the conflicts of interest.

26. There is a need for a much smaller body to effectively represent the range of stakeholders of the game.This could be called the “Council” or some other name if the name “Council” were retained for the newly-aligned shareholding body. If the Board was comprised as outlined above, this could be a largely advisorybody. If the current Board structure or some variant of it were retained, then this body would, in my view needto have a strengthened role of holding the Board to account, as envisaged by Burns.

27. It would be important that such a body could not be dominated by any single interest group. A possiblecomposition of such a body might be:

County FAs 12

Premier League 4

Football League 4

Alliance 4

Football Supporters Federation 1

Supporters Direct 1

Professional referees 1

Amateur referees 1

League managers 1

PFA 1

National coaching system 2

Disability Equality Advisory group 1

Race Euality Advisory group 1

Total 34

January 2011



Written evidence submitted by Gordon Taylor, Chief Executive, Professional Footballers Association

Should football clubs in the UK be treated differently from other commercial organisations?

— Football clubs are an integral part of our cultural and sporting life and need to be recognised assuch by ensuring that they are a viable and vibrant part of our society. They have a significantsocial impact on the lives of their local communities involved in areas such as health, education,community cohesion, social inclusion and equalities. In that sense it is important that normalcommercial criteria/imperatives are not the only considerations that we should take into accountwhen looking at football clubs.

— The European Commission when considering the Bosman case highlighted the specificity of sportwith regard to the freedom of movement of workers and consideration was given to the protectionof young players but also the development programmes which support this development andconsideration was allowed for a compensation system to ensure these were maintained albeit, incontradiction of European legislation with regard to the freedom of movement of workers butconsidered proportionate. Similar sport specificity may be viewed compatible with EU Law ifpursuing the “fairness of competition”, uncertainty of results, recruitment and training, health andsafety, contract stability for example.

— Matters such as integrity within competition are relatively exclusive to sport and is a key reasonwhy sport cannot be defined purely in business terms. The football creditor rule protects theintegrity of the game and ensures that club cannot achieve success beyond their financial meansand then enter into administration and reduce their debts whilst still maintaining the status theirsuccess has brought. This is clearly unfair and the regulations which currently apply ensure this isnot achievable and should not only be maintained but strengthened. If the free market is allowedto reign supreme in football it might be the case that only the strong big city clubs will surviveand the poorer town clubs will go to the wall. Some would say this would be good “pruning” inthe long term but football is different to other industries in that once you lost a club likeMiddlesbrough, Portsmouth or Leeds United, for example, it is impossible to put a new club thatis so important to its community in its place and that is why over three decades we have workedhard by club loans, wage deferrals etc to maintain a club’s existence. As a result this country isunique in the world with a record number of full time clubs, full time players and the highestaggregate attendances in the world.

Are football governance rules in England and Wales, and the governing bodies which set and apply them, fitfor purpose?

— The shock waves that went through football when Portsmouth went into administration withstaggering debts in the middle of a Premier League season brought into sharp focus that footballgovernance rules were far from satisfactory. The model that clubs cannot fail if levels of fundingare of a very substantial nature clearly did not take into account the ability to mismanage thosefunds and repeatedly spend substantially more than the income they received. Although harshlessons have been learnt from the Portsmouth experience and new measures have been brought into reduce the chance of this happening in the future, clubs are still at risk under the current rulesand more stringent regulations need to be brought in to moderate and monitor levels of spendingwithin our clubs. A particular problem in football is often the failure of the Inland Revenue tocollect tax monies due allowing large sums to build up which are then demanded at short notice,triggering potential insolvency. Although the PFA campaigned for the removal of the maximumwage in 1961, challenged the retain and transfer system in 1963 this does not mean we are againstfinancial propriety and both fans and players want their clubs to survive rather than risk theirexistence with casino speculation.

— The development of a closer working relationship between the Leagues and the sharing ofinformation with the relevant Government departments to ensure that such situations are notallowed to develop in the future.

— There is also a problem with the overall control and leadership at the top of football in this country.The Football Association has experienced very turbulent times in recent years and the lack ofcontinuity and direction has left a considerable void at the heart of our national game. There hasbeen much soul searching as to the best way to reform the somewhat antiquated structure andculture within the national governing body and in the absence of a strong and purposeful strategyof reform, the FA does not have the authority and power needed to take the whole game forward.The FA also needs to meet the challenge of engaging with and regulating the “power house” ofEnglish football, the Premier League and achieving compatibility between a strong National team/FA Cup and one of the finest League systems in the world.



— There is a need for strong leadership within the governing body and also a modernisation of theCommittees that make up the governing body. Representatives of the players (PFA), the Managersand also supporters at the highest level of the game need to be involved at the top decision makingtable within the game to ensure that all concerns within the game are properly represented. Thereis currently a distinct lack of the governing body making use of the expertise and experience whichis available from former players within all areas of the game at the highest level.

Is there too much debt in the professional game?

— Gearing is required in all industries but there has to be a balance in terms of the level of debt andwhether it is sustainable in the long term. As football is a result driven business and forecastingleague position and success is notoriously difficult, it is important that clubs do not overreachthemselves and gamble with the club’s very existence. As we have seen with a number of clubsacross the leagues, the level of prudent financial management has all too frequently been lacking.That being said there are also many examples of good financial governance throughout Englishfootball that are a good template for all clubs to follow. The problem has been in England thatdecision making in this area has largely been left up to the clubs and this laissez-faire approachhas allowed financial mismanagement to take hold in a number of cases. There have been variousmeasures introduced to monitor and moderate excessive unbudgeted spending and the new UEFAprovisions will also go a long way in ensuring more financial stability within the game. Both thePremier League and the Football League have taken steps to improve and strengthen their oversightand control of clubs in this area but there is still a long way to go in order to replicate the kind ofstrong and effective provisions that are a feature of German football. The German LicensingSystem is a model for other European clubs to follow. Sufficient liquidity is ensured through aliquidity forecast for 18 months which must exhibit that payment obligations can be fulfilled at alltimes. Also, the 50+1 clause ensuring that a football club must hold the majority of the votingrights of the attached football company ensures that owners who are intent on personal financialgain rather than club stability are precluded from achieving this goal. The implications for thiskind of business model are that, firstly, expenditure is strictly in line with existing revenues,secondly, possibilities for using incoming capitals to replace revenues are limited and, thirdly,clubs can plan and operate with positive results. According to recent studies, 14 of the 20 PremierLeague clubs made substantial losses, whereas in Germany the state of their clubs’ finances aremuch healthier. To this fact can be added the highest average attendance per match and the lowestaverage ticket price per match whilst at the same time increasing turn-over year on year, jumpingfrom 1.27 billion Euros in 2003–04 to 2.036 billion Euros in 2008–09. Two of our most famousclubs, Manchester United and Liverpool, have been bought with a massive debt leverage puttingthe club at risk if results on the field diminish. In the USA a much greater solidarity exists withstronger, central control and a maximum 20% debt leverage with any takeover.

What are the pros and cons of the Supporter Trust share-holding model?

— The inclusion of democratic supporter organisations at their football clubs increases participationfor stakeholders of the club and generates meaningful contributions to the decision-making process.Not only does this improve the governance structure and processes at the club but can also helpto strengthen civil society and also prove beneficial to their communities. Many football clubs inEurope are run as limited companies without any form of supporter involvement enshrined in theirgoverning document. In contrast, professional football in Germany ensures that supporters are anintegral part of the governance of their clubs. Of course, the level of funding required for a footballclub to compete at the highest level mitigates against Supporters Trust models of ownership andthe size of membership of Trusts also mitigates against them being able to influence football clubpolicy. What is required is greater support and greater involvement from a more substantial andtherefore influential contingent within the club’s supporter base for these groups to make seriousin-roads in terms of being able to exercise their power and influence Board decisions. Barcelona,the most successful club in the world at the moment, is seen to be owned by supporters and runin a very democratic manner.

Is Government intervention justified and, if so, what form should it take?

— It is important in every industry including sport that there is a level playing field and there isintegrity emanating from the rules and regulations that govern the sporting activity. The idealmodel is that the industry in question operates a self-regulatory form of governance and this hasthe highest standards in terms of best practice and ensures that all the stakeholders are treatedfairly and have an opportunity to seek redress if the rules and regulations are not adhered to. Atthe present time, there are issues in English football in terms of leadership and control and there



is some doubt about the role and reach and supremacy of our current governing body, the FA. Thegovernment does have a role to play in re-ordering the hierarchy of English football and workingwith all the leading players in the game to establish clear lines of demarcation and power in orderto create more harmonious working relationships at the top of our game. This can only benefit thegame and ensure that all parties take their responsibilities seriously in terms of doing what is bestfor football and not necessarily just their own organisation or interests. This should be driven bythe FA with the government standing behind to ensure that all parties engage in a meaningful andconstructive way. Government intervention was inevitable and successful in the 80’s with serioushooliganism and health and safety issues and played a key role in assisting in ground improvementsto the extent that our supporters and stadiums are amongst the world’s best. Drug testing andcorruption are other obvious areas where Government has to be involved.

Are there lessons to be learned from football governance models across the UK and abroad, and fromgovernance models in other sports?

— The German model has many redeeming features as mentioned earlier and contains many elementsof the UEFA model that is to be introduced in the near future. The financial fair play provisionsare important in that they codify the rules and regulations in this area by which clubs in Europeare obligated to operate under. This development should impact positively on the governance ofclubs particularly at the top level who regularly compete on the continent. Hopefully, this willensure greater competition and remove the spectre of financial instability and indebtedness thathas been endemic in the game over a number of years. Never has the game enjoyed such incomebut never have balance sheets shown so much debt.

January 2011

Written evidence submitted by The Football Association (The FA)

Summary

— English football has evolved as primarily based on a market-orientated model incorporatingfootball specific regulations intended to balance appropriately the interests of supporters, clubsand competitions whilst allowing the opportunity for clubs to invest in potential playing success.Professional clubs are unique from other commercial organisations in the sense that theimplications of their failure (on supporters, their communities and their competitions) areconsiderable and require mitigation.

— The current governance structures of the game are based on a regulatory model of subsidiarity.The Football Association1 (The FA) works in cooperation with the delegated authorities of thePremier League and the Football League on rules designed to uphold the integrity of competitionsand protect the interests of supporters and players alike. The FA would acknowledge that there isan important and continuous challenge to be faced in terms of the speed in which rule changes aremade and the manner in which they are openly communicated.

— The FA considers that the aggregate level of debt in the professional game is of less relevancethan the ability of individual professional clubs being able to service their debt through their ownbusiness models. The annual rise in debt and equity financing in many clubs in the pyramidhighlights an underlying issue of the sustainability of this business model. The FA and both thePremier League and Football League have been working collectively to ensure that thesustainability of club finances is reviewed and protected and the recently introduced rule changesreflect this work.

— The FA supports the ability of Supporter Trusts to be able to hold shares and to own professionalclubs, but would not endorse any form of arbitrary mandating of this practice. It is The FA’s beliefthat this model is of much greater potential lower down the professional and semi-professionalgame structure where the financial barriers to entry are lower and where the scope for a Trust toengage directly with the local community is greater. As such it would look to work with theLeagues to ensure there are no existing barriers in place to Trust ownership, and furthermore urgethe Government to consider what incentives could be identified in the fiscal regime. The FA wouldalso support new initiatives to encourage best practice reporting between club owners andsupporters as a means to better information sharing.

— Whilst The FA recognises the vital role Government plays in the development of sports policy andin the encouragement of sport to deliver a positive social impact, it does not believe thatGovernment would be justified in directly intervening in the running of English football.

1 A brief introduction to the role and remit of The FA is provided in the appendices.



— The FA recognises that it is important to learn from the best practice governance arrangementsboth across football and wider across other sporting bodies. However, it also notes that the uniquenature of English football and its evolution makes replication as opposed to benchmarking moredifficult. It is three years since The FA last reviewed its own governance structures and as suchthere is currently an internal review underway which will include benchmarking of other sportsbodies and the UK Corporate Governance Code (formerly the Combined Code). This review wascommissioned by The FA Board in December 2010 and will report to the newly-appointed FAChairman. The Committee will be kept up to date on the process of this review.

— A series of supplementary documents are attached to this submission in appendix form. If theCommittee requires any further information it should contact The FA Group, Head of PublicAffairs, Robert Sullivan at .


1. The model of football club ownership in England has long been established as one based on benefactorinvestment. Investment into clubs from individual, corporate, cooperative or organisational benefactors providessupport to the day to day football related revenue generation of the club. Like any other commercialorganisation, clubs seek to balance these income sources with the costs of successfully operating, andaccordingly have to make investment and expenditure decisions based on the associated levels of financial risk.This market-orientated approach is applicable at all levels of the professional game. Professional clubs, like allcommercial organisations operating in the UK are subject to UK Company Law which seeks to maximise theopportunity to generate revenue and attract investment whilst at the same time mitigating against the risks andconsequences of financial failure.

2. However, The FA believes that although professional clubs operate within this broad commercialframework they are different to other commercial organisations and therefore requir an additional (limited butunique) regulatory approach. Specifically professional football requires unique regulation due to the impactand consequences of the financial failure of clubs. These include:

— Should a club be forced out of business and cease to operate, its supporters (unlike consumersin another market) find it more difficult to transfer their support.

— The identity of football clubs to their location and communities makes them a unique part ofthe social fabric and enhances the importance of their continuing existence.

— The fact that football clubs take part in competitions which require the fulfilment of fixturesto uphold their integrity means that the failure of one club has a direct impact on all the otherclubs within the same competition.

3. Therefore, where football clubs are regulated differently from other commercial organisations, it is toensure that the interests of supporters, the long-term sustainability of all football clubs and the integrity offootball competitions can be protected.2

4. In addition, The FA would also note that the predominantly market-orientated nature of English footballrequires discretion in the identification and implementation of regulation according to the stature of individualclubs. Professional clubs at the top of the Premier League are global, commercial operations with worldwidefan bases, whereas clubs within the semi-professional structure are more community-centric in their operations.Whilst the principles of how both these types of club are regulated are, and should be, consistent, it is importantthat they are applied with respect to these very differing circumstances.

Are football governance rules in England and Wales,3 and the governing bodies which set and apply them,fit for purpose?

5. The FA acknowledges its responsibility to ensure that the rules governing English football, both on andoff the field are fit for purpose in terms of their protection of supporters, players, the clubs and the competitionsin which they play. This is a significant challenge due to the rapid evolution of the game on and off the fieldand the impact of globalisation and it requires the cooperation and partnership of all the football authorities.

6. The regulation of football is based on a model of subsidiarity. FIFA, the world governing body of football,set out a series of “Rules/Laws” relating to the game to which all association football must adhere. The FA isthe delegated body by which these Rules/Laws are implemented in the English game. In turn The FA itselfsets out a series of rules and regulations to cover both the playing and administration of the game at everylevel from Premier League to grassroots football (FA Rules). In order for any club or competition to besanctioned to participate in English football they must comply with these FA Rules. Furthermore, The FAdelegates authority for the rules pertaining to the running of competitions to competition authorities, such asthe Premier League and The Football League. Each League works with its clubs to agree the “rules of itscompetition” which are then submitted for approval to The FA on an annual basis.2 A full compendium of all the rules and regulations applied to football clubs across international, regional, national andcompetition boundaries is provided in the Appendix to this document.

3 The Football Association has no jurisdiction over Welsh football.



7. The FA’s Executive team (led by the General Secretary) work with their colleagues at both the PremierLeague and Football League to ensure that The FA Rules that govern professional football are kept appropriateand up to date. As a consequence of this approach over recent years many changes have been made to the rulebooks of The FA and the leagues.4

8. The FA endorses this process of self-regulation for its effectiveness in introducing changes to the gamewith the support and buy-in from its key decision makers. Furthermore it allows for flexibility across thediffering levels of the game where standardisation may not be appropriate but encourages uniformity where itis possible. The FA provides the oversight function to this process.

9. Central to the role of The FA in developing, implementing and reviewing The FA Rules is the FootballRegulatory Authority (FRA). The FRA as a committee of The FA has a delegated authority from The FACouncil to administer and exercise various powers and functions relating to the FA Rules including thefollowing:

— Formulating, proposing amendments to and publishing the Rules or any other relevant rule orregulation of the Association and any changes to them from time to time.

— Monitoring compliance with and detecting breaches or possible breaches of the Rules, theLaws of the Game, the statutes and regulations of FIFA and UEFA, the rules and regulationsof each affiliated association and competition or any other rule or regulation of The FA oroffences of possible offences under any of them.

— Being responsible for disciplinary matters (save for those reserved by Council/Committees/Regulatory Commissions/Appeal Boards) including taking appropriate measures to detect,enquire into, investigate and prosecute breaches or possible breaches of relevant rules etc.

10. To ensure a balanced representation across the game, the FRA is made up of twelve Commissioners,four from each of the professional and national games, and four independent representatives who bring avariety of different experience and expertise.

11. The FA would note that one of the biggest challenges facing the football authorities particularly in recentyears has been the ability to openly communicate the many rule changes to the public and media. Meeting thischallenge is important in helping to avoid false perceptions developing amongst supporters and commentators.For example, recent enhancements to the financial regulation of the game developed and agreed by the Leaguesand The FA have not filtered into the public consciousness. This inquiry may prove beneficial in this regard.

12. Furthermore The FA would also acknowledge that there will always be disagreement about the pace andscope of rule change in responding to the changing demands of the game. Traditionally English football’sapproach has been to be reactive, pragmatically responding to incidents once their full implications are clear.It is reasonable to consider in the future whether a greater balance between this approach, and a more proactiveoversight approach that maintains the coordinated control of the game within the principles of consensual self-regulation could be achieved.


13. As outlined, the predominantly market-orientated model of English football has traditionally relied onthe private investment of individual and corporate benefactors. External capital injections into clubs are a long-standing part of the game at all levels; they are used to develop playing potential, improve facilities and inturn generate returns from increased football related revenue. The funding of external capital investment intoclubs can be benefactor or debt supported, and the trend to the latter in recent years has mirrored the trends ofother commercial markets.

14. It is the belief of The FA that the aggregate level of debt funding in itself is not necessarily a problemthat needs addressing. However, it is the view of The FA that any funding of clubs reliant on “non-footballgenerated” income should not be tied to undue financial risk which may have consequences not just for thefinancial stability of the club but for the integrity of the competitions as well. Therefore the ability for individualclubs to service their debts, and openly demonstrate their ability to do so on a regular basis, is central to thecurrent regulatory approach.

15. As such all the football authorities have moved to ensure that Premier League and Championship clubscan demonstrate that they do not have outstanding debts to other clubs on an annual basis, and that they areno more than three months in arrears with their HMRC requirements. Furthermore clubs are now required toprovide “future financial information” to their relevant competition authority on an annual basis to ensure thatthey have a credible financial plan to allow them to complete their fixtures in a season. This is part of acoordinated approach that seeks to ensure that all debt is serviceable within a sensible regime.

16. The FA also welcomes the UEFA Financial Fair Play initiative to which it was a key contributor.Financial Fair Play will set a framework for balancing football expenditure with football revenue over time forclubs competing in European competition. The FA endorses this principle subject to an allowance for initial4 A matrix of the recent rule changes in professional football implemented through football authority co-ordination and self-regulation is provided in the Appendix to this document.



capital investment when appropriate that can help maintain the opportunity for new investment to enter thegame, and looks forward to working with UEFA and the Premier League in implementing the required rules.

What are the pros and cons of the Supporter Trust share holding model?

17. The FA believes that the ownership of football clubs should be open to all and any individual ororganisation under any model that is legal and approved by the relevant competition authorities as per thesanctioned rules of the game.

18. The FA for many years has been a significant investor in the supporter representation movement,providing financial support to not only Supporters Direct and the Football Supporters Federation, but also theNational Association of Disabled Supporters and the Gay Football Supporters Network. The FootballSupporters Federation is represented on The FA Council.

19. The FA strongly supports the view that Supporter Trusts definitely have a role to play within the gameand there are many examples where they have been and continue to be successful. However every footballclub is unique. There are no uniform circumstances from which a football club can construct its financialposition to enable a Supporter Trust Share holding model and hence we would caution against pursuing itsimposition in any arbitrary manner.

20. It should be noted that several Trusts have played a significant part in raising funds for clubs (particularlythose lower down the leagues) when they have been in financial difficulty, and it is this challenge (the abilityto access and coordinate investment funds) that most inhibits the wider adoption of the trust shareholdingmodel. By the nature of the financial requirements involved it is clear that the model may prove to be moresuited to those clubs further down the pyramid of professional and semi-professional football where the scopefor a Trust to engage directly with the local community is greater.

21. We would also note that a Supporter Trust is no guarantee of long-term financial stability. Many of thedifficulties faced in running a struggling football club are particularly challenging for whoever takes control.Furthermore, in order to develop and progress up the leagues a club needs to raise capital and Supporter Trusts,like any other owner, have to equate the risks of attracting external investment to spend on the club with givingup whole or part control of the club itself.

22. The FA commits to working with both the Premier League and Football League to ensure that there isnothing in the existing rule books that creates an additional barrier to entry to supporter trust ownership.Furthermore we would urge the Committee to consider ways in which the current fiscal regime might be alteredto help incentivise Supporter Trust Shareholding.

23. Rather than the issue of “shareholding” The FA would highlight to the Committee the importance ofimproving communication and information sharing between supporters and clubs. The majority of professionalclubs are exemplary at the way in which they communicate and involve their fan bases’; it is a core principleto them and rightly their fans demand it of them. The FA strongly endorses this best practice and will continueto work with the Leagues and Clubs to assess whether these practices require formalising. For instance UEFA,as part of their licensing requirements, will ensure each club that plays in UEFA competitions from 2012–13will be required to have a Supporters Liaison Officer as a go between with supporters. This is a proposal we willsupport whilst looking at other potential reporting/engagement requirements between clubs and their supporters.


24. English football has over the last 150 years become an inherent element of our nation’s social fabric. Itskey events punctuate our calendar and its highs and lows provide a steady back-drop to our daily lives.Moreover, in more recent times it has become of great economic significance to the nation, employingthousands of individuals and generating an annual income of over £1 billion into the Exchequer. Englishfootball does not expect to fulfil such an important social and economic role in isolation from electedrepresentatives and The Government.

25. The FA very much welcomes the views of Government (and all politicians) and considers them animportant stakeholder in helping us to ensure the ongoing good governance of the game. Indeed The FAbelieves that there is a mutually beneficial role to be enjoyed between football and politicians of all Parties.Increasingly policymakers have recognised the value and impact sport can have in helping to achieve widersocial policy objectives. The FA is particularly proud of its work in communities, with disadvantaged groupsand helping to increase participation in sport and much of this work has been achieved in partnership withGovernment and its funding body Sport England. This partnership involves regular review and open and“honest” discussion on a range of issues which we value.

26. However, The FA believes that there is no justification for direct intervention by Government into therunning of English football. It is unclear on what basis such intervention might be justified as the externalitiesthat are traditionally cited in cases of direct market intervention are not applicable. Furthermore, we would askthe Committee to note the examples of other football nations where “direct intervention” has resulted inrestrictions being placed on international team participation by FIFA.




27. Whilst English football has developed a unique model over time, it would be wrong to not recognisewhere lessons might be learnt from other football or sports governing models. However, every model isdifferent due to the unique circumstances in which they have developed, and whilst some best practice may betransferable many aspects may not be. Indeed The FA would highlight its own role in providing best practicesupport on a range of football governance and administration issues for a number of developing footballgoverning bodies across the globe as an example of adopting and applying best practice as opposed to seekingto replicate arbitrarily.

28. The FA is currently undertaking an internal review of its own governance arrangements. This reviewwas commissioned by The FA Board in December 2010 and will report to The FA’s new Chairman on thecommencement of his post on 1 February 2011. Specifically this review will consider sports and other relevantindustry benchmarking and also review the latest recommendations in the combined code. It is three yearssince The FA’s last governance amendments and it believes it is good practice to review these arrangementsagain. Any recommendations made will be consulted upon across the game prior to implementation, and TheFA will ensure that the Committee is kept informed of the review’s progress.

Appendices to The Football Association written evidence to the Culture, Media and Sport SelectCommittee Inquiry into Football Governance, January 2011

1. Introduction to The Football Association

The Football Association (The FA) is the governing body for football in England. It takes the lead inproviding a framework for English football and is responsible for regulating, promoting and developing thegame at every level, both on and off the field. The FA is committed to making football accessible, enjoyableand safe for everyone, regardless of race, religion, gender, sexuality, background or ability, and is alsoresponsible for governing the game in areas such as disciplinary, compliance, refereeing, agents, financialmatters and doping control.

The FA is a not-for-profit organisation that by generating revenue from the England team, Wembley Stadiumand The FA Cup is able to invest over £40 million per annum into grassroots football development in England.This money is invested through the tireless work of the 50 County Football Associations, The FA’s executiveand its partner The Football Foundation. In addition The FA distributes a further £40 million per annum intothe professional game through distributions and payments from The FA Cup and other competitions. In 2008The FA published its vision for the period through to 2012 which set out what it hoped to achieve during thatperiod. Some of our key responsibilities are listed below:

Our National Game

Every month nearly seven million people play some form of the game including 3.9 million children. Thereare 131,000 FA-affiliated teams playing in over 1,200 leagues with over 400,000 volunteers helping the gamerun smoothly. As football’s national governing body, The FA aims to ensure that everyone can have the chanceto be actively involved in football in a safe, positive, high quality environment where they are given theappropriate support to be the best they can. In 2008 The FA launched its National Game Strategy, which set aseries of challenging targets for the development of the grassroots game. The first two years have seensignificant progress in meeting these challenges with increases in the number of female senior and youth teams,significant growth in disability football, the reversal of the decline in 11v11 men’s teams and good progresswith the Respect Programme.

Club England

Club England was created to develop a stronger and more consistent approach across all of England’s 24representative teams including men’s, women’s, and youth and disability sides. It helps to create the atmospherethat leads to success at major tournaments, and has seen recent success with the England men’s U17 teamwinning the UEFA European Championships in May 2010. In 2011 alone Club England will field Englandteams in at least five international tournaments including the FIFA Women’s World Cup, the UEFA men’s U21Championships and the men’s FIFA U20 World Cup.

Football Development

The FA is committed to ensuring that the game is accessible to all and that we provide the atmosphere,environment and opportunity for all teams to be successful at all levels. In order to ensure this it essential thatwe provide both high quality coaching and specialist training at all levels. Our FA Tesco Skills programme hasseen over two million children receive specialist coaching focusing on the technical aspects of the game. OurNational Game Strategy has highlighted a growing base of coaches and the creation of our National FootballCentre, St George’s Park will help to develop high quality coaches who will be able to deliver specialistcoaching at all levels. The FA Board also recently accepted the 25 recommendations of our review into Youth



Development that represent a cultural shift designed to develop future generations of the highest quality youngEnglish players.

International Game

The FA plays a part in formulating the Laws of the Game through its place on the International FootballAssociation Board which has eight members (one from each of the Home Nations and four from FIFA). Wecurrently have a representative on the UEFA and FIFA Executive Committees (the latter as a Britishrepresentative and which expires this summer). We also have representatives on a number of FIFA and UEFACommittees. In order to help further with the part we have to play in the international game we have supportedcharities and the global football family to promote football as well as to use football for social good such asaccess to education and to tackle key health issues.

2. An Overview of the Rules and Regulations that Apply to English Football Clubs

FIFALaws of game, global

regula�ons including thosefor players, transfers, agents

and cross na�onal associa�ondisputes

UEFA FARegula�ons to play in

UEFA Club Compe��onsRules and Regula�ons across

English football

ClubsPremierLeague

FootballLeague

Na�onalLeagues

League Rules

FIFA

Summary of Laws and Regulations 2010–11

Scope: Worldwide

Laws— Laws of the Game 2010/2011

Transfers, Player’s status, Clubs, Agents Regulations— Regulations on the Status and Transfer of Players—2010

These regulations lay down global and binding rules concerning the status of players, their eligibilityto participate in organised football, and their transfer between clubs belonging to different associations.

— Rules Governing the Procedures of the Players' Status Committee and the Dispute Resolution Chamber(DRC) (2010)Rules adopted in relation to the procedures to be adopted by FIFA to deal with disputes arising fromthe Regulations on the Status and Transfer of Players Regulations.

— Rules Governing the Procedures of the Players' Status Committee and the Dispute Resolution Chamber(DRC) (2008)

— Regulations on the Status and Transfers of players (October 2009)— Commentary on the Regulations for the Status and Transfer of Players— Players’ Agents Regulations (2008)



Regulations— FIFA Code of Ethics— FIFA Disciplinary Code

Archived regulations— FIFA Statutes (edition 2008)— Regulations for the Status and Transfer of Players (2008)— Players’ Agents Regulations (2001)— Rules Governing the Procedures of the Players' Status Committee and the Dispute Resolution Chamber

(DRC) (2005)— Regulations for the Status and Transfer of Players (edition July 2005)

UEFA

Summary of Regulations

Scope: those clubs that play in UEFA’s club competitions

UEFA Competitions (Champions League and Europa League)— Competition admission and integrity criteria— Operation of the competitions— Stadium and match organisation— Player eligibility— Kit requirements— Disciplinary law and procedures— Financial provisions— Commercial and intellectual property rights

UEFA Club Licensing and Financial Fair Play Regulations, 2010 edition— Criteria to be met by a club to be granted a licence to play in UEFA’s competitions under the headings

sporting, infrastructure, personnel and administrative, legal and financial.— The monitoring of clubs’ finances during the course of UEFA’s competitions including the evidencing

of the payment of debts, provision of future financial information and, from 2013, that clubs meetdefined breakeven requirements.

UEFA Disciplinary Regulations, 2008 edition— These regulations contain the substantive and formal provisions for the sanctioning of disciplinary

offences by UEFA for matters subject to their jurisdiction. They describe the infringements, regulatethe application of penalties and govern the organisation and action of the disciplinary bodies and theprocedure to be followed.

UEFA Stadium Infrastructure Regulations, 2010 edition— That sets out the minimum stadium requirements for the playing of matches in UEFA’s competitions.

UEFA Safety and Security Regulations, 2006 edition— Regulations that govern the organisational measures intended to ensure safety and security in and

around the stadium before, during and after every match played in a UEFA competition.

UEFA Kit Regulations, 2008 edition— Provisions in relation to the use of kit by clubs playing in UEFA competitions.

FA Rules 2010–11

Summary of Rules

Note: Numbers in brackets state the number of rules in each section. Each rule may be subdivided.



Scope: clubs in England

A Constitution and administration of The Association (7)Provisions in relation to:— Structure and Definitions— Affiliation of clubs including eligibility, cessation and transfer of membership— Powers of The Association

B Sanctioning of Associations, Competitions and Matches (9)Provisions in relation to:— the sanctioning of competitions in which clubs participate— the sanctioning of matches— football and religious observance— the proceeds of matches— defining the playing season

C Rules relating to players (4)Provisions in relation to:— players with written contracts including age, financial arrangements and standard players’ contracts— the registration and transfer of players— players without written contracts— the offer of scholarships to young players— players under 16 years of age

D International and Other Representative Matches and Call-Ups (4)Provisions in relation to the call up of players for international and representative matches

E Conduct (26)Provisions in relation to:— misconduct of a breach of rules and regulations including those of the laws of the game, The FA,

UEFA and FIFA— the general behaviour of those involved in the game, discrimination, receipt of gifts etc, sale of

tickets, betting and attendance and participation in matches— Doping control— Suspension from football for serious criminal offences

F Powers of inquiry (10)— Powers of The Association to monitor the compliance by each Participant (including clubs) with

FA Rules, the laws of the game, the statutes and regulations of FIFA and UEFA and the rules andregulations of each competition.

G Disciplinary Powers (9)— Set out the jurisdictional arrangements and procedures for dealing with misconduct

H Appeals to an Appeal Board (4)— Provisions in relation to referring matters to an appeal board

I Financial Records (3)Provisions in relation to:— the maintenance by clubs of their accounting records and annual accounts— the documentation of loans and recording of gate receipts by clubs— a club’s rules or articles of association including members and directors of clubs to act in

accordance with the Rules and Regulations of The Association, The Association to give prioragreement to changes in a club’s articles, that a person is not to hold a position at the club ifsuspended from football by The Association and provisions in relation to the winding up of a club.

— clubs to advise The Association of defined notifiable changes such as insolvency— the registration with The Association of a designated club bank account

J Rules, Regulations and Laws of the Game (3)— Provisions in relation to changes to the Rules, enabling the laws of the game and regulations such

as the fit and proper person test, safeguarding children, advertising on player’s clothing and mixedfootball

K Arbitration (14)— Procedures to resolve disputes or differences between Participants without recourse to the law

L Fair Play in Football (3)— Provisions to promote Fair Play in football



M Transitional Provisions (2)— Provisions in relation to the adoption of the Rules and Regulations of The Association

In addition to the above there are the rules of FA competitions such as The FA Cup, FA Trophy and FA Vase.

Summary of FA Regulations and related matters 2010–11 that support FA Rules

Sanction & Control of CompetitionsRefereesYouth FootballAreas and Overlapping of AssociationsNational League System Regulations (applicable below The Football League)Women’s Football PyramidProgramme for Excellence (in respect of Centres of Excellence and Academies operated by clubs in thedevelopment of young players)Programme for Excellence (Female)Advertising on the Clothing of Players, Club Officials and Match OfficialsThe Association’s Equality PolicySafeguarding Children Policy and RegulationsVulnerable Adults Policy and RegulationsDoping Control Programme RegulationsFA Football Agents RegulationsThird Party Investment in Players RegulationsFit and Proper Persons RegulationsDisciplinary Procedures— Section A: Field Offences in First Team Matches, for PL, FL and FC (N)— Section B: Field Offences in Non-First Team Matches— Section C: Field Offences in Friendly Matches— Schedule A: Standard Directions, incidents caught on video— Schedule B: Standard Directions, incidents reported to The Association— Schedule C: Standard Directions, incidents on or around field of play and media comments— Schedule D: Standard Directions for Appeals— Field Offences, below Football Conference National Division— Assaults on Officials— Regulations for Football Association Disciplinary Action— General Provisions relating to Inquiries, Commissions and Appeal Boards— Regulations for Football Association Appeals— Memorandum of Procedures for Clubs dealt with by County Associations— Memorandum of Procedures for Teams in Leagues at Steps 5 to 7— Disciplinary Procedures at Personal Hearings, dealt with by County FAs— Safeguarding Children in the Disciplinary Process— The Football Association Disciplinary Process for Small-Sided FootballSmall-Sided Football Laws of the GameMatches against Foreign ClubsThe Football Association Loan Scheme for loans provided to clubsStandard Club RulesStandard Code of Rules for CompetitionsStandard Code of Rules for Youth CompetitionsStandardised Rules for competitions at Steps 1 to 6 of the National League SystemMedical Regulations from Premier League to Step 3 of the National League SystemGoalpost Safety GuidelinesPitch Sizes/Artificial Grass GuidelinesWhite Line Marking of Pitches GuidelinesRespect—a behavioural code for football

Premier League Rules 2010–11

Scope: clubs in membership of the Premier League

Summary of ContentsNotes: Numbers in brackets state the number of rules in each section. Each rule may be subdivided.Clubs are also bound by the League’s articles of association that are not detailed below.

Section A: Introduction (9)

— Including definitions



Section B: The League (31)— Membership requirements including becoming a member, cessation, expulsion and relegation— Relationship between clubs, the league and other football bodies including FIFA and UEFA— Requirement for clubs to employ key officials that are appropriately qualified (eg accountants and

media officers)

Section C: Finance (101)— Requirements in relation to the distribution of centralised revenue (eg broadcasting rights)— Clubs to advise of a designated club bank account— Power to deduct monies due to a club where that club has defaulted in making payment to another

club or a defined football body— Requirements in relation to the assignment by a club of central funds— Power to suspend a club in the event of a defined insolvency event— Sporting sanction in the event that a club suffers a defined insolvency event— Submission of annual and interim accounts of a club and its group reported on by auditors— Requirement to evidence amounts due to defined employees, PAYE and other clubs— Submission of future financial information— Power to require a club to adhere to a budget or to refuse to register a player in certain circumstances— Quarterly reporting of PAYE and national insurance debts— Provisions in relation to the change of control of a club— Power to inspect a club’s books and records

Section D: Directors & Directors’ Reports (39)— Owners and directors test— Ability to disqualify a Director on determined criteria and suspend a club— Wide reaching definitions of Concert Party, Connected Persons and Control— Directors’ Reports on material transactions undertaken by a club reported on by independent auditors

Section E: Fixtures (43)— Matters in relation to fixtures

Section F: Player Identification and Strip (27)— Matters in relation to player identification and kit

Section G: Match Officials (14)— Matters in relation to match officials including formation of Professional Game Match— Officials Limited for the appointment of match officials

Section H: Medical (12)— Appointment by clubs of qualified medical personnel— Provisions concerning the attendance of medical personnel and availability of medical facilities at

a match

Section I: Ground Criteria (42)— Minimum requirements for a ground— Registration of a home ground and consent to be provided to move to another

Section J: Customer Charter (17)— Written customer charter that sets out its policy with regard to ticketing, merchandise and its relations

with supporters and other stakeholders

Section K: Players’ Contracts (42)— Requirements in relation to the contents of players’ contracts and related matters including approaches,

inducements and remuneration

Section L: Players’ Registrations (38)— Provisions in relation to the registration of players— Prohibition of Third Party Investment in players



Section M: Transfers of Players’ Registrations (40)— Provisions in respect of the registration of players including procedures for the payment of transfer fees

Section N: Youth Development (134)— Provisions in respect of the operation of Football Academies, Centres of Excellence and Satellites— Provisions in respect of player development, education requirements and student welfare

Section O: The Safeguarding of Children and Vulnerable Adults (27)— Clubs to have policies for the Safeguarding of Children and Vulnerable Adults

Section P: Scouts (8)— Registration of scouts— Code of conduct for scouts

Section Q: Managers (39)— Provisions in relation to Managers including minimum qualifications and codes of conduct

Section R: Disciplinary Procedures (75)— Provisions in relation to suspected or alleged breach of the Rules— Commission and Appeal Procedures

Section S: Arbitration (42)— Independent arbitration procedures to arbitrate disputes between the League and its clubs, between

clubs and clubs and players

Section T: Premier League Appeals Committee (24)— Established to address various matters mainly concerning clubs and/or players in relation to

compensation or other contractual arrangements

Section U: Criminal Records Bureau (13)— Provisions in relation to disclosure applications

Section V: Miscellaneous (26)— Other provisions including those in respect of associations between clubs, dual interests and betting— Publication by a club of significant interests in that club

Appendix 1: Standard Clauses for Inclusion in Replica Strip Manufacturers’ Contracts (Rule J.13)

Appendix 2: Notice to Manufacturer Licensed to Manufacture and Distribute Club Replica Strip (Rule J.14)

Appendix 3: The Health and Safety of Students on Residential Tours, Festivals, Tournaments and Visits Codeof Practice (Rule N.121)

Appendix 4: Code of Conduct for Football Academy Students of Compulsory School Age (Rule N.126)

Appendix 5: Code of Conduct for Scouts (Rule P.8)

Appendix 6: Code of Conduct for Managers (Rule Q.1)

Appendix 7: Code of Conduct for Clubs (Rule Q.2)

Appendix 8: Standard Clauses for Inclusion in Managers’ Contracts of Employment (Rule Q.8.1)

Appendix 9: Anti-Discrimination Policy (Rule V.23)

Appendix 10: Rules governing applications for UEFA Club Licences

Appendix 11: Regulations of the Professional Football Compensation Committee

Appendix 12: Schedule of Offences (Rule D.2.4.3)

Appendix 13: Medical Examinations to be carried out on Contract Players and Students registered onScholarship Agreements (Rule H.10)



Football League Regulations 2010–11

Scope: clubs in membership of the Football League

Summary of ContentsNotes: Numbers in brackets state the number of regulations in each section. Each regulation may be subdivided.Clubs are also bound by the League’s articles of association that are not detailed below.

1. General (2)— Definitions

2. Membership (2)— Provisions in respect of membership of the League

3. The League (8)— Provisions in respect of the divisional structure of the League, its competitions, promotion,

relegation and resignation— Sporting sanctions for clubs that suffer a defined insolvency event

4. Clubs (9)— Registration of a club’s home ground— Prevention of movement to another ground without consent— Ground sharing requirements— Requirement for maintaining accounting records— Submission of annual accounts of the club and group (audited for Championship clubs)— Interim accounts and future financial information for Championship clubs— Requirement to evidence amounts due to defined employees, PAYE and national insurance

and other clubs (Championship clubs)— Submission of future financial information (Championship clubs)— Power to require a club to adhere to a budget or to refuse to register a player in certain

circumstances (Championship clubs)— Provisions in relation to the change of control of a Championship club— Reporting of HMRC debts— Requirement for clubs to have and to publish a Customer Charter— Notification of changes of directors

5. Fixtures (16)— Requirements in relation to the playing of fixtures— Facilities to be provided at grounds eg visiting supporters— Attendance of qualified medical practitioners at matches

6. Players (32)— Provisions in relation to the registration of players— Provisions in relation to player transfers, agents, prohibition of third party investment in a

player and payment of transfer fees— Professional Football Compensation Committee to address various matters mainly

concerning clubs and/or players in relation to compensation or other contractualarrangements

— Provisions for disputes and appeals to be determined by the Football DisciplinaryCommittee

7. Broadcasting and Sponsorship (4)— Provisions in relation to broadcasting and sponsorship

8. Offences, Inquiries, Commissions, Disputes and Appeals (9)— Provisions in relation to investigations into breaches of the Regulations and disputes and

appeals

9. Association and Dual Interests (11)— Provisions in respect of associations between clubs, interests in more than one club— Power to request information— Publication by a club of significant interests in that club

AppendicesI Membership CriteriaII Medical Record CardsIII Rules Governing Conduct of FDC HearingsIV Owners’ and Directors’ TestV Regulations of the Professional Football Compensation Committee



In addition to the above are the Rules of the Football League Cup

3. A Matrix of the Recent Rule Changes in Professional Football Implemented throughFootball Authority Co-ordination and Self-regulation

The Matrix is a summary of the Rules. Full details can be found in the relevant set of Rules and Regulations.



Competition

FAPremierLeague

FootballLeague

FootballConference

Solv

ency

Mea

sure

sA

nnua

lacc

ount

s—Su

bmis

sion

Clubsrequiredtofiletheirmost

Allclubsrequiredtofileuptodate

Allclubsrequiredtofileuptodate

Withintenmonthsofits

recentannualaccountswithFormA.accountswithPLby1Marcheach

accounts.By1Marchfor

accountingreferencedate,each

year

Championshipclubs.

Clubshallsubmitacopyofits

fullfinancialstatementstothe

League.

TheFALicensingManualforUEFA

League1and2clubsfailingtodo

ClubCompetitionsappliestothose

so,orprovidefurtherinformation

clubsapplyingforalicencetoplay

whenrequiredmaybeplacedunder

inUEFA’scompetitionsthe

Registrationembargo.

followingseason.TheManual

requiresthesubmissionofAnnual

accounts.

Ann

uala

ccou

nts—

audi

tNorule/regulation,althoughclubs

AllannualaccountsofPLclubs

Allannualaccountsof

Currentlyexaminingproposals

opin

ion

arerequiredtocertifythattheycan

mustbeaudited.Ifaccountscontain

Championshipclubsmustbeaudited.regardingclubsustainability.

meettheirfixturesfortheyearat

anythingotherthananunqualified

Ifaccountscontainanythingother

NoexistingRule/Regulationin

theircurrentgroundaspartofthe

auditreport,thentheBoardableto

thananunqualifiedauditreport,then

place.

annualFormAprocess.

askforfurtherdocumentary

theBoardabletoaskforfurther


evidence.Ineventthattheboard

documentaryevidence.Ineventthat


believethatClubwillnotbeableto

theBoardbelievethatClubwillnot


fulfilitsfixturesorpayitsliabilities

beabletofulfilitsfixturesorpayits

inUEFA’scompetitionsthe

toFootballCreditorsthenithas

liabilitiestoFootballCreditorsthen

followingseason.Thecontentofthe

powertorequireClubtosubmit,

ithaspowertorequireClubto

auditors’reportisconsideredanda

agreeandadheretoabudget,to

submit,agreeandadheretoabudget,

licencemayberefusedincertain

requireClubtoprovideanyfurther

torequireClubtoprovideany

circumstances.

informationonanongoingbasis,andfurtherinformationonanongoing

toplaceitunderaRegistration

basis,andtoplaceitundera

embargo.




Competition

FAPremierLeague

FootballLeague

FootballConference

Inte

rim

acco

unts

NoFArule/regulation—considered

AllPLclubstoprovideinterim

AllChampionshipclubstoprovide

Noprovision

competitionspecific.

accountsby31Marchreportedonby

interim

accountsby31March


auditors.Requirementssameas

reportedonbyauditors.


annualaccountsabove.

Requirementssameasannual


accountsabove.

inUEFA’scompetitions.Thecontent

NotrequiredinLeagues1and2.

oftheauditors’reportontheinterim

accountsisconsideredandalicence

mayberefusedincertain

circumstances.

Futu

reFi

nanc

ialI

nfor

mat

ion

NoFArule/regulation—considered

PLclubsrequiredby31Marchto

Championshipclubsrequiredby31

Noprovision

competitionspecific

provideFutureFinancial

MarchtoprovideFutureFinancial


Information—financialforecastupto

Information—financialforecastupto

ClubCompetitionsrequiresfuture

thenextaccountingreferencedate

thenextaccountingreferencedate

financialinformationtotheendof

aftertheendofthefollowingplayingaftertheendofthefollowingplaying

thefollowingplayingseasontobe

season.IneventthattheBoard

season.IneventthattheBoard

providedtosupportalicence



applicationfrom

aclubtoplayin



UEFA’scompetitions.Licencemay



berefusediftheclubisconsidered



unabletocompletetheseasontobe



licensed.



informationonanongoingbasis,andinformationonanongoingbasis,and



embargo.

embargo.



Competition

FAPremierLeague

FootballLeague

FootballConference

Ove

rdue

Paya

bles

Norules/regulation—considered

PLclubsrequiredtoconfirmby7

Championshipclubsrequiredto

Noprovision


Aprilthattheyhadnooverdue

confirmby1Marchthattheyhadno


payablesinrespectoftransfer/

overduepayablesinrespectof

ClubCompetitionsrequires

compensation/loanfeesandto

transfer/compensation/loanfeesand

considerationofamountsinrespect

definedemployeesandPAYE/NIat

todefinedemployeesandPAYE/NI

oftransfer/compensation/loanfees

31March.Intheeventthatthe

at31December.Intheeventthatthe

andtodefinedemployeesandPAYE/

BoardbelievethatClubwillnotbe


NIat31Marchforthoseclubs

abletofulfilitsfixturesorpayits


applyingforaUEFAlicenceforthe



followingseason.



submit,agreeandadheretoabudget,submit,agreeandadheretoabudget,



furtherinformationonanongoing






Sala

ryco

ntro

lNorules/regulation—considered

Norules/regulation

SalaryCostManagementadoptedat

Nosalarycapmechanismat


League2levelandLeague1onan

presenttime.

advisorybasis.

HM

RC

Rep

ortin

gNoHMRCreportingrule—

Clubsrequiredtoprovidequarterly

ClubsrequiredtosettleallHMRC

HMRCPayrollReporting

competitionspecific(although

certificationthatitsHMRCliabilitiesdebtwithin28daysoftheduedate

Initiative—Anyclubingreater

assistedConferencewith

arenomorethan28daysinarrears.

orkeepuptodatewithtimetopay

than3monthdefaulttoHMRC

implementationoftheirscheme)

Eachclubrequiredtoprovideon

agreementdeemedtobeindefault

placedunderregistration

requestbytheBoardanauthority

andthereforesubjecttoa

embargo.Eachclubrequiredto

enablingHMRCtoprovide


provideanauthorityenabling

informationtoLeaguewithregards

Eachclubrequiredtoprovidean

HMRCtocorresponddirectly

toHMRCliabilities.

authorityenablingHMRCtoprovidewithLeagueonclubmatters.

IfBoardbelievesHMRCliabilities

Leagueinformationrelatingtothe

arenotlessthan28daysinarrears,

club’sHMRCliability.

havepowertorequireabudgettobe

submitted,furtherinformation

providedand/orregistration

embargo.



Competition

FAPremierLeague

FootballLeague

FootballConference

Club

Own

ersh

ipD

isclo

sure

Nopublication—Clubsrequiredto

EachclubshallpublishtheidentitiesEachclubrequiredtopublishthe

Nopublicationofownership

discloseownershipinformationto

oftheultimateownerofeach

identitiesoftheultimateowner

required.

TheFAonannualFormA

SignificantInterestintheClub—

(personnotentity)ofeach

SignificantInterestdefinedasthe

SignificantInterestinclub—

holding(eitherindividuallyorin

SignificantInterestdefinedasthe

concertof10%

ofthevotingshares

holding(eitherindividuallyorin

inaclub).

concertof10%

ofthevotingshares

ARegisterofSignificantInterestsin

inaclub).Publicationrequiredasa

eachmemberclubmaintainedatthe

minimum

ontheclub’swebsite.

League.

Chan

ges

inO

wner

ship

ApprovechangesinownershipwhenAnyperson(s)seekingtoacquire

Anyperson(s)seekingtoacquire

Approvechangesinownership

itinvolvesachangeintheentitythatControlofaPLclubrequiredto

ControlofaChampionshipclub

whenitinvolvesachangein

istheclub—usuallyoutof

submitupdatedFutureFinancial

requiredtosubmitupdatedFuture

theentitythatistheclub—

insolvency.Clubsmerelyrequiredto

Informationpriortothechangeif

FinancialInformationpriortothe

usuallyoutofinsolvency.

notifyFAofchangesinownership

practicableorifnotwithintendays

changeifpracticableorifnotwithin

wherethereisnochangeinentity.

oftakingcontrol.Boardhavepower

tendaysoftakingcontrol.Board

torequireindividual(s)takingcontrolhavepowertorequireindividual(s)

toappearbeforeitandtoprovide

takingcontroltoappearbeforeitand

evidenceofthesourceand

toprovideevidenceofthesource

sufficiencyofanyfunds.Inevent

andsufficiencyofanyfunds.In


eventBoardbelievethatClubwill


notbeabletofulfilitsfixturesor


payitsliabilitiestoFootball


Creditorsthenithaspowertorequire

submit,agreeandadheretoabudget,Clubtosubmit,agreeandadhereto


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Written evidence submitted by the Premier League

Executive Summary

Overview of the structure of the Premier League (A-E)— Context and relationship with other footballing bodies.— Objectives—investment led virtuous circle.— Economic impact—more than football.— Football solidarity—benefits to every level of the game.— Premier League and Supporters—listening to their needs and wants.

Q1. Should football clubs in the UK be treated differently from other commercial organisations?— Historical context of the development of the game.— Working within a legal and regulatory framework.

Q2. Are football governance rules in England and Wales, and the governing bodies which set and applythem, fit for purpose?

— Development of Premier League Rule Book.— Areas of responsibility.— Implementation of the Burns Review.

Q3. Is there too much debt in the professional game?— Context and use of debt in professional football.— Response to the changing nature of debt in professional football and the wider economy.

Q4. What are the pros and cons of the supporters trust shareholding model?— Neutral about ownership models.— Funding of supporter groups.

Q5. Is Government intervention justified and, if so, what form should it take?— What necessitates Government intervention.— The strength of the English game.— Where Government intervention is justified.

Q6. Are there lessons to be learned from football governance models across the UK and abroad, and fromgovernance models in other sports?

— Development of governance models.— Specific characteristics of differing and comparative governance models.

A. The Premier League

A.1 The Premier League was formed in 1992 and is composed of the top 20 football clubs in England,playing 380 matches in each season. It is a private company wholly owned by the member clubs at any onetime, with an additional share held by the Football Association (The FA). The Premier League Rule Book ofthe Premier League is the expression of a contract between the clubs as to how the competition should be run,how relations between clubs should be conducted and how disputes should be resolved, and is approved byThe FA annually for approval. The FA is the national governing body for football in England and is responsiblefor regulating on-field matters, with FIFA responsible for the regulation of football at world level. UEFA isresponsible for the organisation and regulation of cross-border football competition in Europe.

A.2 Each individual club is independent; within the Laws of football and the law of the land each is free tomake its own decisions. In a very competitive environment clubs decide what their ambitions are and managethem accordingly. Missing out on the UEFA Champions League at the upper end of the League, or beingrelegated at the lower, creates challenges. But, as Professor Stefan Szymanski has pointed out, English footballclubs are very resilient with 95% of the clubs in the Football League in 1923 still in existence today and thevast majority within two divisions of their 1923 position. The Premier League’s responsibility is to ensure thatthe overall system is healthy with as many clubs as possible competing to be successful within a frameworkwhere the penalties for failure, however real, do not damage the structure and credibility of the League itselfnor threaten the sustainability of individual clubs. Risk taking is at the heart of how clubs compete andunderpins the high levels of excitement in the English game but the regulatory framework needs to ensure thatsuch risk taking is handled responsibly.

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A.3 We welcome the opportunity to submit our evidence to the Select Committee and we would alsowelcome the opportunity to discuss these issues with the Committee at an oral hearing. The FA have sharedtheir response with us and we endorse their observations. In the interests of brevity we have sought to avoidrepeating their views.

B. The Premier League’s Objectives

B.1 The Premier League’s principal objectives are: to stage the most competitive and compelling leaguewith the best prepared world class players competing in high quality, safe and comfortable stadia, and todevelop clubs to levels where they can compete effectively in Europe.

B.2 The distribution of central revenues is equitable, unlike the unequal distributions in Spain and Italy(Annex 1). Playing standards are high—since 2007 UEFA’s Association’s Coefficient has placed the PremierLeague first, followed by Spain, Italy, Germany and France. According to UEFA, the standards of the PremierLeague relative to other leagues in Europe have risen steadily in the last 18 years (Annex 2). England also hasmore teams capable of competing at the highest level than other large footballing nations in Europe (Annex 3).

B.3 High levels of interest generated by high quality, competitive, football generate commercial returns.These are re-invested in the game to raise standards even further, generating greater fan interest whichstimulates further commercial revenues which are then re-invested.

B.4 This re-investment includes a substantial commitment to Youth Development (YD). Over 2,700 boysare in training at Premier League club Academies and Centres of Excellence. The Premier League contributesto the costs of YD in the Football League. The Premier League and its clubs are committed to generatingHome Grown Players (HGP), with over 95% of young players in training being British. Recent Rule changeshave strengthened this commitment further, with a squad limit and HGP quota for first team squads. A summaryof Premier League support for YD is at Annex 4 and Squad Rules are at Annex 5.

B.5 The community origins of Premier League clubs are reflected in the extensive community programmesdelivered by both the Premier League and Member clubs. Premier League funds also support the FootballLeague Trust and the community activity of clubs in the Football League. The Football Foundation, a tri-partiteagreement between the Premier League, the Government and The FA, is a major investor in grassroots facilitiesand is also responsible for the Football Stadium Improvement Fund which directs Premier League fundstowards making football stadia in the lower leagues safe and secure. This community programme (Annex 6)is the most substantial undertaken by a single domestic sporting body anywhere in the world.

C. The Economic Impact of the Premier League

C.1 Competitive and compelling football is the principal objective of the Premier League, however playingsuccess has led to continuous economic growth generated by buoyant attendances and strong media andmarketing revenues (Annex 7).

C.2 This revenue growth is reflected in the contribution made by Premier League clubs to their localeconomies, particularly in smaller urban communities such as Blackpool, Sunderland and Stoke. Larger citiessuch as Manchester also gain from the direct and indirect economic benefits of being the homes of successfulfootball clubs. Tourism and the hospitality industries are beneficiaries, and the Premier League partners withthe Government’s tourism agency VisitBritain to encourage tourists to visit the UK to watch football.

C.3 The popularity of football makes a contribution to the UK’s creative and communications industries.The Premier League itself runs a global television service and website. Each club has a website and many havetheir own TV channel. Television, radio, print and internet media all use football to attract consumers, whilethe manufacture and retail of television, radio, internet and mobile equipment is encouraged by the continuedgrowth in the popularity of football.

C.4 The public sector gains directly from the economic growth enjoyed by football in the last 20 years.Deloitte figures suggest that the continued growth in football revenues and the increased levels of taxation—notably income tax, National Insurance, VAT and UBR—together mean that tax revenues from football inEngland will exceed £1 billion in the coming tax year.

C.5 The banking crisis and the arrival of much straitened banking circumstances pose new challenges toclubs in the Premier League. Loans and investment funds are much harder for football clubs to achieve, justas they are for households and companies. Business models adopted by clubs vary and so some are moreaffected than others, but on balance, healthy revenue growth through the recession has enabled Premier Leagueclubs to emerge so far less threatened than much of the rest of the British economy, demonstrating the strengthand sustainability of the English model.

D. Football Solidarity

D.1 The success of the Premier League has not harmed the rest of English football. Attendances in theFootball League have risen by 59% since the formation of the Premier League and the value of Football Leaguemedia rights has also risen steadily. It currently stands at £280 million over three years giving the FootballLeague the 7th highest league turnover in Europe. The FA enjoys a similar history of growth. Revenues from



The FA Cup, matches at Wembley and from England’s media and marketing rights are strong, with FA turnoverup 185% since 2000.

D.2 The involvement of Premier League clubs contributes to the revenues of the League Cup and The FACup. Cooperation between the Leagues and The FA includes achieving a balance of match dates and kick-offtimes to minimise timing clashes of broadcast matches and commitment to protecting the status of the Saturday3.00 pm kick-off, with no matches broadcast in the UK during the protected period of 2.45–5.30 pm.

D.3 Direct financial support from the Premier League to lower league football includes parachute paymentsto relegated clubs for four years, meaning that up to 12 clubs in the Football League at any one time could bein receipt of such payments. Other clubs in the Championship receive an average of £2.2 million each fromPremier League funds. Clubs in Leagues One and Two receive an average of £350k and £240k respectively,and the Blue Square Conference receives £1.6 million. Premier League finance underpins Football Leaguecommunity programmes and Youth Development. Of the Premier League’s income, £162 million (13%) isdistributed away from Premier League clubs for the benefit of others.

E. The Premier League and Supporters

E.1 English football has some of the most passionate supporters in the world of football. Gates in the PremierLeague average about 350,000 per match weekend, with an occupancy rate over 92%. The Football Leagueaverages 375,000, with the Championship the 5th best in Europe, significantly better than those in Bundesliga 2.

E.2 Supporters attending matches have benefitted from over £2 billion in expenditure on stadia and facilitiessince the formation of the Premier League. Their interests are protected by the requirement for each club tomeet the standards of their Supporters’ Charters and Supporter Liaison Officers at each club work closely withfans to improve the match-day experience and the relationship between fan and club. Away attendance isencouraged by Rules which insist on a minimum number of tickets for away fans at prices as good as theequivalent tickets for home fans.

E.3 The inevitability of failure in football (only one team can be champions, only four in the UEFAChampions League, three must be relegated) means that at any one time some fans will be unhappy. Fanscomplaining about individual players, the team as a whole, the manager, the Board or the owners have alwaysbeen a feature of football, wherever it is played and whatever its governance model. However, the steadygrowth in match attendance to a level 62% greater than in 1992 would suggest that fans in England believethat playing standards are significantly higher and the entertainment greater. Television audiences are alsorobust, suggesting that so far we have managed to balance the expansion of live football on TV with live gates.Full and noisy stadia are an important part of the spectacle offered by Premier League clubs, vital to theenjoyment of both attending and armchair fans. Over-exposure on television to the detriment of the spectacleis a concern as there can be an impact on attendance. The current 138 matches televised live in the UK tendto focus on the most attractive matches, the ones most likely to sell out anyway.

E.4 The Premier League consults widely with the many different categories of fans at home and abroad,ranging from dedicated season ticket holders to casual attenders, from those who subscribe to Pay-TV sportschannels to those who watch in pubs and clubs, and those whose main engagement is via free-to-air highlightsor the internet. Our research indicates a high degree of satisfaction, with attending fans continuing to placewinning football played attractively in quality, safe stadia with good sightlines at the top of their priorities.Other concerns appear to have much less salience, although of course vocal minorities are able to articulate awide range of demands.

E.5 This continuing programme of research is undertaken to ensure that we understand the full range of fanopinion, not just that of the most vocal. A summary description of our extensive research is attached at Annex8. We understand that the Committee is commissioning private advice from experts and we would like to offerthe Committee the opportunity to access any of our research or invite Populus, the research company thatcarried out the surveys of fans, to present their information to you.

Select Committee Questions

Q1. Should football clubs in the UK be treated differently from other commercial organisations?

1.1 Professional football clubs in England emerged in the 1870s and 1880s as an expression of the drive toplay the best possible football to put on show for the local fans. That continues to be the motivation, widenedtoday through technology to include fans around the world. Nineteenth century club owners did not embarkon this course to make profits, the conventional purpose of commercial organisations, a feature which hasremained over the intervening years. Clubs have often been the beneficiaries of owner investment, a vitalfeature of English football since the beginning. This investment typically allows a club to play to a higherstandard than would otherwise be possible simply from its own operations and prevents the established orderbecoming entrenched. In that sense football clubs are not the same as most commercial organisations. EachPremier League club is a trading organisation of significant size and, by Rule, a registered UK company whichfully expects to meet the obligations and enjoy the freedoms that this status confers.



1.2 Each club is deeply rooted in and engages with its own community far more than the vast majority ofcommercial organisations. The vast range and quality of community programmes is greater than any undertakenby other sporting bodies. The importance of each football club within its own communities is reflected infootball rules and practices which make it very hard for an individual club to go out of existence.

1.3 Football clubs also differ from conventional businesses in being part of a League. A League is greaterthan the sum of its parts, with the quest for honours and to avoid relegation adding interest for fans and valueto the matches, while the competition itself has to be organised to a high standard, with high integrity and withall clubs being treated fairly. One club going out of business, being unable to complete its fixtures, woulddamage the interests of every other League member and the integrity of the League itself. Our League thereforeis a group of clubs that both co-operate together and compete against each other and where the extinction of acompetitor damages them all. This is reflected in the collective selling of media and other rights derived fromLeague activity, ensuring that the value earned from competing in our League is distributed in a way thatreflects the overall strength of the League as well as the appeal of individual clubs and the need for the Leagueto be competitive throughout.

1.4 The Premier League supports the view that football should be subject to the normal application of thelaw, with the specific circumstances of sport being taken into account within the law. We do not support theidea that sport should benefit from exemptions from the law.


2.1 The Premier League Rule Book began as 142 Rules and has evolved to meet changing demands andcircumstances to stand at over 800 Rules today. A summary of the most significant recent changes is attachedat Annex 9, including a strengthened Owners’ and Directors’ Test, a requirement for demonstrating viablefinances at the start of each season or at change of ownership, and prohibition of third party ownership. TheRule Book, Premier League policy and all major spending decisions are agreed by the Shareholders (ie the 20member clubs) who meet at least five times a year. The FA holds a special share and is present at Shareholdermeetings. Day-to-day decisions are taken by the Premier League Board and reported to Shareholders. Disputesbetween individual clubs or between a club and the League, if not resolved at executive level, are referred toindependent tribunals and panels, made up of appropriate experts. The arbitration procedure meets therequirement of the Arbitration Act and cases before the courts have shown it to be robust and legally defensible.Coordination between the Premier League, the Football League and The FA is integral to the working ofEnglish football and is achieved by close links at executive levels, by a series of bi-lateral and multi-lateralforums for all issues of significance and through the regular meetings of the Football Management Team.

2.2 Matters affecting professional football are overseen by the Professional Game Board (PGB) of The FAwhich reports to The FA Board and Council.

2.3 In an intensely competitive environment, in which wide ranging opinions are passionately held, it isinevitable that disagreements and disputes will occur. It is also inevitable that successes for some clubs meanthat others will be deemed to have failed. The test for governance is not whether challenges arise, but ratherthat when they arise they are dealt with fairly, promptly and effectively, that lessons are learned in that Rulesand their application are developed further, and that the overall system remains healthy.

2.4 It is always the case that improvements in governance can be made. The Premier League supported therecommendations of the 2004 Burns Review and, while the existing governance system has dealt with recentchallenges in a better way than is often reported, we continue to hold the view that its recommendations shouldbe fully implemented.

Q3. Is there too much debt in the professional game?

3.1 Debt is a feature of the modern economy. The household sector carries £1.46trn in debt while theGovernment presides over total net debt of over £860 billion and is adding to that debt burden at the rate ofaround £150 billion per year. As for all debt, the key questions are whether the burden can be financed withoutjeopardising the economic health of the debtor, whether it is backed by assets and whether the trend indicatesthat borrowing is under control.

3.2 Prior to the banking crisis, debt in the Premier League reached approximately £3.1 billion, against assetsof about £2.5 billion. This reflects the relative ease of credit at the time, the high (and rising) asset values inEnglish football, and the fact that the costs of carrying debt are allowable against tax, thus encouraging ownerinvestment to be held as debt rather than equity. Since the pre-crash peak, it is clear that clubs have taken activesteps to reduce levels of debts, evidenced by the recent transactions at both Liverpool and Manchester United.

3.3 The banking crisis and the accompanying recession has created problems throughout the UK economy.In the case of Portsmouth FC it exposed high-risk strategies and poor management, and led to the club goinginto administration and receiving a nine-point penalty. Portsmouth FC has now stabilised in the Championshipon a firmer financial basis. In general, Premier League clubs have survived the continuing economic turbulencereasonably well. Overall income has increased, mainly due to the strong interest in the Premier League inoverseas markets, although clubs are having to work extremely hard to maintain attendances and income from



hospitality. Concern about costs has led to a series of regulatory changes (listed in Annex 9) and the PremierLeague fully supports the objectives of UEFA’s Financial Fair Play proposals for teams in Europeancompetition.

Q4. What are the pros and cons of the supporters trust shareholding model?

4.1 The Premier League is neutral about ownership models. There is no evidence to suggest that any singlemodel is better than others and in a dynamic, rapidly-changing environment there is strength in flexibility anddiversity. The top level of English football needs to be competitive with the best in Europe if it is to meet thedemands of fans. Ownership models need to deliver effective leadership, clear and timely decision-making andthe ability to raise finance. Provided supporter ownership can meet these tests then there are no reasons whyit should not be successful and the Premier League supports The FA’s evidence to the Select Committee inthis regard.

4.2 Premier League funding via the Football Foundation helped sustain the expansion of Supporters Direct(SD), the umbrella body for the Supporter Trust movement. Last year the previous Government decided tofocus its Foundation funding to sports participation projects only. As this excluded SD the Premier League hasbecome SD’s sole funder.

Q5. Is Government intervention justified and, if so, what form should it take?

5.1 In a free society the case for Government intervention is usually based on arguments that restrictions onthe freedom of individuals and organisations to take their own decisions are justified because of negativeimpacts on others. The failure of the market to deliver desirable public outcomes may also lead to interventionand in such circumstances the Government or its agencies might do a better job. It is far from proven thatthese conditions exist in the case of football.

5.2 Football in England is by-and-large successful, with fans attending Premier League and Football Leaguematches in greater numbers and TV audiences robust. As indicated, the Premier League is currently at the topof UEFA’s league rankings while the England football team is ranked sixth out of 203 in the world by FIFA.While some might wish this ranking to be higher it compares well with other sports (English cricket is currentlythird out of the nine nations playing top-level cricket, English rugby stands at fourth out of the 94 rugbynations). Premier League football is attractive enough to be the most watched domestic sporting competitionin the world, bringing fast-growing revenues to the UK economy and establishing the Premier League and itsclubs as positive British symbols. In a highly competitive League there will always be clubs failing, just asthere will always be clubs on the rise. The temporary periods of failure endured by some clubs do not meanthat the system as a whole is failing. Premier League research earlier this season into the attitudes of fanssuggests satisfaction levels are high, with close to 80% indicating that, on balance, they are satisfied withtheir club.

5.3 The all-round quality of football in England was thought to be the strongest argument in support ofEngland’s recent bid to stage the 2018 FIFA World Cup™, a claim advanced by a wide range of opinion bothdomestic and international. The failure of the Bid does not invalidate the arguments on which it was based.

5.4 Government intervention in individual sports is justified when those sports need public money to sustainhigh standards at the elite level or where public sector action is required to achieve higher levels of participationin sport at the grassroots level. English football at the elite level is not in this position although it is alwaysready to work with Government to invest jointly in the pursuit of shared objectives, particularly in encouraginggrassroots activity.

5.5 Government intervention is also justified in the areas of stadium safety and security and all clubswelcome the statutory framework that seeks to guarantee high standards. The failings of the 1970s and 1980sexposed the many problems that then prevailed and Government action was necessary. Since then over £2billion has been spent on stadium improvements, attendances have risen steadily, injury levels are very lowand police reports of incidents and arrests have declined sharply.


6.1 Sports governance for each sport tends to be a combination of sport-specific rules developed over manyyears in distinctive national environments and more generic rules and standards developed as a result of greaterinternational competition. In addition, the evolution of sport rules have been characterised by the extensiveexchange of ideas, initially with Britain having much to offer the rest of the world and more recently a trulyglobal traffic in best practice, innovation and imitation. There is no single “best” model, nor can successfulmodels from one particular cultural, historical and economic context be readily transplanted to another. Thefranchise model works well in the USA but does not fit with British sporting traditions. The highly regulatedGerman model of football governance clearly works well in the context of Germany, but does not deliver thesuccess at club level that would be expected from a country with the largest population in western Europe, thebiggest GDP, the biggest fanbase, some of the richest clubs and a history of state aid. German football alsofails to sell globally, suggesting that its attractions tend to be domestic. The Spanish football model produces



two great clubs but suffers from a lack of competitiveness within its top League, with economic problemscommon amongst the smaller clubs.

6.2 As noted above, the Premier League’s Rules have expanded from 142 20 years ago to over 800 today.This development has included incorporating international influences, most recently from the adoption of anumber of Rules to align financial regulation more closely with the principles of UEFA’s Financial Fair Play.Other imports include rule changes to conform with international anti-doping objectives. The Premier Leaguewill continue to learn from best practice elsewhere, conscious always of the need to ensure that lessons areapplied appropriately given the specific traditions and circumstances of English football.

Annex

SUPPORTIVE INFORMATION

1. Broadcast Distribution Ratios

Broadcast Revenue Distribution Ratios—Top Club/Bottom Club (four major European Leagues)

Premier League Germany (Bundeßliga) Spain (Primera Liga) Italy (Serie A)1.49 : 1 2.11 : 1 12 : 1 13.5 : 1

2. Uefa Association’s Coefficient (1991–92 to 2009–10)123456789

1011121314

Season

ItalyGermanySpainFranceEngland

Ran

kin

g

3. Top 20 European Club Data

A. EUROPE’S LARGEST CLUBS—TOTALREVENUES 2008–09 (€M) (DELOITTE)

£m

Real Madrid 401.4FC Barcelona 365.9Manchester United 327.0Bayern Munich 289.5Arsenal 263.0Chelsea 242.3Liverpool 217.0Juventus 203.2Internazionale 196.5AC Milan 196.5Hamburger SV 146.7AS Roma 146.4Olympique Lyonnais 139.6Olympique de Marseille 133.2Tottenham Hotspur 132.7Schalke 04 124.5Werder Bremen 114.7Borussia Dortmund 103.5Manchester City 102.2Newcastle United 101.0



B. EUROPEAN CLUBS TEAM STRENGTH INDEX 2009–10(DECISION TECHNOLOGY)

0 20 40 60 80 100

BarcelonaChelsea

Man UnitedReal Madrid

InterLiverpool

ArsenalBayern Munich

LyonRomaPorto

LilleSevilla

DonetskMilan

TottenhamMan City

CSKA MoscowValenciaMarseille

4. Premier League Youth Development

A. YOUTH PLAYERS REGISTERED AT PREMIERLEAGUE CLUBS (STUDENTS AND

SCHOLARS ONLY*)

Nationality Scholars Students

British 160 1,705English 124 604Irish N.I 4 2Scottish 3 0Welsh 4 11Total British 295 2,322Other 46 117Total Registered 341 2,439% British 87% 95%

* Students and Scholars means players (other thancontracts, trialists or amateurs) registered in the agegroups, U9 to U21.

B. FINANCIAL INVESTMENT IN YOUTH DEVELOPMENT

£m Max £m

Premier League Clubs (average £2.4m per Club) 48.0 5.5Premier League contribution to Football League 5.5YDFA Contribution to Football League YD 6.8Annual Investment in Youth Development 60.3

5. Premier League Rule Book Content—Squad Limits and Home Grown Player Quota

As of Season 2010–11, Premier League Clubs must name a squad list of up to 25 players, of which no morethan 17 can be over the age of 21 and not home grown, with an unlimited number of players under 21 beingeligible for selection. Changes to the squad list may be made during a transfer window.

“Home Grown Player” means a Player who, irrespective of his nationality or age, has been registered withany Club (or club) affiliated to the Football Association or the Football Association of Wales for a period,continuous or not, of three seasons or 36 months prior to his 21st birthday (or the end of the Season duringwhich he turns 21).



6. Financial Investment in Community Activity and Solidarity Payments

2010–11Community Funding £m

Football Foundation 12.0Football League 8.1PL Domestic 20.3PL International 3.0Total community investment 43.4Solidarity PaymentsFootball Leagues 1 & 2 Solidarity 12.9Football League Championship Solidarity 43.5Parachute Payments 62.2Total Solidarity & Parachute Payments 118.6Total COMMUNITY/SOLIDARITY 162% of Premier League Turnover 13%% of UK Broadcasting Revenue 22%

7. Premier League Turnover and Attendance Patterns

A. TURNOVER GROWTH IN PREMIER LEAGUE REVENUES(1998–99 TO 2009–10)



B. GROWTH IN PREMIER LEAGUE ATTENDANCES(1995–96 TO 2009–10)

8. Premier League Research Programme Summary

The Premier League manages a research programme for its own purpose and on behalf of the 20 memberclubs. The programme content includes attendance and audience data, fan research and marketing intelligence.

A. FAN RESEARCH (POPULUS)

Report Overview

Establishment Survey An annual football fan establishment survey, comprising random sampletelephone interviews in the UK to quantify different types of fans and thevarious levels of engagement that the general public has with the PremierLeague and its member Clubs. Report published via the research website inAugust.

Club Match Attender Survey An annual bespoke match attender survey for all Clubs, comprising onlineinterviews sampled from Club databases. Report published via the researchwebsite in January.

Football Nation Survey An annual survey of the football nation, comprising 10,000 individualsrepresenting a broader set of football fans, beyond season ticket holders andmatch day attenders. Report published via the research website in January.Surveys representative of the ‘Football Nation’ will be conducted by thePremier League periodically to cover relevant and topical issues. Reportswill be published via the research website.

Premier League Fan Panel An online Panel of 10,000 people, representing Premier League fans andfollowers with weighting based upon the establishment survey.Surveys representative of ‘Premier League fans and followers’ will beconducted by the Premier League periodically to cover relevant and topicalissues. Reports will be published via the research website.

Focus Groups Fan focus groups to identify and explore in depth the key drivers shapingbehaviour, interest, attitudes and opinions of Premier League fans andfollowers. Reports will be published periodically via the research website.

Key Stakeholder Research Depth interviews and discussion groups with opinion leaders andstakeholders (eg representing legislators, advisors, policy makers and themedia) to monitor attitudes and opinions on reputational and public policyissues associated with the Premier League and its Clubs. Reports will bepublished periodically via the research website.



B. FOOTBALL MARKET INTELLIGENCE (SPORT+MARKT)

Report Overview

Football Scout A syndicated market research tracking tool (10,000 nationally representativesample built from 200 per week over 50 weeks each Season) measuringleague popularity and providing bespoke Club data about supporter bases,attitudes, interests, opinions, behaviour, sponsor awareness and other keyissues. Published via the research website monthly.

Sponsoring 21+ A syndicated market research tool (1,000 nationally representative sample)measuring league popularity and providing bespoke Club data aboutsupporter bases, attitudes, interests, opinions, behaviour, sponsor awarenessand other key issues in 30 key International markets benchmarked against theUK. Published via the research website in August 2011.

C. ATTENDANCE AND AUDIENCE DATA (SPORT+MARKT)

Report Overview

Attendance Data Match attendance data for all Barclays Premier League matches. Publishedvia the research website monthly.

Audience Data BARB TV audience data (inc overnights and consolidated) from the UK iscollated across all Competitions and for all programmes involving the Clubs.Published via the research website weekly.TV audience data from international markets is collated across all PremierLeague Live Licensees (and sub-licensees where appropriate) for theBarclays Premier League and all related programmes. Published via theresearch website bi-monthly.A global summary report of all the above domestic and international TV datais published via the research website bi-monthly.

9. Premier League Rule Book—Significant Recent Changes to Financial and Ownership Rules

CLUB FINANCES

Date ofimplementationEffect of Rule PL Rule

September Scrutiny of club finances: C.78–C.902009 — Club to submit annual accounts, interim accounts and future financial

information;— Clubs must satisfy the Premier League Board that no transfer fees or

sums payable to or in respect of employees are overdue;— The Premier League Board scrutinises the submissions to ensure that

the auditors’ opinion on the accounts is unqualified, that the club is notin arrears with regard to its transfer/employee payments, and that theclub will be able to pay its football debts and fulfil its fixtures until atleast the end of the following season;

— If the Board concludes that the club will not be able to do so, it canimpose a transfer embargo and/or require the club to adhere to anagreed budget.

June 2010 The financial scrutiny regime was extended to promoted clubs who C.88must submit all the required information within weeks of beingpromoted to the Premier League.

June 2010 The financial scrutiny regime also extended to give the Premier C.91League Board the ability to look again at a club’s finances if there isa change of control or ownership. The Board will require updatedfuture financial information and have the powers outlined above if notsatisfied that, after the change, the club will be able to fulfil itsobligations as a Premier League club and pay its staff and its footballdebts.The Board also has power to require incoming owners to meet with itand provide evidence of the source and sufficiency of any fundswhich they propose to invest in the club.

June 2010 Each club must certify to the Premier League that its liabilities to HM C.93–C.95Revenue and Customs in respect of PAYE and NIC are up-to-date.This certification must be given each quarter.Where the Board reasonably believes that a Club is behind in itsHMRC liabilities, it may impose a transfer embargo and/or requirethe Club to adhere to an agreed budget.



Date ofimplementationEffect of Rule PL Rule

June 2010 Any grant of security by a Club over central funds due from the C.55Premier League must be fully disclosed to and approved by thePremier League.

June 2010 A club may only assign its entitlement to future instalments of a L.37.10transfer fee to a recognised financial institution.Taken together with the requirement for incoming owners to satisfythe Board about the source of new funding, and the fact that alltransfer fees and agents’ fees must be paid either via the PremierLeague or the FA “clearing houses”, this provision illustrates thework undertaken to ensure transparency of money flows into andwithin the Premier League.

June 2010 Increased parachute payments to relegated clubs were introduced.This was part of the increased “solidarity” package with the FootballLeague in general, whereby financial assistance to and for the benefitof Football League clubs was greatly enhanced. Further, the rules ofboth leagues were aligned in key areas with a commitment to furtherdiscussion and alignment of rules going forward. This will ensure thesharing of best practise across professional football.

OWNERS’ AND DIRECTORS’ TEST

Date ofimplementation Effect of Rule PL Rule

June 2009 Events in an individual’s history which can prevent him from becoming D.2–D.25an owner or a director of a Premier League club were significantlyextended to include:A conviction in respect of which an unsuspended sentence of at least 12months’ imprisonment was imposed;A conviction for an offence which could reasonably be considered to bedishonest regardless of the sentence imposed.Further, a provision was included in Premier League Rules that a personwho is prohibited by law from entering the United Kingdom, ortransacting business here, cannot acquire any shares in a Premier LeagueClub.In addition, a requirement was introduced whereby prospective directorsand owners of Premier League Clubs had to be assessed under the testbefore taking up their role.

June 2009 Clubs must disclose not only to the Premier League but also publicly V.11–V.13who owns interests of 10% or more in the Club.

June 2010 The list of events which prevent an individual from becoming an owner D.2–D.25or director of a Premier League Club were further extended to includethe following:A suspension or ban from another sports governing body (whether a UKbody or one based abroad);A suspension, disqualification, or striking off by a professional body(including foreign professional bodies);A finding that the individual has breached the rules of the FootballAssociation against match fixing;The long-existing provision that an individual who has been a directorduring two club insolvencies (whether the same or different clubs) wasextended to include an anti-avoidance measure whereby if a directorresigns from a club which enters into insolvency within 30 days after hisresignation, this will count as a “strike” under the rule.

CLUB INSOLVENCY


June 2009 The Premier League’s detailed regime to disincentivise the insolvency of C.57football clubs was extended so that a triggering insolvency event nowincludes where a club or its parent undertaking is placed in insolvencyanywhere in the world (previously within the European Union).If a club suffers an insolvency event, this triggers a 9 point deductionand the ability of the Premier League Board to suspend the club.



PROHIBITION OF THIRD PARTY OWNERSHIP


June 2008 The Premier League became the first football body in the world to L.7 &outlaw the practice of third parties, ie individuals or entities who were L.37–38not clubs, taking a financial interest in players whereby that individual/entity could be said to have the beneficial entitlement to any valuerealised from a future sale of the player. Such practices have beenutilised in certain other football jurisdictions, but were seen by thePremier League as an adverse development. Third party ownership stripsmoney out of the game, preventing a “trickle down” of transfer fees, andincreases the risk of a lack of transparency and probity in the sources offunds and potential money flows.The Premier League’s prohibition on clubs allowing third parties to havea material influence over their playing matters was likewise revolutionaryand has since been adopted, nearly word for word, by FIFA in itsregulations of global application.The Premier League also requires, in the furtherance of full transparency,all contracts concerning players’ registrations and economic rights to bedisclosed to it, in certain circumstances in draft.

Written evidence submitted by Supporters Direct

Summary

— This is the written evidence of Supporters Direct, which is the national representative body forSupporters’ Trusts. We request the opportunity to give oral evidence to the Committee.

— We also endorse the evidence submitted by our partners in the Football Supporters’ Federation.— We believe that professional football clubs should operate as sustainable enterprises within healthy

and competitive leagues, which enable them to maximise their valuable contribution to society.— We believe that greater stakeholder participation not only better fits the nature of football clubs as

intrinsically public institutions, but also actively contributes to better governance and thus financialsustainability. We view co-operative models as ideally suited to this task.

— The governance of English football is in urgent need of reform. The financial model pursued bymost English professional clubs is unsustainable, with 81 clubs having sought protection fromcreditors since the current insolvency regime was created in 1986.

— Current regulation of clubs relies on retrospective penalties rather than incentives to encouragegood financial practice and prevent clubs getting into financial difficulties.

Our Proposals

— The introduction of a new licensing regime to promote financial and social responsibility andbalance the sporting, commercial and social objectives of clubs. Specifically, it should:

— Work to bring costs and debt under control and incentivise good financial practice toenable clubs to live within their means and penalise those who do not.

— Recognise the social and sporting dimensions of clubs by requiring clubs to havesupporter representation on their boards as part of good governance measures to promotebetter decision-making and transparency.

— This regime must be overseen by a regulatory body, operating within a clear legal frameworkwhich recognises the specific requirements of sport to ensure a level-playing field for healthysporting competitions.

— Government intervention to this end should be focussed on driving this change within football andproviding support to overcome obstacles where necessary.

— The Coalition has pledged to take actions To meet their commitment to “encouraging the reformof football governance rules to support the co-operative ownership of football clubs by supporters”,Government should introduce a community right to buy and incentivise supporter financialcontributions through redirecting existing tax reliefs to clubs with significant supporter influence,or granted to individuals who invest via a supporters’ trust.

— Supporters Direct has driven supporter involvement since 2000 through its work developing thenetwork of supporters’ trusts seeking to achieve it. In addition to other measures to increasesupporter involvement and ownership, Supporters Direct should be appropriately funded tocontinue this work.



About Supporters Direct

1. Supporters Direct’s mission is to promote sustainable sports clubs based on community ownership andsupporter involvement. We believe that the issues of financial sustainability, ownership and governance arelinked.

2. We were formed in 2000 following a recommendation of the Football Task Force, to encourage theformation and development of groups of fans to take ownership stakes in their clubs.

3. We have overseen the creation of over 170 supporters’ trusts, which like us, are registered as CommunityBenefit Societies with the Financial Services Authority (FSA), and who are our members.

4. These societies—commonly known as supporters’ trusts—have over 250,000 members and have beeninstrumental in preserving football at over 30 clubs across the UK. They have raised over £30 million infunding for clubs since 2000 for an investment in Supporters Direct of £4 million in that time.

5. Our work began in English football, but we are now active in Scottish football and Rugby League andthanks to support from UEFA, we are now working with groups in 14 other European countries. We have alsohelped form trusts in Rugby Union and Ice Hockey.

Current Barriers to the Growth of Supporter Involvement

6. A series of factors militates against sustainability and the growth of community ownership models. Variousregulatory and taxation policies combine with the unsustainable economics of football to incentivise theownership of clubs by dominant individuals who continue to fuel the arms race of ever-increasing player costs.

7. Wealthy owners who hold their football club shareholding in a group of companies can in effect claim asubsidy from taxpayers by writing off the losses in the football club against profits in other group companies.This tax advantage is not available to supporters’ trusts.

8. In contrast to this, supporters’ trusts who aim to ensure prudent financial management face a number ofregulatory burdens in trying to raise capital for investment (see paragraph 37).

9. The combined impact of this has been to transform a potentially diverse (and thus more robust) ownershiplandscape into a monoculture in which clubs are over-dependent on the financial performance of other sectorsof economic activity from which their owners derive the funds to subsidise the clubs’ spending commitments.

Q1. Should football clubs in the UK be treated differently from other commercial organisations?

10. We believe that football is different from normal commercial activity, and its clubs are different fromnormal companies.

11. The psychology and loyalty of football fans differs from that of normal consumers; the economics of theindustry do not operate like other sectors, and the financial performance of the game, especially in the last 20years, would have laid the sport to waste had it been “just” commercial. Most clubs have poor historiccommercial performance and only exist on subsidies from their owners.

12. We contend that clubs have inter-linked sporting, commercial and social goals. Their primary purpose isto take part in sporting competitions, but the historic reason for doing this is because of their role in the socialand cultural life of their supporters and their wider community. In order to continue to do this successfully,they need to be commercial, as professional sport has always been.

13. The potential contribution of football clubs to community wellbeing is documented in the report on theSocial and Community Value of Football commissioned by Supporters Direct and published in June 2010by Substance.

14. This more holistic view of clubs is recognised in some countries through the creation of specific legalforms for sports clubs that give them advantages and exemptions provided they act to ensure that the sportingand social purposes are properly addressed. In other territories, the national football bodies have licensingsystems to achieve a similar function. We have neither.


15. We believe that neither is the case. Both are the haphazard result of England’s history as the first FA. Itsresponse to the major challenges of sport’s development—professionalism, safety, facility development, playerdevelopment, financial sustainability etc—have all been developed using a governance structure which hasconsistently produced outcomes based on shifting balances of power much more than independent, rationalpolicy-making.

16. In key areas, the governing bodies (the FA and its licensed leagues) have been captured by the interestsof the clubs they are supposed to regulate. The FA is built around being a representive body, not necessarilyan effective one.



17. The rules it has put in place to guide and govern clubs are not adequate, not least because those clubshave an effective veto.

18. There are many metrics one might use to demonstrate this, but the most salutory and important is thatsince 1986 (when the current insolvency regime was created), 81 clubs that have played in the top five divisionsin English football have been declared insolvent.There are a great many more that have been technicallyinsolvent, if not legally so, as the large number of clubs sold for nominal fees such as £1 demonstrates.

19. Whilst rules have been introduced belatedly to address some of these issues, they are mostlyretrospective, geared towards penalising clubs after they have already entered insolvency, rather than dealingwith the individuals responsible for club policy, nor incentivising sustainability and sound management.

20. In addition to the burden of poor structures, English football regulation has taken it as axiomatic thatclubs cannot be compelled to act in ways contrary to wishes of their shareholders, nor should they, as thoseshareholders are better placed to judge appropriate actions than a regulator.

21. This idea forms the intellectual underpinning to much debate about regulation in the game. However,the record of insolvency shows that club shareholders cannot be relied upon to make correct judgements, andthat regulators must therefore act.

22. The key requirement—following UEFA’s lead with its Financial Fair Play system—is to introduce adomestic licensing regime. This would provide a framework for clubs to become sustainable by controllingcosts, limiting debt and ensuring they are well governed and take the needs of their stakeholders into account,as well as the wishes of their shareholders.

23. The test for whether there is a role for government in achieving this depends on whether the FA iswilling and able to undertake this work, as football associations in other countries have successfully done.

Q3. Is there too much debt in the professional game?

24. There is clearly too much unsustainable debt, as the number of clubs in insolvency shows. Whilst someclubs have taken on capital debt which is serviceable through using it to generate higher revenues, too manyclubs have debts to their owners, their suppliers and the state which are accumulated operating losses fromtrying to keep pace with those for whom money is no object.

25. Often, debt is secured against the most important asset of the club, its stadium, and because the clubsfail to generate any surpluses to pay their debt down, in increasing number of grounds have become separatedfrom the control of the club, and in many cases been sold for development.

26. The current regulatory regime leaves debt to the discretion of the club, its shareholders and its lenders.As we have seen from ther chronic insolvency in the game, their track record leaves much to be desired.Investigation and sanctioning of club debt should be a major part of the licensing system we recommend.

Q4. What are the pros and cons of the Supporter Trust share-holding model?

27. There are two distinct contexts to consider here. Firstly, where the trust is the majority or sole owner(eg Exeter, AFC Wimbledon, Brentford, FC United) and secondly where the supporters’ trust is a minorityshareholder (90 clubs including Lincoln City and Swansea City).

A. Trusts with majority control

28. There are currently 21 clubs where the majority shareholder is a supporters’ trust. We identify six clearadvantages of community-owned clubs over traditionally owned clubs.

28.1 They must live within their means as they have no other means of support. As they have nodominant owner with an overbearing drive for short-term success, the board is more likely to take amedium-to-long term view in order to ensure the club will continue to exist for future generations.

28.2 Their ability to trade is aided by their greater ability to co-opt volunteers. If the club is owned bya multi-millionaire, fans can develop an attitude which says “let him pay for it”. FC United ofManchester have over 10% of their regular crowd volunteering, all motivated because they allown a single share. This active community engagement could be seen as an example of the BigSociety in action.

28.3 They also have a boost from better relationships with public authorities. Research from theSubstance report referred to in paragraph 13 showed that clubs with more dispersed communityownership had a much wider understanding of public policy agendas and a greater ability to buildrelationships with those delivering them. Given the importance to clubs of facility development,this has a major financial benefit.

28.4 They are also much more likely to understand their role in the community more holistically anddevote resources to supporting that community. The research on social value demonstrated thatclubs make a contribution to their communities in everything they do, not just through theircommunity programmes. In addition to being more sustainable (thus less likely to default on debtsto local suppliers) they are more aware of the importance of a local supply or employment policy.



28.5 Unlike many clubs who have reduced the amount of information about their operations that ispublicly known, community-owned clubs are transparently owned and managed. People can haveconfidence about whom they are dealing with, and supporters are aware of the club’s financialaffairs before it is too late, and so are able to press for a change in policy.

28.6 Supporter-owned clubs also have a different recruitment policy for Directors. For most clubs, therequirement is to have several hundred thousand pounds and be sanguine about never seeing itagain, which is not a compelling proposition for many. Having a means for able individuals tocontribute regardless of means is a major benefit, allied to a governance structure which is notskewed by the wishes of a dominant shareholder and—crucially—accountable to a widermembership for their actions.

29. These positives are, in our experience, outweighed by a single negative, which is common to all clubswhich are not owned by a wealthy benefactor: all struggle in the face of a sport where the main demand ofany owner, over and above wisdom or ability, is liquidity to support negative cash flow.

B. Trusts with minority shareholdings

30. There are 90 supporters’ trusts who have an equity stake in their club, and 64 with a seat on theclub board.

31. The ability of this involvement to bring benefits to a club depends on its approach to good governance.Where the club has proper procedures in place, supporter-elected directors can play a very positive role as partof a balanced board considering club strategy.

32. Conversely, where the club’s governance is poor, with dominant individuals making most decisionsoutside of formal processes, the ability of any minority interests to influence decisions is limited.

33. As noted, the trend is for more clubs to be owned by dominant individuals due to the economic paradigmin the game. There have been instances where trusts’ shareholdings have been diluted and their board seatsremoved by new financiers less concerned with open dialogue, with a more dictatorial approach.

34. Addressing the wider financial issues through a licensing system will help in this respect, but beyondthat, the benefits of regular dialogue and involvement need to be underpinned by more than the inclinations ofthe current managers and owners and the finance-raising capacity of trusts. UEFA’s new licensing systemincludes a provision that all clubs should have a Supporter Liaison Officer, and authorities have a frameworkto go further.

35. Board representation for supporters should be part of a football licensing system and clubs could bemandated to provide places on the board of their clubs, be transparent about their financial operation and holdannual meetings to discuss those reports.

36. Clubs could also be encouraged to make shares available to their supporters to build up their stakethrough such a system, knowing that their position in the club was guaranteed in the future.

C. Capital raising

37. Improving access to capital is a key issue to level the playing field for supporter investment, which iscritical for all trusts, regardless of how many of the club’s shares they own.

38. There are regulatory burdens imposed on trusts because they are raising funds to buy shares in a privatecompany and so treated like any other investment activity, which is unsatisfactory. There are clear differenceshowever which if recognised by the FSA would make it easier and cheaper for volunteer-run trusts to bringnew equity into the game.

39. At the same time, the exisitng tax advantages which support the increase in club losses or leveragebuyouts are not in the public interest as they contribute to unsustainable cost inflation and unproductive debt.Tax policy should be refocussed on incentivising fan investment.

40. FC United of Manchester are in the process of developing a home ground, for which they had to raise£2 million of investment themselves. They have used the Community Benefit Society to raise that sum on aone-member, one-vote basis. This is an astonishing and unprecedented sum for a club with average gates ofaround 2,000. Crucially for this discussion, the offer attracted Enterprise Investment Scheme (EIS) reliefs forinvestors. The announcment of EIS reliefs came after the initial share issue was opened, and caused a significantrise in take-up. We believe that incentives like this would drive fan investment and influence.

41. There are obviously wider policy implications, so we believe that an expert group convened by theMinister for Sport could provide a way forward on these issues. We would be happy to serve on such a groupand believe it is an area of activity which, by not requiring any discussion outside government, would be aminor change with major implications, if allied to a licensing system for the game.



Q5. Is Government intervention justified and, if so, what form should it take?

42. Football is our national game and is a subject of public concern, so it is a legitimate subject forGovernment action and Parliamentary investigation.

43. The Coalition Agreement commits the Government to action on club ownership and governance, so theissue is not whether Government should intervene than what form intervention should take.

44. In our view, this could be achieved through a Right to Buy, modelled on the Scottish Land Reform Act2003. We see two situations where this might be appropriate: when a club is insolvent, where changes to theInsolvency regime would need to be made, and where existing owners offer a club for sale, in which case amoratorium period would be necessary for the Community to raise the required finance. There are alreadyRight to Buy proposals in the Localism Bill with respect to public assets and services, and these could beextended to include non-public sector community assets such as football clubs.

45. An alternative to that legislative route would be to use the tax system to incentivise supporter influenceat their respective clubs, as we detail in paragraphs 37–41.

46. The tax system contributes to the poor financial and governance performance in football and should bereviewed as a matter or urgency. Any public assistance to football clubs must be based on the provision ofclear and demonstrable social benefit, as we call for in our report on the social value of football.

47. In terms of the governance of the game as a whole, Government intervention has often been necessaryprincipally because the game was incapable of making the necessary changes due to its poor governance. Theclearest case is to ensure supporter safety through legislation in 1975 and again in 1991, the latter accompaniedby financial assistance.

48. Other national football associations have put into place licensing systems to regulate club activity; thatthe FA has not done so suggests that there are significant blockages which will continue to prevent it unlessthey are tackled.

49. The issue for government is where can it support the FA in achieving the necessary changes if it is eitherunable or unwilling to deliver. The nature of the obstacles would determine the precise nature of theintervention, but we would suggest that such has been the historic failure that Government must do more thansimply urge reform upon football.

50. We suggest a time-limited Act which provides powers for the Minister to take all necessary action tointroduce a thorough licensing regime should such not be introduced by football. Experience suggests thislatest impulse will similarly run into the sands without this kind of motivation.


51. In 2008, we published research on the system of governance and regulation of football in six continentalEuropean countries; Italy, Germany, Spain, France, Belgium and the Czech Republic.

52. Most impressive was the German Bundesliga, which commends itself on a host of factors. Criticalamongst them is a recognition that a stable sport flows from regulation at club level of who makes decisions,and regulation by the league to ensure greater possibility of clubs achieving success without damaging the clubor the wider financial operating environment.

53. The record of the Bundesliga speaks for itself; it is the most profitable, solvent and well attended leaguein Europe with has the highest ratio of commercial income to turnover. There has never been an insolvency inthe history of the Bundesliga, which contrasts starkly with the record here.

54. A key component of this is the league’s licensing system which recognises that clubs are interdependentand so the risky actions by one can cause problems for all. Specifically, if one club decides to becomeunsustainably ambitious and buy the best players, the impact will be to raise players costs which impacts onother clubs.

55. That underpins their approach to the 50%+1 rule, which places ultimate controlling shareholdings in thehands of a members’ association of supporters. Whilst there are instances of individuals making large paymentsto clubs, the level to which this occurs is much much less than in England, because they cannot controlthe assets.

56. The combined impact of these is that clubs trade their way to sustainability confident that the leaguewill be able to act if another club tried to subvert the system.

57. We are also very much attracted to the Commission model developed in many Australian and AmericanSports, which stops regulatory capture whilst ensuring regulators have understanding and experience of thesport without being beholden to it.



58. The lesson from these countries suggests that if sustainability is a outcome we wish to see, it seems tobe necessary to have a licensing system, and that licensing systems need to be independently managed andgoverned from the clubs who will be subject to them.

January 2010

Written evidence submitted by the Football Supporters’ Federation

1. Introduction

1.1 The Football Supporters’ Federation (FSF) represents over 180,000 fans supporting professional clubsand national teams at all levels throughout England and Wales. We would like to endorse the evidenceseparately submitted by our friends and partners at Supporters Direct.

1.2 The proposals and recommendations contained in this evidence are summarised as follows:— The creation by Parliament of a special legal status of “registered limited sports club” as part

of a new comprehensive Sports Act (section 2).— Strengthening of the owners’ and directors’ tests and their enforcement (section 2).— Further reforms of FA governance, starting with the appointment of two new independent FA

main board directors (section 3).— Continued adequate funding by the game of the FSF and Supporters Direct (section 3).— New rules to inhibit leveraged buy-outs and curb disproportionate debt (section 4).— Government to intervene as a facilitator to ensure that essential governance reforms are

introduced by the FA (section 5).— A study of models offered by other nations and sports (section 6).

2. The Legal Structure of Football Clubs in England and Wales

2.1 We believe that football clubs are principally sporting and cultural assets. Their prime purpose shouldbe to serve their geographical and supporter communities by (a) providing the best level possible of footballon the pitch; (b) providing the best possible level of supporter facilities and value for money off the pitch; (c)supporting the development of the game at all levels as a “beacon” of football in their town or city; and (d)the promotion of community cohesion and well-being. All other purposes and objectives should be ancillaryto and support these objectives. In many cases what actually happens is very different.

2.2 Almost all professional football clubs in this country are legally either private or public limitedcompanies. Indeed Premier League and Football League regulations require that professional clubs be registeredas such.

2.3 There are a number of clubs whose final legal majority or sole owner is a mutual Industrial & ProvidentSociety (eg Exeter City, Brentford). This is a major success for Supporters Direct and the mutual supporterownership movement.

2.4 To regulate football clubs solely as private sector commercial businesses is to miss the point ofprofessional football as a sporting and cultural good. The game’s European governing body UEFA, the Uniondes Associations Européennes de Football, believes that the best form of organisation for a professional footballclub is a mutual member-owned club. We agree.

2.5 In the British context we propose the creation by statute as part of a comprehensive Sports Act of a newlimited liability status for sports clubs whose goal is not primarily one of profit for shareholders.

2.6 The directors of all private or public companies limited by shares owe an overarching fiduciary duty tothe company’s shareholders. All other objectives are secondary. Even this objective is often not met in football,as demonstrated by the financial crises at many clubs over the last two decades. Most recently at the elite levelwe have seen the economic collapse of Portsmouth, Liverpool almost collapsing under the weight of acquisitiondebt piled on the club by its new owners in a leveraged buy-out in 2007 and the deeply controversial leveragedbuy-out of Manchester United in 2005.

2.7 Last season saw the collapse of the former Chester City FC, expelled mid-season from the FootballConference. These and many other instances demonstrate that the current model of football governance isbroken and needs urgent reform

2.8 The football authorities deserve credit for a range of reforms which they have introduced in recent years.They need to go much further. The owners’ and directors’ tests (formerly the “fit and proper person” tests)need to be extended and strengthened. The resources and expertise applied to their enforcement needs tobe enhanced.

2.9 Currently the owners’ and directors’ tests (ODTs) bar any person from owning or directing a club wherethey have been responsible for two episodes of football insolvency or have serious unspent convictions.



2.10 The amendments to the Premier League’s ODT require potential new owners to provide details of theirbusiness plans and proof of funds prospectively rather than retrospectively. Clubs are now also required toreport on tax payments due to HMRC. This is all welcome.

2.11 When a prospective director or owner is resident and domiciled in the UK there are fewer problemswith investigation and enforcement. However, it becomes difficult when the prospective new director(s) and/or owners are foreign nationals and/or resident abroad, particularly in countries known to experience corruption.The former Manchester City owner Thaksin Shinawatra is an example. When Shinawatra took over ManchesterCity respected international non-governmental organisations like Amnesty International and TransparencyInternational expressed grave concerns. There should be a place in the ODT for the examination andconsideration of such evidence, whilst applying the rules of natural justice.

2.12 There are other problems with the rules as they relate to past records. As they stand Robert Mugabewould pass the test but Nelson Mandela wouldn’t.

2.13 The football authorities claim that they are constrained by UK and EU law. Whilst this is true, webelieve that they could do far more, even within the current legal framework. We believe that some legalchanges will be required however to allow football to effectively regulate itself.

2.14 The recent jurisprudence of the European Court of Justice (ECJ) suggests that professional sportsgoverning bodies may introduce rules which control and curb the economic activities and/or employmentrights provided that the rules are necessary, proportionate and introduced for primarily sporting rather thaneconomic reasons.

Recommendations— he creation by Parliament of a special legal status of “registered limited sports club” as part of a

new comprehensive Sports Act.— Strengthening of the owners’ and directors’ tests and their enforcement.

3. Football’s Governing Bodies and Rules

3.1 The most recent reform of the FA’s internal governance structure took place following the enquiry intothe organisation’s governance by cross-bench peer Lord Terry Burns, whose findings and recommendationswere published in 2005.

3.2 Lord Burns made it clear that the reforms he proposed hung together as a coherent whole. Despite thisthe FA decided to dine from the recommendations a la carte. Some reforms were implemented, notably theappointment of an independent chairman, the creation of the semi-autonomous Football Regulatory Authority(FRA) within the FA (although with neither the functions nor the governance that Burns envisaged) and theaddition of representatives from the members of the “football family” formerly unrepresented within the gameto the FA Council.

3.3 However, Burns recommendation for additional independent non-executive members of the Board wasnot adopted. The supporters’ representative on the FA Council, Dr. Malcolm Clarke will submit separateevidence to the Committee on the FA’s structure and governance arrangements.

3.4 We do not necessarily believe that the Burns model, which was by his own admission a compromisebased on what he thought it was possible to get accepted, represents the ideal end-state. We do however believethat the partial implementation of even his limited reforms is inadequate.

3.5 The rejection of the draft response to the seven questions posed to the football authorities by the formerSecretary of State for Culture, Media & Sport, the Rt Hon Andy Burnham MP submitted by Lord DavidTriesman to the FA Board demonstrates the problems of conflicts of interest within it.

3.6 The Guardian revealed that Triesman’s draft contained the following recommendations, which the FSFsupports:

— The FA must be trusted to lead across the full breadth of its remit, including its role asregulator, which [is] a core function of the FA,

— A licensing system, overseen by the FA, in which clubs would commit to financial regulations,and minimum levels of community and supporter involvement, and youth development.

— Clubs to make annual financial reports to the FA, including whether their accountants havepassed them as “going concerns”.

— A single fit and proper person test to be applied to all professional clubs, including prohibitingpeople from being owners or directors if they are under criminal investigation or have beencited by Human Rights Watch as human rights abusers.

— Owners must say where all the money they invest in clubs has come from.— “A formal relationship [to be] developed with supporters groups … promoting discussion of

the distinct local character of the club and its community role”.— Boards to publish “an annual statement of their plans for the club”.



— “A preliminary discussion” to be held on sharing money more equally in football, andproviding clubs with financial incentives to develop young players.

— “A discussion” to be held with UEFA about “wider distribution” of Champions Leaguetelevision money.

— Working to prevent clubs signing players from overseas until they are 18 years old.

3.7 The instability of the FA is evidenced by the procession of chief executives who have resigned orotherwise been forced out since the resignation of Graham Kelly in 1998. The FA has had six chief executivesin less than 13 years.

3.8 It should be remembered that one of the express reasons behind the FA’s creation of the Premier League—which broke away from the Football League in 1992–93—was to promote the success of the England nationalteam. The Premier League chairman Sir David Richards said at the third Dubai Sports Council conference in2008 that the reality has been different. He argued that the Premier League’s failure to reduce its size to 18clubs as planned and the constant pressure on managers for results, leading them to not blood young Britishplayers, has damaged the national team. What supporters might think of an 18 team League hasn’t been tested.As usual, they haven’t been consulted. They should be, but it is telling that a senior Premier League and FAofficial thinks that it would benefit the English national team.

3.9 We are a long way from the kind of player development and youth coaching infrastructure that exists inother major European football countries, as is demonstrated by the performance of the England team at lastyear’s World Cup.

3.10 Nor do we utilise the game’s great former players as we should. Franz Beckenbaur, the former WestGerman international player and manager is a senior figure within the DFB (the Deutsche Fußball-Bund, orGerman Football Federation) and a member of the executive committee of FIFA (the Fédération Internationalede Football Association). Former French great Michel Platini was co-president of the organising committee forthe 1998 World Cup in France and is now president of UEFA and a vice-president of FIFA.

3.11 If supporters are to play a real part as stakeholders in the game as envisaged by the Government, boththe FSF and Supporters Direct must be properly funded by the game. This has been recommended by asuccession of independent inquiries going right back to the Chester report in 1968, as well the Football TaskForce in 1999 and reports by the All-Party Football Parliamentary Football Group. The FSF received supportfrom the Professional Footballers’ Association (PFA) before a new arrangement was introduced four years agogiving us £75,000 per year from each of the PFA, the Premier League and the Football Association.Unfortunately that arrangement ceases in summer 2011.

3.12 The PL and PFA contributions are to be replaced by a new Fans’ Fund for which we will also be incompetition with other organisations in a situation where it appears that the Fund may be under-financed tomeet existing commitments. Furthermore, the new fund will focus on time-limited projects whereas much ofthe work of the FSF as a democratic, representative supporters’ organisation, is not, by its nature, project work.There is also a requirement to seek matched funding from elsewhere. Whilst we have been working to do so,in practice such sources of funding are difficult and time-consuming to obtain—particularly in the currenteconomic climate—for the kind of projects envisaged by the Fans Fund. We do not know if the contributionfrom the FA will continue beyond summer 2011.

Recommendations— Further reforms of FA governance, starting with the appointment of two new independent FA main

board directors.— Continued adequate funding by the game of the FSF and Supporters Direct.

4. Debt in Professional Football

4.1 It is an irony that at a time when the professional game has massively increased its income from mediarights and commercial/sponsorship agreements, more and more clubs throughout the United Kingdom arebecoming legally insolvent.

4.2 Her Majesty’s Revenue & Customs (HMRC) has had to accept substantial losses to the public purse asa consequence of clubs going into administration. Since the FA created the Premier League in 1992, there havebeen no fewer than 64 (Beech, CIBS, 2008) insolvency events in the three divisions of the Football League.This reflects to some extent the negative consequences of the huge imbalances of wealth between differentlevels of the football pyramid, which is an incentive for financial irresponsibility as clubs strive to reach ormaintain themselves at the next level. The Premier League has now experienced its first insolvency atPortsmouth.

4.3 Not all debt problems arise from overspending. Prior to the leveraged buy-out in 2005 and subsequentde-listing of Manchester United had no long term debt but now has over £500 million of such.



4.4 This debt has done nothing whatsoever to improve the club on or off the field. Some £260 million hasflowed out of the club since 2005 in debt repayments, all of which was loaded onto the club balance sheet bythe new owners having been contracted to pay for their purchase of the club. The Glazer family has personallytaken out at least £20 million over five years.

4.5 A similarly highly leveraged takeover by the American investors Tom Hicks and George Gillett ofLiverpool almost led to the club’s bankers seizing control of the club’s shares. The Royal Bank of Scotlandinsisted that the club be sold to clear its debts, almost all of which was transferred to the club following theleveraged buy-out, in direct contravention of pledges made.

4.6 Debt itself, intelligently incurred, prudently managed and invested in assets such as stadia and training/coaching facilities, is not a bad thing per se. However, debt which is used to redress annual operating losses,as it is in case of many clubs, is the road to financial instability, rather like paying your mortgage by credit card.

4.7 The football authorities have failed to adopt and enforce strong enough rules on debt load andmanagement to secure clubs as sporting and cultural assets.

Recommendation— New rules to inhibit leveraged buy-outs and curb disproportionate debt.

5. Government Intervention in Football

5.1 Successive Sports Ministers and Culture Secretaries in both the previous Labour and current Coalitiongovernments have expressed concern at the apparent inability of the football authorities to introduce lastingreforms to protect the game and give the FA the structure and authority it requires to discharge its functionsas the guardian of the game.

5.2 The calls for government regulation or intervention and oversight arise from a sense of frustration at theapparent inability of the game to cure its administrative ills unaided.

5.3 The FSF hopes that the Committee and Government ministers will want to play an active part in ensuringthat the right regulatory framework exists in the game, supported by an appropriate and proportionate statutoryunderpinning. This must respect the rights of football to organise itself as part of civil society. On the otherhand when it expects and receives Government support as the national game, football cannot expect to beabove any legal accountability.

6. Lessons from Other Nations and Sports

6.1 The FSF believes that the internal self-regulatory regimes applied in professional football in France andGermany have much to commend them. They are not perfect but it is no accident that of the four biggestfootball nations in Europe, Germany’s Bundesliga is the one with the least financial problems and also themost competitive. It is also better attended and has much cheaper matchday prices than the Premier League.France has also taken significant strides to address the constant financial problems that plagued the game there.

6.2 The regulatory licensing regime employed by the Deutsche Fußball Liga, responsible for the Germangame’s two elite national professional divisions, has much to commend it. If clubs fail the stringent financialviability tests placed upon them their professional licence is revoked and the club concerned automaticallyrelegated to the semi-professional regionalised third tier. In practice the “death penalty” of relegation onfinancial grounds acts as a sufficient deterrent to prevent the insolvencies which plague the game here.

6.3 We also commend to the committee’s consideration the administrative reforms introduced by theAustralian Football League, the governing body of Australian Rules Football. In 1985 the AFL (then knownas the Victorian Football League) replaced its former board of directors with the Commission.

6.4 The Commission comprises eight non-executive commissioners, a non-executive chairman and a full-time chief executive. Commissioners are elected by the 16 AFL club but may not hold any club position.Commission members include business people, a senior trade unionist and a judge.

6.5 The Commission has absolute discretion. Its decisions can only be overturned by a vote of three-quartersor 12 of the 16 AFL clubs. This system has not been without its controversies but it allows the Commissionto run the game unhindered by minority or factional interests. The Commission has overseen the expansion ofthe code’s elite professional competition from the state of Victoria to New South Wales, Queensland, SouthAustralia and Western Australia. The only state without an AFL team so far is Tasmania.

6.6 Under AFL rules all clubs have a duty to fund and promote the grass-roots game in their communitiesand states. The AFL Commission model has seen the game expand and grow to become the leader amongstAustralia’s four football codes (Australian Rules, rugby league, rugby union and football). The National RugbyLeague is about to adopt the commission model of governance. Interestingly, all 16 AFL clubs are wholly ormainly owned by their members and/or the state semi-professional leagues.



Recommendations— Government to intervene as a facilitator to ensure that essential governance reforms are introduced

by the FA.— A study of models offered by other nations and sports.

7. Conclusion

7.1 We would be delighted to provide further more detailed papers to the Committee. We would alsowelcome the opportunity to give oral evidence.

Football Supporters’ Federation

26 January 2011

Written evidence submitted by the League Managers Association

Summary

The League Managers Association welcomes the opportunity granted to it by the DCMS Select Committeeto make a submission to its forthcoming Inquiry on the Governance of Professional Football.

The LMA is firmly of the opinion that the current system is not fit for purpose and unable to provide theleadership that is necessary if English football is to regain its place at the top of the world game.

There is an overwhelming need for increased accountability, transparency and communication within footballand to make this happen, then fundamental changes will be required.

For this to occur, we believe that the following key changes are necessary;1. A new FA Board structure with independent and executive directors.2. The adoption of good governance recommendations and practices including a role for the Football

Supporters’ Federation, the Professional Footballers’ Association and the League ManagersAssociation in the decision-making process.

3. A unifying strategic plan for the game with input from all stakeholders.4. An increased focus on player development learning from experiences in other countries.5. Enhanced club licensing and regulatory controls including the mandatory adoption of standard

contracts for managers.

1. Positives in the English Game

In many aspects, the professional game has changed significantly for the better over the past 26 years,following the dark days of Heysel and Hillsborough.

1.1 Stadia and Community

Following the publication of the Taylor Report in 1990, football grounds have became all-seater and clubshave regained their place in the heart of their local communities by way of numerous community initiatives,as diverse as numeracy, literacy and crime prevention.

1.2 Racism

Racial abuse has now thankfully been all but eradicated from our stadia, thanks to the Kick it Out campaignand the The FA’s Ethics and Sports Equity Strategy.

1.3 The Economic Health of the Game

The Barclays Premier League is watched worldwide and as a consequence has become a significant financialsuccess. Attendances in both the Premier League and Football League are amongst the highest in Europe,proving that English football is an exciting and vibrant product.

1.4 The National Football Centre

The decision to proceed with the National Football Centre at St. George’s Park is to be commended. It willprovide a resource to develop and train future England players, aspiring coaches and thereby identifying futureEnglish players, managers and coaches. It will form a route to a career path in coaching and for deliveringcourses in association with higher and further education providers for all football related careers.



Issues Facing the English Game

2. Independence of The FA

2.1 With the exception of the Chairman of The FA, the current Board of Directors of The FA is comprisedof members, most of whom are directors of other companies involved in football. This produces a situationwhere directors can be perceived as having conflicts of interest.

2.2 It is difficult to see how, placed in such circumstances, directors of The FA can act simultaneously andconsistently in the best interests of the organisation and how such a situation mitigates against the developmentand implementation of strategic long-term sustainable plans for The FA and English Football as a whole.

2.3 The creation in 2002 of the Professional Game Board (PGB) with its terms of reference concerning thedistribution of FA revenue accrued directly from the professional game has further concentrated strategicdecision making into a forum in which decisions regarding The FA are made exclusively by members of TheFA who are directors of other football companies. Even the Chairman of The FA does not have a vote in theforum of the PGB.

2.4 In 2005, the Burns Report produced its recommendations for a review of The Football Association.Paramount of the 16 recommendations was a new Board of Directors should be created to take fullresponsibility for overseeing the running of The FA and for the delivery of its strategic objectives. It shouldinclude two executive directors and at least two independent non-executive directors and should be accountableto The FA Council. Despite political pressure amongst others, this has failed to be implemented.

3. Governance of the Game

3.1 The recent Birkbeck Sport Business Centre Report “Good Governance in Sport” identified that therecognition and management of stakeholder interests is considered a key element of good governance. Thefour principles of good governance explicitly relate to stakeholders:

— accountability of decision makers to stakeholders;— participation so that all stakeholders are represented when decisions are taken;— responsiveness of the organisation to its stakeholders; and— transparency about the information on which decisions have been based, the decisions

themselves, and the way those decisions are implemented.

3.2 There is a need to review the way that Governance in Football is implemented and to identify short,medium and long-term changes.

3.3 Currently, three key stakeholders are excluded from the decision-making process, the FootballSupporters’ Federation, the Professional Footballers’ Association and the League Managers Association. Forthe credibility of the sport, this has to change and the LMA believes that each of these organisations,representing these key elements in the game, should have a place on The FA Board as a right.

3.4 In addition, if the Professional Game Board of The Football Association is to have credibility, then theLMA would like to see representatives of the Football Supporters’ Federation, the Professional Footballers’Association and the League Managers Association to be included in its composition.

4. A Strategic Plan for Football

4.1 Despite many of the strengths of our game being at club level, the conflict between The FootballAssociation and the Leagues continues to be a significantly destabilising factor.

4.2 Within the game, there is a perception that there is a significant lack of strategy as to how football shouldprogress in England. The LMA would like to see a unifying strategy identifying short-term, medium term andlong-term goals.

4.3 This strategy must be prepared with the agreement of all the game’s stakeholders. The failure toimplement all the recommendations of the Burns Report highlighted this issue.

4.4 There is a further need to work as a team, in respect of International Football/FIFA Politics. An exampleof the problem of a lack of coordination across the game arose during the ill-fated 2018 World Cup Bid. Itwas only at the 11th hour that one of the game’s most valuable assets, the managers, were called upon to assist.The membership of the LMA contains a wealth of talent and over 100,000 matches’ experience. The value ofinvolving Sir Alex Ferguson, Arsène Wenger and many others, at the centre of the bid, was a wonderfulopportunity missed.

5. A focus on Player Development

5.1 The Football Association has no committee, nor any recognized forum to discuss, oversee and nurturethe development of English footballers.



5.2 The Technical Control Board, established in 1996 was scrapped in 2006 and the PGB’s own Youth SubCommittee established in 2007 was dismantled in 2008. Thus there is neither external FA supervision ofAcademies and Centres of Excellence, nor the opportunity for The FA, the governing body of the game inEngland, to develop a long-term, unified strategy for the development of young English footballers.

5.3 In 2000, after some comparative failures at international tournaments, Germany decided that a changeof policy was required. They decided that the number of foreign players in the Bundesliga (50% in 2000) wastoo high and not enough high-quality players were being produced in Germany. Their priority became the eliteprofessional structure, the clubs, while recognising that the national side and the entire German footballeconomy would benefit from a drive to develop talented young players.

5.4 Crucially, the Germans also have a very harmonious relationship between the DFB and their leadingclubs. They all work commonly to promote youth development. After significant investment in youthdevelopment (circa £500 million) they now have nearly 400 national training centres as well as 46 academies,one at every club in their two top divisions. Their clubs and governing bodies all work together for the goodof youth development and their national side.

5.5 They have reached the semi-finals of the past two World Cups, doing so this summer with a squad whoseaverage age was only 24.7 years old, compared to England’s which was 29. Every one of their 23-man squadin South Africa began his career with a Bundesliga club academy. In 2009 they were the European Under-21 champions.

5.6 The same applies in Holland and the relationship between the Dutch FA (KNVB) and their top league(Eredivisie). Holland, a country of 16 million people, has a national team that is number 2 in the FIFA Worldrankings. This did not occur by chance, but by the close co-operation of all the parties. Holland’s decisionmaking forum includes representatives of both the coaching and the playing professions.

6. Club Licensing and Regulatory Control

6.1 The current UEFA licensing system is a step in the right direction, but does not address all of the issuescreated by “overseas ownership”, including the number of clubs owned by offshore companies outside thecontrol of UK legislation.

6.2 In addition, the LMA believes that the game’s ‘Fit and Proper Person Regulations’ also needconsolidating and strengthening.

6.3 Furthermore, there is a need for better employment regulations within the professional game. The numberof managers and coaches dismissed after only a short time in post continues to damage the credibility of thesport. Statistical evidence suggests that the gains from changing football managers are marginal, if indeed thereare any at all, and without doubt the sacking of managers is a costly business to football clubs. The lifeexpectancy of a sacked manager is now 1.4 years. In League 2 it is now less than 12 months. The saddeststatistic, however, is that 50% of first time managers who are sacked will never work in the profession again,in any capacity. What encouragement is this for players approaching the end of their careers to obtain theircoaching qualifications?

6.4 The LMA is firmly of the opinion that standard contracts need to be introduced for the employment ofmanagers across the leagues. These are not documents designed to work solely in favour of the employee, butto give certainty to the employer/employee relationship. Among the advantages of its introduction wouldinclude the end of misunderstanding on key points and the promotion of clarity and consistency from clubto club.

The League Managers Association

The League Managers Association is the collective, representative voice of all professional managers fromthe Barclays Premier League, the npower Championship and npower Leagues 1 and 2.

Formed originally in 1919 as the Football League Secretaries’ and Managers’ Association, the LMA cameinto existence in 1992, during the period when football in England was undergoing major change, includingthe split of the FA Premier League from the rest of the Football League, and the introduction of satellitetelevision coverage of football by Sky Television.

The LMA has continued to develop its support and service offering to its members and its influence withinthe game. The LMA has become an integral and credible part of the football industry and as football continuesto present new challenges, the LMA will grow and adapt to achieve its aims.

The six major aims of the LMA are:1. To represent the interests of the professional football managers to The Football Association,

Premier League, Football League and all the game’s other governing bodies and stakeholders.2. To promote and publish the views of the professional managers on key issues within the game.3. To protect the rights and privileges of its members.4. To deliver and grow a range of support services to the managers both professionally and personally.



5. To embrace and deliver strong commercial relationships with the game’s sponsors and partners.6. To encourage honourable practice, conduct and courtesy in all professional activity.

January 2011

Written evidence submitted by the Department for Culture, Media and Sport

1. The Department is pleased to respond to the Select Committee’s call for evidence on their Inquiry intothe governance of football.

2. The Inquiry is a valuable opportunity to take stock across a range of issues that affect the way that footballis run and to ensure that our national game is in the best possible place to make the most of its strengths andto address the challenges it faces. We look forward to following the Committee’s Inquiry and responding totheir recommendations. We will be happy to support the Committee in any way it feels appropriate.

3. It is our honour and privilege to have the eyes of the sporting world turned firmly on us as we buildtowards what we hope to be one of the best ever Olympic and Paralympic Games. Such attention brings manyresponsibilities. One of those is to ensure that the organisation of sport in this country—and not just thetraditional Olympic sports—is fully fit for purpose. Working with the sports themselves to ensure that thegovernance arrangements are as strong and effective as possible, that they reflect the best possible practice, andthat they reflect the identity and expectations of a modern population, is a key part of responding successfully tothat attention.

4. It is not for any Government to run sport or to micro-manage its future. All sport—not least football—isbest run by dedicated professionals working within strong and effective independent and accountableorganisations.

5. At the same time Government, by virtue of public expectation and through the legitimate interest in theuse of public funds, has a genuine role to play in ensuring that those sports organisations are working togethereffectively for the long term good of the game. The Department has committed to addressing the issues ofgovernance and supporter involvement within its Business Plan.

6. There is little question that football in this country has a strong claim to be one of the greatest nationalsporting and commercial success stories of the last two decades. To think back to where football was at theend of the 1980s in terms of violence, racism, the state of grounds and the quality of supporter experience isto be shocked by the comparison with today’s game. To get where we are today—not without problems, butdemonstrably in a completely different place—has been the result of the dedication, skill and professionalismof people in the Football Associations, the Leagues, of supporters, players, the police, anti-racism campaignersand many others.

7. Those changes have been part of bringing about the kind of stability and popularity that has enabledprofessional and amateur football to thrive.

8. In Wembley we now have a genuinely world-class national stadium that bears comparison with the bestin the world. In time this will be matched by the National Football Centre at Burton which we hope willprovide the centre for coaching and national development for years to come. At junior level the England Men’sUnder 17 team are European Champions, the men’s and women’s Under 21 teams reached the EuropeanChampionship Finals. The women’s professional game has been supported by the FA with the introduction thissummer of a new Super League.

9. The 2010–11 Premier League season is shaping up to be the one of the most competitive ever. Theproceeds of the sale of television rights has enabled over £110 million to be invested in community goodcauses since 2007, helping engage with around 14 million people. The Premier League has become the mostwatched sporting league anywhere in the world, followed by over 500 million people in 202 countries. Inthe process the Premier League has been given a Queen’s Award for Enterprise for their contribution tointernational trade.

10. The Football League attracted over 17 million attendances last year. The Championship is the 4th bestattended football competition in Europe—ahead of the top leagues in Italy, the Netherlands and France. TheLeague has recently signed a new £264 million three year television deal and the Football League Trust hasreached over 1.6 million young people under 16 with programmes to encourage sporting participation.

11. That success is not accidental. It is down to the hard work of those in the Football Association, thePremier League and the Football League and many others. There is no doubt that they do not always get thecredit they deserve.

12. At the same time, there is absolutely no room for self-satisfaction. The struggle against racism andviolence is never completely won, but must be an ongoing campaign. And the rapid commercial changes ofthe last two decades, together with supporters’ increasing expectations, has brought new challenges in termsof financial sustainability as clubs chase success; the genuine involvement of supporters; the ability for thefootball authorities to work effectively together to regulate appropriately; the development of new young



players; and the high expectations of the national team. Those are challenges enough, even putting aside lastyear’s England FIFA World Cup disappointments, first in South Africa and then in Zurich.

13. The football authorities in this country are not complacent. In a number of cases they have alreadyresponded to the new challenges by making potentially significant changes to the way that the game is regulatedat the highest levels. The various competition regulators themselves will undoubtedly provide the Committeewith evidence of how they are toughening-up the regulation of the clubs that play in them. The changes inrelation to the ownership of clubs, squad size and make-up, closer scrutiny of financial transactions, and thegrowing interest in putting in place effective approaches to ensuring that football clubs live within their meansdemonstrates that the will to respond to the new challenges of football is not lacking. Separately UEFA’sintroduction of what has been termed “Financial Fair Play” rules for their own competitions has alsoundoubtedly acted to shift the terms of the debate and expectations on the proper role of competition regulators.

14. At the same time, as the Select Committee notes in its Call for Evidence, there remain genuine concernsamongst supporters, and others close to the game, about whether the authorities are always in the best possibleposition to turn their will to respond to the new challenges into the kind of practical action that will make thegreatest possible difference.

15. Despite the undoubted success story of football in this country there are a number of areas which maybe fertile ground for the Select Committee’s Inquiry. The Department has picked out four particular issues onwhich there may be a view that the time is now right for further action.

— Governance. All sporting organisations need strong, effective and appropriate senior-levelgovernance arrangements. The kinds of structures and membership that are appropriate willvary from body to body, and from time to time, depending on their roles and responsibilities.What does not change is the need for the top-level governance arrangements to be robust, toavoid unnecessary conflicts of interest and to include the right levels of independent challengeand expertise. In our view, modern boards should have eight to ten members and includenon-executives.

— Transparency. The football family is a complex one and the relationship between the bodiesand the governance structures is similarly complex. For example, it is unlikely that manysupporters will fully understand the process for confirming new regulations or changing rules,or the degree of challenge to which any changes may be subject. In the current climate, thejudgements taken on the regulations about the servicing of debt, the sustainability of that debtand the penalties which should be incurred for failing to abide by the rules, are understandablyof significant concern to supporters and others. The perception of a lack of clarity in thoseareas is likely to reduce confidence in the decisions themselves, regardless of theireffectiveness. We would be particularly interested in the Select Committee’s view on suchissues and whether the current arrangements are fully fit for purpose. In our view, decision-making structures should be transparent, understandable and open to external challenge.

— Supporters. It is inevitable and unsurprising that a significant proportion of the currentconcerns relate to football’s relationship with its supporters. Rightly or wrongly, there is aconcern that it is generally harder for supporters to be closely involved in their club than inthe past and that there is not yet strong enough encouragement for supporters’ organisations.We would be particularly interested in views on whether there are inadvertent restrictions onsupporter involvement in either club or league regulation and what practical steps can betaken to better encourage meaningful engagement. There appears to be a common feeling thatSupporters Trust ownership has become the last resort for clubs which are on the vergeof dissolution. Whether there are effective means of enabling appropriate engagement andinformation sharing earlier in the process may be a fertile area of interest. Equally interestingwould be a view on the value of opportunities to incentivise supporter involvement via adifferent approach to the treatment of any Government-facing debt.

— National game. It is understandable that given the recent successes of the England Under 17and Under 21 teams, there is growing optimism about how this will translate to the seniorteam in the years ahead. Our view is that improvements in governance could have animportant effect in ensuring that the football authorities are always set up to give the nationalteams the best possible chance of success. For example, it is widely acknowledged thatEnglish football still has some way to go to improving the way it develops young talent incomparison with our major European competitors. In particular, in terms of the numbers offully qualified coaches we have, and an overall strategy for ensuring the right level of skillsand expertise is passed on from the earliest possible ages. Ensuring that each organisationtakes a hard and thorough look together to ensure there are no inadvertent barriers within thecurrent processes or regulations in terms of coaching, player development or availabilitywould be an important step in helping to turn our expectations for the national teams intoreality. 16. I believe that, by working together, the football authorities have the incentive,powers and skills to be able to respond effectively to the new challenges.



16. I want to be clear again that it is not for Government to run any sport. However there is an appropriaterole for Government in encouraging the authorities in either this task or altering the landscape. Where thereare challenges or recommendations that properly fall to Government then we intend to address these fully.

17. The Department looks forward to reading and responding to the Select Committee’s findings andrecommendations. In the meantime, we will be glad to assist the Committee in whatever ways are appropriate.

January 2011

Written evidence submitted by the Football League

This document represents the submission of written evidence from The Football League to the Culture,Media and Sport Committee’s inquiry into football governance. As you will see, it provides a short synopsisof the key issues facing The Football League and the wider game at present.

Formed in 1888 by its 12 founder members, The Football League is the world’s original league footballcompetition and is the template for leagues the world over. With 72 member clubs, it is also the largest singlebody of professional clubs in European football and is responsible for administering and regulating the npowerFootball League, the Carling Cup and the Johnstone’s Paint Trophy, as well as reserve and youth football. Lastseason more than 19 million fans attended League competitions; with millions more viewing matches ontelevision. Off the pitch, the inspiring work of The Football League Trust helped more than 1.5m people in thecommunities in and around its clubs.

The League is a hugely important national institution and has led the way on issues of football governancein recent years. It will continue to focus on protecting the integrity of The League’s competitions going forward,as well as seeking better ways to control costs throughout its divisions.

The League is a broad church, and includes small clubs, with attendances numbering just into four figures,holding membership alongside big clubs renowned on the international stage. Ultimately, The League isgoverned through a democratic process. For new regulations to be implemented, they must be supported byway of a vote by a majority of Football League Clubs, and a majority of Championship clubs.

The League welcomes the Committee’s inquiry and hopes it will provide a much needed independent forumto debate the future of the game in this country.

Greg ClarkeChairman of The Football League

26 January 2011

The Football League—“a global success story”

The Football League is, by a long way, the world’s most successful second tier competition. Last seasonover 19m fans went through the League’s turnstiles, with the Championship remaining the fourth best attendedfootball competition in Europe, ahead of the Italian Serie A, the French Ligue 1 and the Dutch Eredivisie.More people watch Football League matches, including the Carling Cup and Johnstone’s Paint Trophy, thanany other sporting competition in Europe.

Our commercial offering is the strongest in The League’s history. The current television deal with Sky andthe BBC started in 2009, bringing live domestic football back to terrestrial television for the first time since2002. In 2010, npower became title sponsor of The League, replacing Coca-Cola who remain an officialpartner. FL Interactive, The League’s online arm, continues to produce and manage digital products for 84football clubs, providing cutting edge service and generating an increasingly important revenue stream.

Football League clubs occupy a special place in the hearts and history of their communities. Many of TheLeague’s clubs have been in existence for more than a century. This unique status is why The Football LeagueTrust, The League’s own charity focusing on community work, has been so successful in having a positiveimpact in and around its clubs—working with over 1.5million people last season. The work of the Trust ishugely varied, but focuses on five key areas: sports participation; social cohesion (including crime reduction);the environment; education; and health. For each area, the Trust harnesses the power of football to change lives.

Football Governance

The Football League has led the way in recent years in improving the good governance of football inthis country.

The League pioneered the use of “Sporting Sanctions”, with a 10 point penalty applied to any club enteringadministration. It also pioneered the publication of club spending on Agents Fees.

The first “Fit and Proper Persons Test” in English football was introduced by The League in 2004, banningindividuals who fail to meet a number of clear objective checks from being a director of a Football Leagueclub. This has been strengthened several times since, and in the summer of 2010 was amalgamated with the



Premier League’s own test to create one unified “Owners and Directors Test” for professional football inEngland. An Annual Reporting process for all club directors has also been implemented, as well as priordisclosure of new directors and a prohibition on persons taking up the role until clearance is received fromThe Football League. A restriction has also been introduced restricting those owning an interest in a club whenprohibited from entering the UK, or unable to have funds available in the UK for their own benefit. Clubsmust also publish (usually on their website) the identity of any individuals owning 10% or more in their club.

The League was the first in football to appoint independent non-executive directors. Currently, two membersof an eight person Football League Board, including an independent Chairman of The League, are independentof formal links to football clubs.

The League has also sought to improve its clubs’ costs controls. All clubs must include “divisional pay”clauses in their contracts indicating what the player will be paid in each division he might play in during theterm of the contract. A Salary Cost Management Protocol (SCMP) was introduced in 2003 for League 2,limiting club spending on player wages to 60% of turnover. Clubs provide budgetary information to TheLeague that is updated as the season progresses and any player registrations that take clubs beyond the thresholdare refused. The Protocol has proven successful, with the vast majority of clubs in the division spending lessthan 45% of turnover on players’ wages. League 1 clubs are working towards shadowing the Protocol thisseason, allowing clubs to trial the system and tailor it to their divisional needs and requirements before decidingwhether that measure is appropriate for their division.

In 2009, pioneering new financial regulations relating to tax payments were introduced. These provided TheLeague with written permission to monitor the PAYE of its clubs directly with HMRC and impose transferembargoes in instances where clubs fail to meet their tax debts as and when they fall due. These regulationshave had a hugely positive impact, reducing the HMRC debt of Football League clubs from £9.6 million inAugust 2009 (for 29 clubs) to £400k in August 2010 (for 4 clubs). HMRC have welcomed this innovation andhas since implemented similar arrangements with other sports, including the Premier League.

In August 2010, clubs agreed to additional financial reporting requirements for Championship clubs, in linewith Premier League regulations. These include the provision of “future” financial information relating to thesubsequent season and the need for clubs to demonstrate no overdue transfer fees, compensation fees, keyemployee wages or PAYE/NIC. Clubs in default, or clubs with business plans that cast doubt on their abilityto fulfil fixtures or meet their ongoing obligations, will be required to submit to budget constraints, includingthe possibility of a registration embargo. The change of ownership of more than thirty per cent will also triggerfresh reporting requirements.

The Football Association

The League is represented within the Football Association through its membership of the Main Board (2seats) and Professional Game Board. The League is determined to continue to contribute to the betterment ofthe domestic game going forward.

Historically, League clubs have made a significant contribution to the Football Association through theircommitment to participate within the FA Cup, a vital income generator for the Association. The League alsoplays an important role in the membership of the FA Council and committees.

The Football Association should be the guardian of the national game in England, seeking to protect itswider interests. However, to be successful, this must be done in conjunction with its key stakeholders, of whichThe League is one, and be inclusive to the needs of a successful professional game.

The Football League should continue to be treated as an autonomous stakeholder of the FA. It is by far bestplaced to regulate its member clubs as it is in effect The League’s competitions that keep clubs operational.When its decisions or competitions do not impinge on the national interest, it should be able to service theneeds of clubs as required, both commercially and operationally.

The League would welcome the appointment of at least two independent members to the Board of TheFootball Association. The League’s experience of appointing independent Board members has clearlydemonstrated that such a model can enhance an organisation’s governance structure.

Youth Development

The poor performance of the England team at the last World Cup has led to a focus on the domestic youthdevelopment system. For their part, Football League clubs are committed to developing the next generation ofEngland stars from within the local communities in and around its clubs. They are at the forefront of developingyoung playing talent for the domestic game and are investing more than £40 million a season in thisimportant area.

Clubs within The League make a significant contribution to the England national team at all levels. England’slast full international saw 12 out of the 23 players having been developed in full, or in part, by clubs presentlywithin The Football League. The same applies to 46% of England youth internationals (England U16–U21).



The fact that The Football League has the biggest player development programme in world football is ahuge advantage to English football. No other competitor nation has a professional system outside their top-flight league that is capable of delivering a system on this scale. More than 8,500 young players between theages of 8 and 18 are presently on the books of Football League clubs.

The Football League was the first football body to introduce a “Home Grown Player” rule. The rule requiresat least four players from a club’s 18 man match day squad to be registered domestically for a minimum ofthree seasons prior to their 21st birthday. Last season, over 900 players, aged under 21, made first teamappearances within The Football League.

It is important that Football League clubs are fairly compensated for developing young players when theymove on to “bigger” clubs. Fair compensation encourages clubs to invest in youth development and createsopportunities for more young players to play first team football.

The Football League also provides opportunities for young Premier League players to gain valuable firstteam experience through its loan system. In recent seasons, The League has added greater flexibility to its loanrules to encourage clubs to offer more opportunities to young players.

Off the pitch, League Football Education (LFE) is a partnership between The Football League and TheProfessional Footballers Association, which works to ensure young players gain additional qualifications andlife skills to assist them should they not make the professional grade. In total, the organisation delivers theApprenticeship in Sporting Excellence programme to twelve hundred 16–18 year old apprentices within the 72Football League Clubs. LFE manage all elements of the education programme and deal with safeguarding, aswell as the provision of an extensive exit and progression package.

In 2010, LFE apprentices achieved 95% retention and 93% academic achievement of the full apprenticeshipframework. These are outstanding results, and reflect the high standards set by LFE, as well as the commitmentof clubs.

Club Finances

The League sets a framework of regulations that aim to promote good governance and protect the integrityof competitions. It does not manage the finances of its individual clubs—that is the job of their individualBoards of Directors—but it does monitor them under certain situations.

Financially, League clubs are earning and spending more than ever. The Football League is distributingrecord amounts direct to clubs from the centre as a result of its commercial activity. On average this season,Championship clubs will receive circa £2.5million from The League; League 1 clubs circa £700k; and League2 clubs circa £500k.

Alongside these, the Premier League make substantial “Solidarity Payments” direct to clubs to offset thelarge parachute payments provided to assist their clubs when relegated from the top tier. This season, thesewill amount to approximately £2.2 million per Championship club not in receipt of parachute payments;£324.5k per League 1 club; and £214.5k per League 2 club.

Football League clubs are not normal businesses. While most could be officially defined as SMEs, they playa much more fundamental role at the heart of their local communities. The majority are owned by fans orgroups of fans wanting to invest their hard earned monies to help their club and local town or city to achievea dream.

The Football League is continuously working to ensure clubs understand that the best way to run a footballclub is to create a sustainable business model that sees a club living within its means.

Clubs should pay their debts on time and in full. To do otherwise would in effect be cheating, thus gainingan unfair advantage over those who are doing so. However, the threat of a footballing penalty if a club goesinto administration has had a positive impact, and there is clear acceptance within the game of the damageadministration can do to a club’s performance both on and off the pitch.

While there is considerable debt owed by clubs within The Football League this does not arise fromleveraged buy outs as such practice is uncommon within The League. Instead, it relates to the rolling up ofaccrued trading losses, financed historically by owners and directors.

It should be noted that the lack of economic value created by Football League clubs means the capitalmarkets are often closed to them. For example, only two Championship clubs made an operating profit in 2009.As a result, clubs are becoming more reliant on an operational model that requires benefactors or entrepreneurswith a high risk tolerance.

Cumulative player wages per division have risen continuously, both within The Football League and thePremier League. The Championship trend is particularly aggressive, rising from £103 million in 1999–2000 to£223 million in 2009–10. The trend in League 1 is less aggressive (from £37.6 million in 1999–2000 to £54.3million in 2009–10), but still of concern. The League 2 trend is flatter (from £20.7 million to £22.8 million)and reflects the success of the Salary Cost Management Protocol.



However, to demonstrate the true impact of such wage increases on League clubs, it is important to viewthem alongside the growth of club turnover during the same period.

Table 1

COMPOUND GROWTH WITHIN THE FOOTBALL LEAGUE BETWEEN 1999 AND 2009 (SOURCE:DELOITTE ANNUALREVIEW OF FOOTBALL FINANCE)

1999 2009 Compound Annual Growth over 10 years to 2009Turnover Wages Turnover Wages

(£k) (£k) (£k) (£k) Turnover Wages

Champ 6,720 5,343 16,385 14,363 9.3% 10.4%L1 3,602 2,866 5,100 4,100 3.5% 3.6%L2 1,387 1,317 2,800 2,000 7.3% 4.3%

Please note that figures within Table 1 are average per club and include all wages (playing and non-playingclub staff).

Such a comparison shows that while the trend at a Championship level is worrying, it remains around apercentage point above the overall growth in turnover. However, in an ideal world, wage increases would notdirectly track the increase in turnover, allowing for more general investment in clubs.

The recent economic downturn and the threat of public sector job cuts, increased taxation and inflation, haveall increased the need for football clubs to reduce their costs and to live within their means.

The League supports self regulation within the game aimed at better controlling costs. The Salary CostManagement Protocol within League 2 is testament to the impact such measures can have.

However, it is clear that player wages and related costs within The League, and the Championship inparticular, follow player wage trends within top flight football internationally. As a result, the escalation ofwages is an issue that requires leadership on an international stage if real impact is to be made.

The League welcomes the regulatory changes being made at the top of the game in this country and inEurope, and is pleased that its Championship clubs have committed to implementing financial reportingmeasures. While the true impact of such regulation will not be known for a number of seasons, it should leadto a more sustainable financial environment for League clubs.

This season, clubs are without doubt starting to feel the “squeeze” suffered by other industries in recentyears. On average, there has been a small reduction in attendances (down 3% on last season to date) with theadditional consumer spend at matches also falling. Evidence also suggests that the commercial marketplace forclubs is becoming more difficult, with hospitality and sponsorship income under heightened pressure.

Clubs have responded to the deteriorating local economic environment in recent seasons. This includes betterpractice in regard to the length of player contracts. The League has also introduced “Squad List” regulationsto limit the number of players aged over 21 a club may register.

Table 2

LENGTH OF PLAYER CONTRACTS WITHIN THE FOOTBALL LEAGUE1 year 2 year 3 year Other

05/01/11 05/01/10 02/01/09 05/01/11 05/01/10 02/01/09 05/01/11 05/01/10 02/01/09 05/01/11 05/01/10 02/01/09

Champ 20.9% 19.7% 18.3% 30.8% 28.1% 31.5% 38.9% 38.6% 38.7% 9.4% 13.6% 11.5%L1 26.4% 25.6% 26.7% 48.6% 46.4% 43.4% 21.0% 24.3% 26.1% 4.0% 3.7% 3.8%L2 45.9% 42.6% 33.5% 45.5% 44.4% 54.4% 7.5% 11.6% 10.7% 1.1% 1.4% 1.4%

Preserving a Successful Football League

While, in the main, The League is confident that it can continue to govern its competitions and clubs to ahigh standard, there are certain issues on which it would welcome the support of the Committee:

— There is no doubt that The League and its clubs must do more to control costs. It is anunsustainable situation for any club to spend more on wages than its turnover, thus making itoverly reliant on investor funding. While many clubs have improved their internal costcontrols in recent years, some have not. It is imperative that The League and stakeholderscontinue to keep up the pressure on all clubs to live within their means—ensuring they canremain in existence for another century or more at the heart of their local communities.



— The League is supportive of cooperative ownership within football as long as it remains avoluntary option, rather than an imposed ownership model. There is strong evidence that suchan ownership model can be successful at some clubs, but unworkable at others. The Leaguestrongly believes that the best way to encourage fan ownership in football is to make clubfinances more sustainable. Fans’ groups cannot often meet the gap that exists between revenueand expenses, and thus experience difficulties in financing the ongoing commitments of aclub. The League would be supportive of changes to the tax system that would make it moreefficient for fans to purchase their clubs; as long as there are no delays built into the systemthat could be detrimental to clubs seeking urgent cash injections.

— The Football League is supported by the Premier League by way of a significant multi-million pound “Solidarity Package” designed to off-set the parachute payments for clubs beingrelegated from the top tier. The League is very grateful to receive such a package, which isalso helpful in closing the growing financial gap between the two leagues. The League wouldencourage the Select Committee to voice its support for an ongoing “Solidarity Package”from the Premier League and to note its importance in the finances of League clubs.

— The ongoing support of Government funding through the Skills Funding Agency for football’sapprenticeship programme, overseen by League Football Education, is critical to protectingand maintaining the high standards set. The League would encourage the Select Committeeto voice its support for such an important funding stream that ensures youth players gainadditional qualifications while within the game.

— At present, domestic football matches are not shown live during the Saturday 3.00 pm“closed” period. The streaming of live domestic games from foreign satellite feeds has anegative impact on those participating in the game at a grassroots level on Saturdayafternoons, as well as crowds at Football League grounds—reducing the much needed gateincome of lower league clubs. The League would encourage the Committee to voice itssupport for a continuation of the closed period on a Saturday and for its assistance in haltingthe streaming of televised matches at 3.00 pm on Saturdays.

— The football creditors’ rule is a much maligned and misunderstood area of policy within thegame. It is far too simplistic to say it is about ensuring footballers are paid while local smallbusinesses are not; and a submission of this type cannot properly set out all the justificationsfor the rule. What we can say is that the rule is fundamentally important in protecting theintegrity of the competition and applies to all clubs equally, whether insolvent or not. Footballclubs and players operate in what is essentially a closed trading environment. No club shouldbe permitted to gain an unfair sporting advantage by failing to honour commitments (financialor otherwise) within the game. To allow otherwise in the context of financial obligationswould be to expose all clubs at all levels of the pyramid to a “domino” effect of financialdistress. We also recognise the importance of other creditors—those local businesses whohave supported the club in its activities through local supply agreements—and look to clubsto secure a CVA as part of any exit from insolvency. The CVA has a number of statutorysafeguards designed to protect the rights of the unsecured creditors, providing them with aplatform to decide whether an insolvent club should continue or not. If the football creditorrule was removed, there is a greater risk of clubs ceasing to exist, undermining the rescueculture promoted by successive Governments and devastating local communities. But for therule, it is likely that a number of those clubs who have undertaken financial restructuringwould not be alive today. We would encourage the Committee to ensure it fully understandsthis policy and its importance to the game, and that the alternative could well see FootballLeague clubs going out of business.

— The introduction of “transfer windows” by FIFA following discussions with the EuropeanCommission caused a collapse in the domestic transfer market which, in turn, frustrated thetraditional method of re-distributing wealth within the game. FIFA’s initial objective was toprovide contract stability across international borders in an attempt to prevent a minority offootball markets from dominating the market for playing talent. It is entirely questionablewhether this has worked, yet FIFA remain opposed to relaxing the current regime for fear thatplayers will seek unilaterally to terminate their contracts early in order to exploit opportunitieselsewhere. It is with this background in mind that individual countries have been preventedfrom operating the principle of subsidiarity on a domestic level. It is clear, therefore, that itwould require political intervention in order for there to be any change in this position andThe League would encourage the Committee to voice their support on this matter. It is anirrefutable fact that the denial of an ongoing source of transfer income has helped polarisefootball finances further. A return to an “open” registration system where domestic transferscan be concluded throughout the season would help redress this position and reinvigorate theprinciple of wealth redistribution throughout the game.



— The League Cup continues to underpin the finances of English football by being one of themost important means of wealth re-distribution. Each season it generates around £50 millionof income, two-thirds of which stays within The Football League. Given its importance inre-distributing wealth from the Premier League, The Football League would encourage theCommittee to voice its support for the competition, as well as the continued allocation of aEuropa League place for its winner.

League clubs are committed to developing local talent and providing first team opportunities for the nextgeneration of England stars. However, for this to continue there must be an incentive of fair compensation forthe club that has invested in the player’s development, should another club wish to sign that player. The Leaguewould ask the Committee to put on the record its support for a compensation system that allows a fair returnfor clubs investing in and developing young players.

— In recent years The League has seen attempts by some police forces to increase the incomecollected from clubs for “special police services”. Football supporters, who already faceheightened taxation, should not be asked to pay, in effect, a new “police tax”. The Leaguewould ask the Committee to support Football League clubs in their efforts to prevent thembeing seen as easy targets for revenue generation at a time of budget cutbacks for policeforces and heightened taxation for clubs.

In Summary

— The Football League has demonstrated a proactive and pioneering approach to footballgovernance in recent years, and is realistic about the problems that presently exist withinthe game.

— The good work of The League in recent years does not mean it can demonstrate complacencygoing forward. It is determined to continue to raise the bar even higher and to work with itsclubs to focus on good governance, and protect the integrity of its competitions.

— The League welcomes any positive engagement from Government and stakeholders that isaimed at improving the domestic game, and which preserves the success of a professionalgame that is enjoyed by millions of fans. However, it does not believe that Governmentintervention is appropriate, at this time.

— When focused on clear objectives, football can work together to create an impactful regulatoryregime. The League welcomes the recent regulatory changes within the top tier, and iscommitted to integrating similar practices within its Championship clubs, as well ascontinuing to strengthen its Salary Cost Management Protocol.

— It is vitally important that football does everything possible to ensure that wealth is fairlydistributed throughout the game. The League encourages the Committee to voice its supportfor The League Cup, the “Solidarity Agreement”, a reopening of the domestic transfer market,and a fair compensation system for the development of young players. All of these will assistin narrowing the increasing financial gap between the Premier League and The FootballLeague.

— The Football League will provide its full resources to the Committee to assist in the deliveryof a report that is in the national interest.

Written evidence submitted by Dave Boyle

Summary

— Debates about poor governance in football, and concern over clubs poor performance have provenintractable for almost 20 years.

— In response to that intractability, government has been consistently prevailed upon to intervene,sometimes to resolve the impasse within football, sometimes to bypass the game altogether throughcreating an independent regulatory authority.

— Sport in the UK had developed in such a way as to leave Ministers or Parliament without any specificpowers to guide their response. As a result, they would first have to create the means by which theywould then act.

— Much of the criticism of the FA fails to account for the lack of legal power for its actions, especiallywhen set against the legal basis of clubs as sovereign enterprises.

— By following the example of other countries—and more recently the EU—Parliament could legislate tofinally provide a framework for football (and indeed all sports) to better navigate their way in the 21stCentury with tools designed for the task, rather the 19th century structures they currently have.

— Parliament could pass a Sports Act which:— Recognised that sport was a specific and discrete sector of cultural life which was in crucial areas

free to be treated differently than other commercial sectors.



— Provided legal certainty to governing bodies for their regulatory role, whilst providing the meansto ensure those governing bodies were acting properly, proportionately and in the wider publicinterest.

— Created specific legal vehicles for sports clubs that enable them to better balance their commercialactivities with their sporting and social purposes.

— By doing so, they would unjam the debate in football by ending a shadow debate about whether theFA can act, freeing it to debate the more relevant issue of whether and how it should.

— Individual clubs and communities would be able to—over time—transform their clubs into enterpriseswith asset protection, transparency of operations and stakeholder involvement as they saw fit.

— Parliament and Government would have the means in future to act in limited and proportionate way toresolve issues when called upon by stakeholders, with clear understanding of their powers to act.

Personal Submission

1. In my professional capacity I am Chief Executive of Supporters Direct, where I have worked for 10 years.This is a personal submission covering issues beyond the immediate purview of the evidence submitted bySupporters Direct.

2. Discussion about what to do about football must eventually become discussion about how to do it.Identifying things the FA should do presupposes that it has the ability to do that, so matters of policy inevitablybecome governance issues.

3. Over the past 15 years or so, the issue of governance—and by extension, ownership and financialmanagement—has been a perennial issue. In 1997, the incoming Government formed a Football Task Force,responding to public concern. The outcome of that process on these key issues was unsatisfactory,notwithstanding the creation of Supporters Direct and the Football Foundation and their excellent work.

4. In the same period, the FA has had six Chief Executives, as is now on its 4th Chair. The issues presentin 1997 are essentially the same in structure and cause as those we face today.

5. Throughout the period, advocates for change in football have looked to Government for assistance becausethe closed governance of the structures of football leave no avenue for change. It is impossible to attend, placeitems onto the agenda of or lobby, at any of the governance fora of the authorities, which are private limitedcompanies in law.

6. However, the demand for government action was often ill-matched to the policy apparatus investigatingits achievement. In short, government has been unclear as to what it might want to achieve, and thereforeunclear as to how to do it.

7. Sitting behind this has been a wider view in politics and economics disinclined to interfere in the conductof legally-private enterprises, a view overlaid with the not unreasonable hope that football could and shouldbe able to resolve these issues of its own accord.

8. It is clear that as much a factor as the political will within Government and Parliament to act is the needto identify an action that either can or should take.

9. As a legislature, Parliament can enact provisions governing the conduct of life in this country, within aframework managed by the various treaties the UK has acceded to.

10. It is in this area that action is needed, and only Parliament can take it.

11. Whilst there are a number of lawyers specialising in sports law, there is no such thing as Sports Law inthe way we might speak of Charity Law, or Corporate Law.

12. Parliament has created a legal framework for enterprises under the company law framework, and updatesit every 20 years or so. Charity law has a similar body of statute. To a lesser extent, statues also recognise thespecial status of educational institutions, railways, co-operatives, hospitals and pubic bodies and others.

13. These statutes provide a framework for registration and operation of the entities so registered, committingthem to running their affairs in a way consistent with the wider good conduct and performance of those sectors.

14. In return, all provide certain boundaries of law, and means that other statutes that operate more widelymight operate differently, if at all, in that area, recognising their special circumstances.

15. For example, those on the governing council of a Charity cannot be paid for their time, even if thoughthe charity might be a company allowed to pay Directors under company law.

16. No such provisions exist for sport. Sport operates according to its own internal framework, which is inturn managed by the statutes governing whatever corporate vehicle the entity in question happens to be.

17. Governing bodies are private companies, mostly limited by guarantee with members, rather thanshareholders. Aside from basic provisions, their role as institutions which can set criteria that members mustcomply with is backed up by their legitimacy as a governing body (and thus the willingness of the community



of the governed to assent). There are some precedents that give comfort to governing bodies, but these arevulnerable to new case law.

18. For example, the Meca-Medina case sent shockwaves through European sport. Prior to this case,precedent held that as long as sports bodies pronounced regulations to achieve sporting goals, the economicconsequences of those rules on participants was secondary and not normally actionable. In finding against twoswimmers banned for substance abuse, the European Court of Justice nevertheless conceded that the sportingcause was not sufficient in itself to override Treaty provisions relating to economic matters.

19. As football has become increasingly commercial, the potential threats clubs have seen to those revenuesfrom regulation has grown, as have their resources to fight such rules. The impact on regulators has been tomake them fearful of regulating in certain ways lest they invite a legal challenge which if lost would underminetheir entire basis of authority.

20. For example, when Wimbledon FC wished to move its stadium from South-West London to MiltonKeynes, the Football League refused to sanction this as it deemed football clubs to be traditionally associatedwith particular geographic communities, links that would be threatened by such relocations. They were alsomindful of the possibly of clubs being destabilised (and gaining unfair advantage) if areas incentivised teamsto relocate using tax advantages, new facilities and so on. The rules were designed for purely sporting reasons.

21. However, Wimbledon FC lobbied fellow clubs that the league was unfairly prohibiting their right as asovereign business to trade wherever it best saw market opportunities and that they were prepared challengethe League in the courts on this point.

22. The League’s funds were already in jeopardy following the collapse of their TV partner, ITV Digital,and nervous clubs worried about the potential costs they would be asked to pay should the case be fought andlost. As a result, they lobbied the Football League to revise their position, and the result was that the matterwas referred to a FA Commission who ruled in the club’s favour.

23. The key point here is that the League had a long-standing sporting tradition, underpinned by theirauthority as competition regulator, but they were unwilling to take the risk of losing, unsure as to how a givenjudge might proceed on so fundamental a matter.

24. Whilst the idea that unhappy clubs could use law to overturn regulation is probably more rhetoricallyinvoked than real, it acts as a serious disinhibitor to action.

25. Another threat often levied at regulators is the threat of a breakaway, where disgruntled clubs form newleagues without those rules causing the unhappiness. As regulatory bodies derive their power from membership,rather than Parliament, this is a serious threat.

26. The net effect of this is to emphasise the commercial operation of a club over its sporting and socialroles, as the former has a body of law in its favour, whilst the latter must be enforced by unconfident and oftencomparatively poorer regulatory bodies.

27. The situation elsewhere is instructive. Many countries legislate to enshrine their governing bodies as thelegally-binding authority on sporting matters. They are not exempt from legislation governing employee rights,or health and safety and such like, but the designation allows the special character of sport to be protected andregulated for. The new Lisbon Treaty recognises the specificity of sport for the first time, building on previousdeclarations by the Member States in Helsinki and Nice.

28. As an example the Bundesliga has exemption from German anti-trust law (similar to exemptions givenMajor League Baseball in the USA). In Spain, the national governing bodies are licensed by the Higher SportsCouncil, which is an agency responsible to the Government but at arms length from it.

29. In other countries, specific legal vehicles are provided for clubs; again, in Spain, a Limited SportingCompany (SAD—Sociedad Anonima Deportivo) which is built on standard Spanish corporate vehicles butenshrines certain provisions to reflect the specific nature of sport.

30. This form was created in 1992, when chronic debts of Spanish clubs meant that all hitherto-member-owned clubs with debts to branches of the state had to raise equity through these bodies in lieu of those debtsbeing waived. However, as the clubs had traditions built on representation and accountability, specific clausesgiving small shareholder powers to require independent audit were added.

31. The sport law was recently reviewed by the Spanish Parliament and changes proposed included allowingthe clubs to choose to revert back to member-associations if they wished.

32. There are provisions in Norwegian and French law to provide specific legal personality for sports clubs.

33. By contrast English clubs are overwhelmingly private companies. This is essentially an accident of boththe professional understanding of its earliest directors, who were familiar with joint-stock companies, and theirurgent need to raise capital for constructing stadia for the enjoyment of the burgeoning crowds for those clubs.

34. They are unable to become charities due to the nature of charitable objects, and whilst some have latelyconverted to Community Interest Company status, this is a small handful set amongst hundreds of senior clubs.



35. As detailed in Supporters Direct’s evidence, the private limited company route is easily bought and sold,and has facilitated the acquisition of many clubs by individuals who have had personal interests to serve ratherthan the clubs.

36. In some case, those interests might be temporarily aligned, such as in achieving greater playing success,but unless the issue of the subsidy (and later debt) is resolved, at some point interests will diverge, and thelegal position allows for that tension to be only resolved in the cause of the owner, not the stakeholders.

37. Clubs structured as companies increasingly have boards of Directors who are the shareholders (or theiragents) and if Annual meetings and accounts are a part of governance arrangements (and increasingly, they arenot), are often cursory and ill-suited to holding the board to account.

38. The other mechanism supporters can employ is to withdraw their custom to the extent that it acts as acheck on the executive of the club, who relent and change tack.

39. This is flawed in football, because before the shareholders are damaged, the club will be damaged (egplayers will be sold or not acquired, the facilities used by fans will not be maintained) but before that point isreached, withdrawing custom is simply antithetical to most fans’ self-identity as a supporter.

40. Indeed, there is a masochistic streak which is often even more tolerant of poor management as tocontinue to attend and pay money over is a sign of even greater fidelity to the club.

41. As a result, club directors are to all intents and purposes unaccountable, except when the mass base ofsupporters becomes mobilised (as witnessed late last year at Liverpool FC). Even when this happens, thedamage is often already done to a club, and the process of such confrontations is usually costly, unproductive,unedifying and time consuming.

42. Ensuring that the public character of clubs is recognised is not concern for company law designed tofacilitate efficient operations of private concerns.

43. The only stakeholder group to whom clubs must respect are their regulators, but this is not a real powerthose regulators have proven able to deploy in reality.

44. These are issues Parliament can remedy. It need not do so by compulsion as in the Spanish case. It couldfirst legislate to provide a specific legal status.

45. That legal status could enshrine obligations upon clubs registered to be owned in the UK, with fulldisclosure of controlling entities. They would be required to hold open annual meetings and publish fullaccounts and have stakeholder representation on their boards. They would also be required to demonstrate theiractivities each year which supported the community in their localities, and called upon to account for those.

46. In return, they could be given special privileges to provide protection from statutes relating to commercialactivity, such as allowing collective sale of pooled media rights, as they would now be legally required toprovide wider benefit as opposed to this being a matter for voluntary consideration).

47. They could be exempted from VAT on ticket sales, or perhaps investment in them attracted reliefs notavailable to clubs registered as normal private companies. They could also be given special rights in planninglaw to enable local authorities to treat development issues differently, as well as being eligible for rate reliefs,or stamp duty on asset transfers.

48. At a governing body level, authorities could be invited to register to receive legal backing for theirefforts. If they were registered, they would be protected from challenge on economic grounds as long as theycould demonstrate the motivation was sporting or social in purpose. This is essentially a codification of thecurrent precedent position in UK law, but once legislated for would lead to greater confidence.

49. Registration would require the authority to be subject to regular review to ensure its processes weresound and its decision-making was fit-for-purpose, including ensuring all stakeholders were represented fairlyin its deliberations. Government could link support for any governing body—such as financial support orassistance with bidding and hosting tournaments—with being a registered body, in order that the public interestcan be satisfied.

50. Having passed such a Sports Act, Parliament would have given governing bodies the ability to act withgreater legal certainty (or to run the risk of not doing so at their own choice) as well as ensuring that publicsupport in given to institutions in whom the public can have confidence.

51. Similarly, clubs can choose to acquire a corporate form more suited to their status and so move awayfrom vehicles which have proven to ill-serve the responsibility of clubs to take the needs of their stakeholdersinto account and act as a sustainable enterprises within their communities and within their sports.

January 2011



Written evidence submitted by Professor Stefan Szymanski

The State of Football in England

Summary— This statement has been prepared by Professor Stefan Szymanski of Cass Business School, City

University London. It represents my own personal views. I have been writing about the businessand economics of sport in general and football in particular for more than 20 years. I havepublished over 70 academic articles and book chapters as well as eight books and two editedvolumes on sports related issues. I have been a consultant on sports issue to the DCMS, the OFT,OFCOM, the OECD, and in 2010 I was a member of the Committee of Independent Expertsadvising the European Commission on sports policy. I have also worked for governing bodies suchas UEFA, the FIA and ICC. I was an expert witness on football for the OFT in the Premier Leaguebroadcasting case. I appear regularly in the media on sport and business issues and have writtenfor various newspapers and including the Financial Times, The Times, the Washington Post, theNew Statesman and the London Evening Standard.

— This submission deals principally with the state of football in England—little will be said aboutthe state of the game in Scotland, Wales or Northern Ireland.

— Contrary to popular views, English football is not currently in crisis, but is in fact in rude goodhealth. Not only has attendance grown significantly over the last 25 years despite rapid priceincreases, there has been £2.8 billion of investment in football stadia largely from the privatesector. English football now dominates its European rivals thanks to the large commercial incomethat it generates from ticket sales, broadcasting rights and merchandising.

— This represents a major a turnaround after the long term post-war decline that bottomed out around1985. While there were many factors which helped the recovery, the main driver was a change inattitudes, away from the amateurism which had characterised management up to that date, towarda more commercial outlook.

— English professional league football is also remarkably stable, as measured by the survival offootball clubs over more than a century. This stability stems from the community base that footballclubs rely on. Short term instability associated with debt crises and administration represent onlya temporary setback. Moreover, the movement of clubs up and down the league is an importantpart of the competitive structure of the leagues.

— Club finances in England are remarkably transparent, much more so than club finances in othercountries, even those with admired regulatory systems such as France and Germany. Thistransparency reveals how the competitive process works. Money buys success, and support followssuccessful teams. This also means that clubs make little profit, but all income is instead ploughedback into football.

— Against this background I have set out some answers to the questions posed by the Committee.Broadly speaking I see little basis for government intervention in professional football and arguethat the competitive system provides the greatest possible benefit for the fans. This is manifestedin the enormous popularity today of English football at all levels. There is no obvious marketfailure or social injustice which regulation is required to correct, and in that context the governmentwould do better to keep well clear.

Failure or Success?

1. There is a common perception that English football is in crisis. In reality English football is healthier thanit has ever been. Equally, there is a view that English football experienced a golden age, possibly to be locatedin the 1950s and 60s, maybe even as recently as the 1970s. In fact the reverse is true. As the chart belowshows, attendance at league football in England (the top four divisions) is now at the highest levels seen forfive decades. Indeed, attendance at league football in England was in almost continuous decline from 1950until 1985. The scale of the recovery since 1985 matches the scale of the decline, so that today attendancelevels are where they were in 1960.



Source: Sky Sports Yearbook

2. The Premier League has the highest annual attendance of any football league in the world, a total of 13million in 2009–10, compared to 12.8 million for the Bundesliga1, 10.5 million for La Liga and 9.4 millionfor the Serie A. Much has been made of the Bundelsliga’s increasing attendance in recent years, but this isonly true in the top tier. If we compare second tiers, the Championship attendance reached 9.9 million lastseason (higher than Serie A), far ahead of the 4.6 million following Bundlesliga2, the 4.2 million attendingSpain’s Liga Adelante or the 2.5 million attending Serie B. Indeed, England’s third tier attracted over 5 millionspectators last season, making it more popular than any other second tier league in the world.

3. Attendance is one of the best measures we have of the state of the game, since it represents active choicesmade by people about how they want to spend their time. Football clubs, like any other providers of acommercial service, have to ensure that what they offer is attractive to the buyer on the buyer’s own terms. Itis a commonly held myth that football fans are somehow a captive audience monopolized by whichever clubthey happen to support. However, the chart illustrates that if fans do not like what they are offered then theywill desert football en masse as they did until the mid 1980s.

4. The evident renaissance in English football might seem puzzling in the light of the dramatic price increaseswe have witnessed over the last quarter century. Back in 1985, when attendances were still falling, a ticket fora top division game cost £2.80 and a season ticket for Manchester United cost only £70.5 When ticket priceswere low, attendance fell. Since then prices have risen at an average annual rate of over 10% to a level ofabout £35 for a typical Premier League ticket and between £513 and £930 for a Manchester United seasonticket.6 For the sake of comparison, had ticket prices increased only with the rate of inflation (RPI) an averageticket would cost £6.60 today and a Manchester United season ticket £166.

5. Economic studies7 have suggested that demand for attendance at professional sports is inelastic(relatively insensitive to price)—with figures ranging from close to unit elasticity (so that a 10% increase inprice leads to a 10% fall in attendance) to as little as −0.1 (so that a 10% increase in price leads to a 1% fallin attendance). All else equal, the size of the price increases we have seen would have provoked a decline inattendance of over 50% in the Premier League even if we assume very inelastic demand. In reality attendancehas increased by 66% since 1989. Moreover, most Premier League teams have been playing at near capacityfor the last decade. In the Championship, where ticket price increases have been less steep and clubs still havespare capacity for many games, attendance in 2009–10 was 180% higher than the post war low of 1985–86. Itis sometimes remarked that attendance in the Bundesliga are equal to those of the Premier League while ticketprices are one third the level. The implication is that if the Bundesliga charged similar prices to the PremierLeague then their stadiums would be half empty, while the Premier League would need to double the size ofits stadiums to meet demand if prices were cut to Bundesliga levels.

6. The current strength of English football can be measured in other ways. TV broadcasting income hasincreasingly became a major source of earnings for successful sports leagues, and the Premier League is themost successful football league from this point of view. For the period 2010–13 domestic rights were sold for£1.8 billion and for international rights £1.4 billion overseas. This amounts to just over £1 billion per season,5 Annual Digest of Football Statistics 1986.6 http://www.manutd.com/en/Tickets-And-Hospitality/Ticket-Prices/Season-Tickets.aspx7 See eg Fort (2004) “Inelastic Sports Pricing” Managerial and Decision Economics, 25: 87–94.



significantly more the top leagues in Spain, Germany and Italy generate. The Premier league is also probablythe largest generator of commercial and sponsorship income overall. In the most recent review by Deloitte,8the average income generated in 2008–09 by Premier league clubs was £99 million, £75 million by Bundesliga1clubs and £65 million by LA Liga and Serie A clubs. Seven out of the 20 clubs in the Deloitte Football MoneyLeague (ranking by income) were from the Premier League. This is to a significant extent driven by thegrowing enthusiasm for English football abroad. Its international reputation has never been higher, withsignificant following in the Far East, Scandinavia, the Gulf states, the USA and elsewhere. Thus Englishfootball is healthy at all levels- it has the lion’s share of the world’s richest clubs, while also enjoying thegreatest support in depth of any football nation in the world.

Why has there been a renaissance in English football?

7. It is not difficult to find explanations for the fall and rise of English football. Immediately after the SecondWorld War attendance peaked as football was one of the few entertainments on offer in austerity Britain.However, from the 1950s onward increasing affluence and new forms of entertainment (TV, motor cars, leisurecentres and so on) increasingly exposed the poor quality of facilities and lack of investment in the game.Hooliganism came to symbolise the English game both at home and abroad. The quality of English footballcompared unfavourably with most of Europe and Italy was seen to have the strongest league, with strongcompetition from Spain, Germany and Holland.9

8. Since the mid 1980s the hooliganism issue has been dealt with and largely brought under control; massiveinvestment in facilities—amounting to £2.8 billion across the 92 League clubs since 199210—has madeattending football matches a more pleasurable experience; the quality of football has improved with theintroduction of some of the biggest stars from around the world; English football became fashionable again inthe 1990s, with blanket media coverage and increased appreciation of its cultural significance, both at homeand abroad.

9. To a significant extent the pressure for change came from outside the game itself. The Taylor Report,which mandated all-seater stadiums following the 1989 Hillsborough tragedy in which 96 Liverpool fansneedlessly perished, was a significant catalyst for change. Likewise, government pressure to deal withhooliganism problem brought measures to ensure that anyone causing a disturbance could be identified, ejectedand if needs be prosecuted. The deregulation of broadcasting in Europe in the 1980s helped to create satellitebroadcasters willing to compete aggressively for television rights and so bid up their value.

10. However, change also came from within. The turning point for attendance came around 1986, beforeTaylor, before Sky and before hooliganism was brought under control. In 1982 the Football LeagueManagement Committee commissioned an enquiry into the structure of the League as many clubs werestruggling with falling gates and revenues during the severe recession of that period. This produced the secondChester Report (Sir Norman Chester having written an earlier report as chair of the Committee on Footballcommissioned by the Department of Education and Science in 1968). The Report published in 1983 stated inits findings “clubs will have to be more sales minded in future if they are to maintain, let alone increase, theirgates” (p vii). Until 1981 League clubs were prohibited from paying Directors- the Committee recommendedthat all restrictions should be withdrawn; the FA still limited the dividends payable by clubs and the Committeerecommended abolishing these limits. In order to ensure “managerial efficiency” the report recommendedabolishing gate sharing for League matches, and that clubs shown most frequently on TV should get a greatershare of the revenues. The report also commented “League clubs are commercial enterprises: their financialsuccess depends on meeting the needs of their customers. Yet until very recently neither the League norindividual clubs have shown any interest in the two management tools which consumer industries normally findindispensable- market research and advertising.” (p10) It recommended increased market research, measures toattract more women to follow the game and consideration of moving games away from the Saturday 3.00 pmkick-off.

11. There can be little doubt that the League and the clubs took this call for a more commercial approach toheart. Restrictions on paying directors and dividends were removed. As well as the investment in facilitiesalready mentioned, clubs have significantly extended their commercial activities and are continuing to do so.By the late 1980s clubs were going on fact finding missions to the USA to discover how commercial sportsmarketing operated over there, and no doubt many practices have been copied. It was this new commercialismwhich helped to generate the rapid growth of income.

So why all this talk of crisis?

12. Despite the continued success of the last 25 years, many people have felt that the English football boomwas/is unsustainable, and that the “football bubble” will soon burst. This feeling arises out of a confusion ofthree things- the short term instability of individual clubs, the long term survival of individual clubs and thestability of the league system as a whole.8 Deloitte (2010) Annual Review of Football Finance.9 See for example Simon Inglis (1988) League Football and the men who made it. Willow Books.10 Deloitte, ibid p 48.



13. There is clearly a great deal of short term instability at individual football clubs. This is largely aconsequence of the promotion and relegation system, which drives teams to spend all they can afford, andoften more than they can afford, to avoid the drop. Equally, ambitious teams are tempted to stretch themselvesfinancially to their very limits, and frequently beyond them, in order to reach a higher level of competition.Many imagine this is purely sporting ambition, but there is also a commercial context to this as well. As thechart below shows (using a decade of data for clubs from the top two divisions), teams with lower leaguepositions (the horizontal axis) generate lower incomes (the vertical axis). The chart demonstrates that there isa high level of predictability in the relationship between wages and league position- the “R2” tells us that overtime 89% of the variation in club revenues can be attributed to league position alone.

English Premier League and Championship Teams 1998-2007: Revenue and performance

R2 = 0.8897

-3.5

-3

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

-5 -4 -3 -2 -1 0 1 2 3 4

league position (-log(P/(45-P))

Rev

enue

s re

lativ

e to

the

aver

age

(log) Manchester

United

Arsenal

Chelsea

Liverpool

Aston Villa

NewcastleLeeds

Wigan

Preston North End

Sheffield Wednesday

QPR

Crewe Alexandra

Rotherham United

Brighton

Bristol City

Source: own calculations based on football club accounts

14. One reason that revenue declines so significantly with performance is that many fans are not always asloyal as they are sometimes portrayed; failing teams lose support. To take an example of a club with notablyloyal fans, Leeds United attracted a league crowd of over 39,000 in 2000 when the club was near the top ofthe Premier League, a figure which fell to only 29,000 when the club was relegated to the Championship andthen fell below 25,000 when the club sank into League One. No doubt there is always a core of supporterswho will follow a club through thick and thin, but equally there may be many “floating voters” who are mostlyinterested in success.

15. An equally important cause of short term instability is the link between league position and wagespending, as shown in the next chart. This says that about 89% of the variation in league position (the verticalaxis) can be explained by wage expenditure relative to other teams in the league (the horizontal axis). Thisrelationship reflects the operation of the market for players. In economic terms this is a fairly “efficient” market,which in football terms means that you get what you pay for. Of course, individual players may get injuredand sometimes a superstar emerges unexpectedly, but because there are many buyers and sellers in the market,and because there is plentiful information about player abilities, generally the market prices talent accurately.



Premier League and Championship Teams 1998-2007Performance and Wage Expenditure

R2 = 0.8872

-4

-3

-2

-1

0

1

2

3

4

-2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5

Wage expenditure relative to the average (log)

Aver

age

leag

ue p

ositi

on (-

log(

p/(4

5-p)

)

Manchester United

ChelseaArsenal

Liverpool

Newcastle

Aston Villa

Leeds

Manchester City

CharltonWigan

QPR

Nottingham Forest

DerbyPreston North EndMillwall

Swindon

Huddersfield

Port Vale

BrightonRotherham

Crewe Alexandra

PlymouthGillingham

Source: own calculations based on football club accounts

16. Combining these two diagrams, it can be shown that revenues and wages at each league position moreor less cancel each other out, which explains why most football clubs fail to generate significant profits. If ateam makes profits, then it must be underpaying its players, in which case a team below them in the leaguecan compete to hire those players at a higher wage and take their position. The short term instability of clubsarises when there is a mismatch between expectations and reality. This may be misjudgement or bad luck, butin either case if short term performance or fan support falls below expectations then the club will fall in to adeficit, which may lead to insolvency. This has become very common in English football; Deloitte identified53 cases between 1992 and 2010.11 In order to deter clubs from reaching this stage a variety of regulationshave been introduced by the football authorities, including docking of points for going into administration, asystem of expenditure limits adopted by League Two clubs and most recently the Financial Fairplay regulationsof UEFA which will limit annual club spending on players to identifiable football income. Of course, evenwithout these constraints, failure often imposes a sporting penalty in the form of relegation.

17. Despite this short-term instability, football clubs are remarkably stable organisations over the long term.Of the cases identified by Deloitte, all of the clubs re-emerged as going concerns after a period ofadministration. Indeed, in 1923 there were 88 teams in the Football League: in 2007–08 85 of these teams stillexisted and the three that had disappeared did so before the war. 75 of the teams were still in the top fourdivisions and in fact 48 were still in the same division they belonged to in 1923. One reason for this stabilityis that clubs are at root community organisations. Clubs can adjust their expenditure to any level of competition,and likewise the fanbase for a club adjusts to the level of success, so even if a club falls on hard times, thereis a level of operation (both financial and sporting) to which it can (and does) adjust.

18. The leagues have also shown themselves to be remarkably stable. The greatest threat to a league is thata club might fail financially and be unable to complete its league fixtures. Whilst this in theory means thatthere is a systemic risk associated with the financial instability of clubs, in reality this risk is almost nevercrystallised. Leagues have also protected themselves by imposing rules on settlement of debts, such as thenotorious football creditor rule. While some rules may be better than others, there is little doubt that leagueadministrators have the capacity and the incentive to make rules which ensure the long term stability ofthe league.


19. Football clubs established themselves as limited companies in the 19th century, although as explainedabove the FA and the League imposed rules which limited their capacity to operate commercially until the1980s.12 Given the significant sums of money involved, it makes sense for clubs to be run as limitedcompanies, but there is nothing to stop the ultimate owners of the clubs to adopting different organisationalforms such as Supporter Trusts. It is worth noting that in the early 1990s the Spanish government obliged11 Appendix to 2010 Deloitte Review, p 13.12 For history of this commercial evolution see Szymanski and Kuypers (1999) Winners and Losers: the business strategy offootball. Viking.



football clubs to move to limited company status because the membership organisations (“clubs”) hadunsustainable debts. In the event Real Madrid and Barcelona (as well as two other clubs) were exempted fromthe change. In Germany clubs (Vereine) have traditionally been registered with and subsidised by the state.However, this is a very different tradition of organisation compared to the UK.


20. Like Parliament and the Bank of England, the governance institutions of football have evolved, and werenot originally designed for the purposes they are now required to fulfil. However, institutions adapt, largelythrough competition among those interested in the consequences of governance. Most notably in recent years,the representatives of the professional game have exerted increasing control over the FA. Abolition or reformof the current institutions would not remove the fundamental conflicts over control of the game which exist,although they might give more power to some interest groups or less to others. This is a much more importantissue than the organisational structure itself.


21. According to the UEFA 2008 Club Licensing report, English clubs had just under €4 billion of net debt,and just under €4.5 billion of long term assets. While these debts were far higher than any other in Europe, sowere the assets. Deloitte estimated the net debt of Premier League clubs at £3.3 billion in 2008–09, againstincome of £2 billion. By the standards of most businesses this level of debt is not excessive. Of course,individual clubs may have too much debt, but without full access to the management accounts of a business itis not easy to be sure about what constitutes “too much”. I do not believe that current level of debt in Englishfootball endangers its long term future. Furthermore, restricting the capacity of teams to borrow may damagethe competitiveness of the leagues.


22. There is no reason that fans should not to acquire shares in football clubs and manage them through atrust. The limitation of the model is that few fans have the capacity to invest significantly in their club, andwhen they do these individuals often want their voice to reflect their investment. In reality Supporter Trustshave played a useful role in some lower division clubs, but the model makes little sense at the top end of thegame. Moreover, even with lesser clubs the involvement of Supporter Trusts is no guarantee of good decisionmaking, as the case of Notts County illustrated.


23. In principle I believe that the Treasury Green Book tests should be applied when considering the prosand cons of government intervention. According to this the “underlying rationale is usually founded either inmarket failure or where there are clear government distributional objectives that need to be met” (p 11). Theannexes to the Green book describe the following classification of market failure (p 51):

(a) “Public goods”—this has a very specific meaning in economic jargon, amounting to the fact thatit is not feasible for private businesses to charge for services they provide, which is far from thecase with football clubs.

(b) Externalities—social costs and benefits exceed private costs and benefits leading to under or over-provision of the service in question. There is no obvious reason to think we have too little of toomuch football at present.

(c) Imperfect information—in particular asymmetric information, so that, for example, buyers cannotbe sure of what they are buying before handing over the cash. This is not an obvious problemin football.

(d) Market power—some claim that clubs have market power over their fans, but the evidence givenabove shows that in reality large numbers of fans are ready to find substitutes if the quality of theproduct falls.

In my view there is no compelling social equity rationale for public intervention in commercial football, anymore than there is a rationale to make luxury cars available at subsidised prices to people on low incomes.

24. It is also important to draw attention to another aspect of the rationale for public intervention mentionedin the Green Book (p 11), namely “is it reasonable to assume that intervention will be cost-effective: ie thatthe benefits of intervention will exceed the costs?” These costs could include any damage done to the standingof English football in general. Given the absence of any compelling rationale on the ground of market failureor social equity, are purported benefits sufficient to outweigh the potential costs?

25. There is a long tradition of state involvement in sport and physical education in Europe. In the 19thcentury this concerned mainly the preparation of young men for military service. In the 20th century thisevolved into a concern both for providing a healthy environment and the pursuit of national prestige through



success in sporting competition. In Britain sport evolved as an autonomous activity13 and as recently as 1960there was almost no state involvement in sport. In the last half century the state has become more closelyinvolved in the provision of facilities and the development of healthy lifestyles, especially for young people.Through lottery funding for sport the state has also become involved with the development of elite sports.

26. My own view is that public funding which supports mass participation in sport is desirable, but that thestate has no useful role to play in the provision of sport as entertainment. Government would be no better atmanaging professional sports leagues than it would be at managing movie studios or any other form of massentertainment. As this paper has shown, football is a highly competitive business and hence there is no needfor a regulator of the kind required when there is natural monopoly (eg water supply) or where informationhard to acquire and consumers need protection. I have not discussed the issue of the national team in thispaper, suffice to say that any government that allows itself to take on even the slightest responsibility for theperformance of the national team will create a rod for its own back.14


27. Yes, I believe there are always lessons to be learned from different models abroad, and much of my ownresearch has been based on a comparative analysis of institutions.15 Indeed, I believe that many of the viewsexpressed on the “crisis” in English football stem from a poor appreciation of actual practice abroad. In anutshell, it is my view that the major American sports leagues are both highly collaborative and highlyprofitable organisations thanks largely to the absence of a promotion and relegation system.16 On the otherhand, the regulatory mechanisms adopted in other European football nations are more reflective of the lack oftransparency in the management of football clubs and poor levels of commercial performance. It is worthnoting that the financial analysis in this paper, which is based on the publicly available audited accounts offootball clubs cannot be conducted on any football league outside the UK, including Germany, because suchaccounts are not publicly available.17 We should certainly beware of copying systems from other countrieswhose governance systems are not completely transparent.

January 2011

Written evidence submitted by Mr Sean Hamil & Dr Geoff Walters, Birkbeck Sport Business Centre,Birkbeck College, University of London

Introduction

1. The Birkbeck Sport Business Centre (BSBC) is a specialist sport business research centre based in theManagement Department at Birkbeck, University of London. Geoff Walters and Sean Hamil are two of themembers with particular expertise in corporate governance of the football industry. This submission will beginby first summarising our key recommendations.18 It will then summarise our response to each of the six keyquestions raised by the Committee, indicating wider background supporting documentation where appropriate.

Executive Summary of Recommendations

2. The authors recommend:(i) It is legitimate for football clubs to be treated differently by government regulators in recognition of

the “peculiar economics” of the sport industry, and the special social function of sport in society, butin return the professional football industry must operationalise “special” reciprocal obligations viamechanisms such as “solidarity” payments to the grassroots.

(ii) The Football Creditors Rule can no longer be justified as a “fit-for-purpose” regulatory device andshould be abandoned.

(iii) The English football authorities should wholeheartedly implement the UEFA Financial Fair Play (FFP)initiative and apply its principles throughout the football pyramid. The FA, as the governing body ofEnglish football should play the lead role in driving its implementation.

(iv) The full implementation of the Burns Enquiry (2005) recommendations for reform of the FA shouldbe re-visited as a solution to English football’s fragmented governance structure.

13 For a comparison of the European and British systems see Szymanski (2008) “A theory of the evolution of modern sport”Journal of Sport History, 35, 1, 1–64.

14 On the issue of the national team see Kuper and Szymanski (2009) Why England Lose. HarperCollins.15 See e.g. Szymanski (2010) The Comparative Economics of Sport. London: Palgrave Macmillan.16 On this see Hoehn and Szymanski (1999). “The Americanization of European Football” Economic Policy, No. 28, 205–33.17 For a sceptical view of German regulation written by Germans see Dietl and Franck (2007) “Governance Failure and FinancialCrisis in German Football”, Journal of Sports Economics, 8, 6, 662–669 and a sceptical view of French regulation written by aFrenchman see Andreff (2007) “French Football: A Financial Crisis Rooted in Weak Governance” Journal of Sports Economics,8, 6, 652–661.

18 By way of additional background to this submission see: All Party Parliamentary Football Group—Inquiry into English Footballand its Governance. Memorandum of Written Evidence—Dr Geoff Walters & Mr Sean Hamil, Birkbeck Sports Business Centre,Birkbeck, University of London, July 2008—http://www.sportbusinesscentre.com/governmentenquirysubmissions.



(v) Tax incentives should be introduced to incentivise supporter trust investment in clubs. Governmentshould offer financial support to the work of Supporters Direct.


3. Football is not purely a business. This is because football is structured as a pyramid of which the topprofessional level is just the apex. English professional football draws on grassroots not-for-profit structures ofparticipation, not only as a training ground for future players for both clubs and the national team but as asource of future spectators. The interdependency between the professional and grassroots game is explicitlyrecognised through the funding mechanism of the Football Foundation, a key investor in grassroots footballinfrastructure, which is funded by the government, the Football Association (the FA) and the PremierLeague.19 So through the principle of sporting “solidarity” professional football in England quite correctlyredistributes significant revenues to football’s grassroots. In this regard professional football performs a “social”function, and it is legitimate that, when performing this “social” function, its activities be treated differently tomainstream business activity, for example through the provision of tax relief etc.

4. It is also the case that the operation of successful sports leagues embodies “peculiar” economiccharacteristics which require exceptional treatment.20 Notably it is the competition itself that is the product,not the individual clubs. It is widely recognised that it is legitimate for sports’ league organisers to centrallynegotiate some commercial activities on behalf of their member clubs, in order to redistribute income moreequally amongst them to more evenly balance labour market spending power to ensure a reasonable level ofcompetitive balance/uncertainty of outcome. The Premier League, the Football League, and the UEFAChampions League and Europa League, all employ centralised selling and redistribution of broadcastingrevenues. This also allows league organisers to maximise broadcasting revenues through more coherentbranding of their competitions. It facilitates financial stability amongst participating clubs by providing amore balanced distribution of revenues; allows competition organisers to centrally divert funds for “solidarity”redistribution to sport’s grassroots. Collective selling would be regarded as an illegal cartel in mainstreambusiness. Its legitimacy in the sport broadcasting field has now been recognised by both the European Unionand the UK competition authorities.

5. However, whilst there are clearly “specific” characteristics of the sport/football industry which demandthat it be treated differently by government economic regulators, this should not amount to a blanket exemption.One such example is the Football Creditors Rule, the football industry rule whereby where a football club hascollapsed into financial administration, in order for it to re-enter the league, the new owners must pay allfootball industry creditors 100% of outstanding debt. Other non-football creditors then receive proportionatelyless. Given there have been 53 incidences of administration in the Premier and Football Leagues between 1992and 201021 additional losses endured by non-football creditors have been significant, as a reading of the April2010 administrator’s report22 for Portsmouth FC demonstrates. Creditors include Her Majesty’s Revenue andCustoms (HMRC) (for a multi-million tax debt) and a host of local small businesses and public agenciesincluding South Central Ambulance Service (£19,535) and St John’s Ambulance (£2,701).

6. The Football Creditors Rule is justified by the football authorities on the grounds that it protects well-managed football clubs from the poor financial decisions of failing clubs. However, in reality the opposite isachieved as it serves to encourage inflation in the football player transfer market by allowing clubs with clearfinancial difficulties to trade players as selling clubs know that, under the current rule, they will still be paidtheir transfer fee even if the buying club collapses, at the expense of non-football creditors. This does notencourage a responsible attitude to risk management in the operation of the player labour market by eitherbuying or selling clubs.

7. Given English professional football’s endemic loss-making (see discussion below) bankruptcy is now aregular occurrence. HMRC has decided to challenge the legality of the Football Creditors Rule. This is hardlya surprise as non-payment of taxes is essentially a hidden public subsidy to a private industry. It is the view ofthe authors that the rule can no longer be justified given its extreme consequences for non-football creditors,and because of the negligent attitude to risk management it encourages in the transfer market. The footballauthorities should recognise this, and move to abolish the rule rather than be forced to by any future courtdecision.


8. Whilst the English Premier League is widely admired as being the world’s most successful national leaguein terms of income generation, on the most critical financial indicator of all—pre-tax profit, English football’s19 See: http://www.footballfoundation.org.uk/about-us/20 The seminal academic paper setting out the key “peculiarities” of the economics of sports leagues is: Neale, W (1964). “Thepeculiar economics of professional sports”. Quarterly Journal of Economics, 78:1–14

21 Deloitte (2010). Annual Review of Football Finance. Manchester: Deloitte. Appendices, page 13.22 See: UHY Hacker Young (turnaround & recovery) (19 April 2010). Portsmouth City Football Club Ltd (In Administration).Report to Creditors pursuant to Paragraph 49 of the Insolvency Act 198, Appendix B—http://www.portsmouthfc.co.uk/LatestNews/news/Portsmouth-Football-Club-Statement-875.aspx



performance is deeply problematic. The table below, drawing on statistics from the authoritative DeloitteAnnual Review of Football Finance,23 demonstrates the chronic lack of profitability of English football.

ENGLISH FOOTBALL—PRE-TAX PROFITABILITY (£ STERLING)

2006–07 2007–08 2008–09Pre-tax profit Turnover Pre-tax profit Turnover Pre-tax profit Turnover

Premier League −£285m £1,530m −£298m £1,932m −£275 £1,981mChampionship −£62m £329m −£80m £336m −£160 £375League One −£20m £102m −£18m £125m −£43 £123League Two −£4m £63m −£6m £65m −£10 £68

Source: Deloitte (2009; 2010)

9. Chronic loss-making has been endemic since the inception of the Premier League in 1992, since whenthere has never been a season where the clubs in the Premier and Football Leagues have, collectively, made apre-tax profit. The individual clubs that do, notably Arsenal, are the exception. The key reasons for the poorfinancial performance has been that football clubs consistently over-spend on (and go into debt to finance)player wages to achieve sporting success. For example, in 2008–09 the percentage of turnover spent on wageswas 67%, 90%, 80% and 72% in the Premier League, Championship, League One and League two respectively:a figure of 60% is the considered benchmark for wage/turnover ratios. Over spending on player wages, leadingto sustained pre-tax losses, has driven total debt in the Premier League from £950 million in 2005 to £3,301million in 2009 (Deloitte, 2010, page 59). In the Championship, net debt levels for the 24 clubs increased from£327 million in 2008 to £406 million by 2009 (Deloitte, 2010, page 65).24

10. Added to this is the phenomenon of clubs like Manchester United, and until recently Liverpool underthe ownership regime of Tom Hicks and George Gillett, where the clubs were plunged into losses, inLiverpool’s case unsustainable losses, due to the cost of the interest on the debt acquired to purchase the clubs.In these cases the leveraged buy-out financial techniques employed simply serves to extract revenue fromEnglish football in order to pay for punitively priced loans.

11. These debt levels can only be managed in two ways. Owners must cover losses from their own resources,making the owner-benefactor model the norm in English football. Or clubs shed debt through the financialadministration process. An associated problem is that this financially contrary business model significantlyreduces the market for high quality investors in English football clubs. It should be of concern to the footballauthorities when investors like Delia Smith at Norwich City, and Sir John Madejski at Reading FC, both highlyregarded for their stewardship of their respective clubs, have publicly stated their desire to sell on theirownership due to a quite reasonable unwillingness to cover indefinitely the ongoing losses that owning anEnglish professional football club entails. This leaves open the prospect that increasingly the market forownership of English football clubs will only be of interest to owners with an excessive appetite for, and highlyspeculative attitude towards, financial risk. The experience of the poor financial stewardship of ManchesterCity by former Thailand Prime Minister Mr Thaksin Shinawatra, now banned from entering the UK by theForeign Office, is salutary. Mr Shinawatra used Manchester City’s Premiership status prestige as part of awider political power struggle in Thailand.25

12. It is the view of the authors that the only realistic way to resolve English football’s chronic lack ofprofitability and related debt problems is for the English football authorities to wholeheartedly embrace theimplementation of the Financial Fair Play (FFP) initiative of UEFA (the governing body of Europeanfootball).26 English football operates within the context of the wider European football pyramid in which itsfootball clubs are highly successful participants in UEFA club competitions. It has been argued that if theEnglish football authorities were unilaterally to adopt more stringent financial regulations this woulddisadvantage English clubs in European competitions by constraining their flexibility in financing playeracquisitions. The fundamental principle underlying the FFP initiative is that clubs should not be able to spendmore than they earn on player salaries and transfer fees (whilst providing incentives to invest in home-grownplayer development). Its effective application will create a level playing field for all clubs seeking to competein European competitions who wish to manage their finances on a sustainable basis. The FFP initiative isfinding favour with owners of some Premier League clubs, notably the new owner of Liverpool FC Mr JohnHenry who has publicly acknowledged that its imminent introduction was an influential factor in his decisionto buy Liverpool FC.27

13. If the FFP initiative is applied successfully by Premier League clubs, it will then become feasible toimplement a version of the regime through the league pyramid, tailored for each league’s special circumstances.23 Deloitte (2009 & 2010). Annual Review of Football Finance. Deloitte.24 For a fuller analysis of the key structural drivers of English football’s financial model see: Hamil, S & Walters G (2010).“Financial Performance in English Football; An Inconvenient Truth”. Soccer & Society. Vol. 11, No. 4 July 2010, 354–372.

25 For a fuller discussion of Mr Shinawatra’s poor financial stewardship of Manchester City see: Hamil, S & Walters G (2010).“Financial Performance in English Football; An Inconvenient Truth”. Soccer & Society. Vol. 11, No. 4 July 2010, pages 364–365.

26 For details of the UEFA Club Licensing regime and the planned implementation of the UEFA Financial Fair Play Initiative see:UEFA.com (2011). Club licensing benchmarking report: Financial year 2009. UEFA.com—http://www.uefa.com/MultimediaFiles/Download/Tech/uefaorg/General/01/58/53/46/1585346_DOWNLOAD.pdf

27 Hunter, A (18 October, 2010). “Liverpool’s new owners provide welcome contrast to their predecessors”. The Guardian.



In the view of the authors it is the FA, as the governing body of English football with a remit for promotingsporting good health and sustainability at all levels of the pyramid, which should play the lead role inimplementing FFP principles, in collaboration with the respective leagues.


14. It would be unfair and inaccurate to assert that in their totality the football governance rules and footballgoverning bodies, are not fit for purpose. The Premier League and the Football League organise four verysuccessful leagues. The Premier League is widely regarded as the world’s leading national league in terms ofglobal fan interest. The Football League Championship was itself Europe’s fourth best attended league in the2007–08 season The FA executes a highly effective administrative function across a host of critical activities,including: (1) organising and regulating a vast structure of grassroots participation involving several millionparticipants; (2) administering English football’s disciplinary system, from the Premier League down to thelowest park league, efficiently and with integrity; (3) efficiently administering key elements of financialregulation including the player transfer system; and (4) organising what is still the world’s most iconic clubknockout competition—the FA Cup. Before attempting to critique the shortcomings of English football’s threemain regulatory bodies it is first necessary to acknowledge their many achievements; and in particular theextraordinary turnaround in the reputation and performance of English football since its nadir in 1989 in theaftermath of the Hillsborough stadium disaster. In the case of the FA in particular it is clear that it has servedas a lightening rod for media criticism because of its exposure to the vagaries of the national team sportingperformance, which has served to obscure the many achievements of the organisation and its staff.

15. However, there are two fundamental weaknesses in English football’s model of governance that need tobe addressed. Firstly there is a problem of uneven application of regulation across the industry given there areessentially three regulatory bodies, all competing to fill the regulatory space. So there is a lack of an over-arching strategy for dealing with the industry’s chronic financial loss-making and its consequences. Andsecondly, and following on from this, regulatory initiatives tend to be reactive and piecemeal, rather thanproactive and strategic.

16. It is the view of the authors that, as the governing body of English football it is the FA that should takethe lead role in co-ordinating a strategy for the governance of English football,28 but obviously in activeconsultation and co-operation with the Premier League and the Football League (who, through the FAProfessional Game Board and representation on the FA Board, have significant institutional opportunities toinfluence FA policy). The primary role of the latter is to organise successful competitions, not to regulate thegame as a whole, but over time a process of regulatory “mission creep” has been manifested by the leagues asthey adopt an increasingly proprietorial approach to regulatory policy. The resulting tensions regarding exactlywhere key regulatory and governance responsibilities lie were discussed in detail in the submissions to the All-Party Parliamentary Football Group’s enquiry into English football governance in 2008–09.29

17. These tensions have been seen most obviously in the structure of the FA Board which is composed offive members representing the professional game (the Premier League and the Football League), five membersrepresenting the national game (the grassroots), and the FA General Secretary. This structure has simply servedto entrench the sometimes competing interests of the two key stakeholder groups, making it difficult for theFA Board to devise a consistent and over-arching strategy for the governance of the game as a whole. Thecomprehensive review of the FA’s governance by Lord Terry Burns in 200530 identified reform of the FA’sboard structure as a key objective. Critically, he proposed the addition of between two and three non-aligned“independent” directors, in line with best practice corporate governance guidelines for UK stock market quotedcompanies.31 This would assist the FA Board to take a broader view of its remit. These recommendationswere never implemented, but in the authors’ view should be revisited.

18. The lack of a clear strategy for the governance and regulation of English football is reflected in the widerapproach to policy development, which is essentially reactive. So, for example, in 1999 the FA, Premier Leagueand Football League articulated their attitude to demands for a more interventionist approach as follows: “thefootball authorities do not believe that the overall well-being of the game will be helped by new layers ofregulation or bureaucracy”.32 But four years later all three bodies introduced points penalties for clubs that28 A recommendation also made in the: All Party Parliamentary Football Group (2009b, April). English Football & Its Governance.All Party Parliamentary Football Group—http://www.allpartyfootball.com/APFG_Report_on_English_Football_&_Its_Governance_April_2009%5b1%5d.pdf

29 All Party Parliamentary Football Group (2009a). English Football & Its Governance: Overview, transcriptions [of evidencesubmissions), written evidence and report. All Party Parliamentary Football Group—Overview, transcriptions [of evidencesubmissions), written evidence, and report—http://www.allpartyfootball.com/inquiry8.htm

30 A full outline of the Burns Review terms of reference, submissions, and conclusions can be viewed at: Burns, L. (2005)Structural Review of the FA—Conclusions.—http://www.thefa.com/TheFA/WhoWeAre/NewsAndFeatures/2005/~/media/Files/PDF/TheFA/BurnsReview/StructuralReviewConclusions.ashx/StructuralReviewConclusions.pdf

31 For best practice governance recommendations for London Stock Exchange-listed companies see: Financial Reporting Council(FRC) (June 2010). The UK Corporate Governance Code. Financial Reporting Council—http://www.frc.org.uk/documents/pagemanager/Corporate_Governance/UK%20Corp%20Gov%20Code%20June%202010.pdf

32 The Football Association, The FA Premier League, The Football League. (1999) Commercial Issues: Football’s Report to theFootball Task Force—The “Minority Report”. Department of Culture, Media & Sport: The Football Task Force. Page 127.



entered into financial administration following what was widely regarded as the unfair advantage over clubsrunning prudent budgets achieved by Leicester City in achieving promotion to the Premier League at the endof the 2002–03 season having shed significant debt through the administration process. There are many similarexamples of such reactive responses. The authors believe strongly that the football authorities, led by the FA,need to take a more proactive, holistic, approach to regulatory policy, and that the implementation of the UEFAFinancial Fair Play initiative in English football offers the opportunity to achieve this.


19. Since its foundation in 2000, Supporters Direct,33,34 the national representative body for supporters’trusts (co-operative societies), has formed over 170 trusts which have in turn gone on to act as key, andconstructive, mobilising vehicles for supporter interests who wish to invest in their local clubs and help themto embed more effectively in the local communities from which they sprung. In this regard supporters’ trustsare a very good example of a modern, progressive, social movement for community benefit, motivated by thefundamental principle of self-help. Headline examples of successful trust-owned clubs which not onlyparticipate successfully in their respective leagues but act as hub for community activity are AFC Wimbledonand Enfield Town FC. But there are many more, and also many more where trusts play an active role asminority shareholders in their club.

20. Supporters’ trusts have also served as a buyer of last resort at many insolvent clubs, and effectivelysaved those clubs from extinction. For example, there are a number of Football League clubs, for exampleChesterfield and York City, where a supporters’ trust acquired the club, reconstructed it financially, but werethen forced to sell the club back to a new private owner as the pressure of managing on a balanced budgetbasis whilst all around them, based on the owner-benefactor model, were spending to excess, becameimpossible. This process, whereby supporters’ trusts served as effectively financial “accident & emergency”facilities, reconstructing club balance sheets with the use of supporter donations and unpaid voluntary labour,only to have to sell the club because a balanced budget approach to club management rendered its teamuncompetitive on the sporting field of play, represents an indictment of the dominant prevailing owner-benefactor model of English football. Financial virtue does not currently have its own reward in Englishprofessional football.

21. The authors believe that the government should review the tax incentive regime covering investment bynot-for-profit, social benefit, co-operatively structured, supporters’ trusts in order to make it more efficient forthem to invest effectively in their own local football clubs.

22. The authors believe that the work of Supporters Direct represents excellent value for money and shouldbe a candidate for an appropriate level of funding by government agencies in order to provide it with thenecessary stability to continue its good work.


23. It should not be forgotten that English football’s recovery following the Hillsborough stadium disasterin 1989 was initiated by government legislation following the recommendations of the Taylor Report.35 Thiscompelled clubs to provide safe stadia regulated by the Football Licensing Authority (FLA) (via the FootballSpectator Act in 1989), a body responsible for monitoring local authorities’ supervision of stadium safetyincluding the issuing of safety certificates. The FLA also oversaw the move to all-seater stadia, which createdan environment that encouraged professional football clubs to make significant investment in stadiamodernisation, and led to the opening up of the game to a wider football. This investment was rewarded byincreased attendances. This investment was supported by a significant subsidy from the Football Trust througha levy on the football pools gambling product. So there is a very clear precedent for successful governmentintervention in the governance of football where the industry was correctly perceived as being incapable ofreforming itself following a decade of stadium disasters.

24. Similarly, the government regularly introduces legislation relating to the football, and wider sporting,industries often following lobbying by the sport sector, on issues as diverse as countering ticket-touting andthe facilitation of the Olympic Games for London 2012. In other words there is a legitimate place forgovernment intervention in football, particularly where such legislation emerges after a period of intensiveconsultation between the two parties. As was outlined above, the sport/football economic system does embody“peculiar” characteristics, and for example, successful consultation on the issue of the legitimacy of thecollective selling of broadcasting rights has led to a sensible solution which recognises the special context ofsport and the need to allow collective selling in that context.

25. However, it would be much more preferable if the football industry is able to develop effective systemsof self-regulation, or that it is able to negotiate government regulation through a process of effective stakeholderengagement which recognises the legitimate interests of both parties. The governing bodies of football shouldbe in the optimal position to assess what is in the best interests of their key stakeholders. However, this is also33 See: www.supporters-direct.coop/34 Please note that one of the authors, Mr Sean Hamil, was an elected director of Supporters Direct from 2002–08.35 See Hamil, S (1999). “A Whole New Ball Game?: Why Football Needs a Regulator”, in: Hamil, S, Michie, J & Oughton, C(Eds.). A Game of Two Halves: the business of football. Edinburgh: Mainstream, pp. 23–39.



why it is critical for the football industry to be able to recognise in advance that historical practices such as theFootball Creditors Rule should be withdrawn voluntarily without the threat of direct intervention by governmentagencies. The defence of outmoded practices serves to undermine their credibility when arguing for exceptionaltreatment on more legitimate issues.


26. As a general principle the authors would state that there is a very strong case for the promotion of amore structured sharing of experience in addressing governance and regulation challenges by all the UK’smajor sporting organisations as a matter of best practice. This might be most effectively co-ordinated by arespected third party organisation such as the Sport & Recreation Alliance (SRA).36

27. The experience of the Rugby Football League (RFL) in implementing a licensing system,37 and theexperience of the Rugby Football Union in implementing an eight year strategic plan—2008–09 to 2015–16—which includes a very clear strategy for balancing the interests of the domestic elite professional clubs withthose of the national team,38 offer two clear demonstrations of management practice that that the three footballauthorities might learn from.

28. The English football authorities could usefully learn from the application of club licensing schemes byother UEFA member national associations. Particular lessons might be learned by the pioneering club licensingsystem in the German Bundesliga league structure. The Bundesliga is Europe’s most profitable, solvent andwell attended league and has never experienced a club insolvency.

February 2011

Written evidence submitted by The Football Conference

THE FOOTBALL CONFERENCE

A Brief History— The Football Conference was formed in 1979 with 22 Clubs in one National Division (later

extended to 24 Clubs).— Attained automatic promotion place to Football League (subject to meeting Ground Grading

criteria) in 1987.— Attained second automatic promotion place to Football League (subject to criteria) from Play-Off

system in 2003.— Played instrumental role with the FA in the re-structure of the National League System in 2004.— Extended Competition to 68 Clubs in three Divisions by the formation of Conference North &

Conference South for start of 2004–05 season.— 2005–06 season—introduced an “Approved Playing Budget” system to monitor member Clubs’

expenditure on players’ wages against Club turnover.— 2007–08 After successive sponsorships, concluding with 12 continuous years with Nationwide

Building Society, engaged new Title sponsor in Blue Square for three years.— 2007–08 Engaged new Broadcast Partner (Setanta) for five years. (Broadcaster went into

Administration at end of 2008–09 season.)— 2008–09 season—developed and extended Approved Playing Budget system into a Financial

Reporting Initiative to monitor and control debt, particularly Crown debt.— 2010–11 Renewed Title sponsorship with Blue Square Bet for three further years.— 2010–11 Engaged with new Broadcast Partner (Premier Sports Television) for three years.— 2010–11 Support received from The Premier League (PL) and The Professional Footballers’

Association (PFA) to organise and manage a Club Community Development Fund. At present 34member Clubs are involved in scheme encompassing health education; literacy and disabledgroups.

Strengths— National Competition.— National media exposure—Press, Radio and Television.— Excellent working relationship with the Football Association, The Premier League, and The

Football League.— Observer status on the Professional Game Board.

36 See: http://www.sportandrecreation.org.uk/37 See: http://www.therfl.co.uk/about_the_rfl/annual_report38 See: http://www.rfu.com/AboutTheRFU/StrategicPlan.aspx



— Promotion/Relegation link with Football League.— Promotion/Relegation with three Feeder Leagues in National League System.— 68 Clubs—well established and progressive Clubs representing large areas, towns or cities, in most

cases as important a part of local and community life as larger clubs in the Premier League andthe Football League.

— Successful Clubs providing a highly competent level of football in three Divisions of the FootballConference; the FA Cup, eg Crawley Town, and the FA Trophy.

— Best Players of member Clubs are selected for the England “C” team in European Championshipmatches.

— Over 60 England “C” players from the Football Conference have progressed to Football LeagueClubs.

— Wrexham FC has frequently had players selected to represent Wales at all levels, including FullInternationals.

— A Promotion/Relegation agreement between the FC and the Football League has worked well sinceits establishment 23 years ago.

— The FC has a successful record of promoting its Clubs to the Football League in a stable conditionmeriting further promotion, eg Doncaster, Rushden & Diamonds, Wycombe Wanderers andYeovil Town.

— The FC had a successful record of returning Clubs relegated from the Football League to theirformer status, in a “rehabilitated” condition, eg Exeter City, Oxford United and Torquay United.

— Clubs’ development of young talent, eg Stuart Pearce (Wealdstone to Coventry City & England);Graham Roberts (Yeovil Town to Tottenham Hotspur & England); Andrew Townsend (Weymouthto Southampton & Republic of Ireland).

— Clubs’ ability to rebuild playing careers, eg Michael Kightley (Southend to Grays Athletic toWolverhampton Wanderers); Andy Drury (Luton Town to Ipswich Town).

— Provides grounding for Managers, eg Nigel Clough (Burton Albion to Derby County), Mark Yates(Kidderminster Harriers to Cheltenham Town), Neil Warnock (Scarborough to Notts. County),Steve Cotterill (Cheltenham Town to Stoke City).

— Excellent relationships, and financial support with/from the Premier League, the Football League,the Professional Footballers’ Association and the League Managers’ Association.

— Professional centralised administration in middle of operating area with small dedicated Staff.— Board of Directors & Officers comprising a mix of professional personnel with current and/or past

Club & Competition experience together with independent personnel which provides goodgovernance.

— Representation on the FA Council—two delegates.— Established Financial Reporting Initiative to assist Clubs to “live within their means”. This

Initiative has been very successful at reducing HMRC debt.— Nationally known sponsor which is part of internationally known company.— Ability to attract Broadcast Partner (Radio & Television).— Club Community Development Fund (see above)—funded by PL and PFA.— Community Clubs “buddying” with Premier League clubs eg Altrincham with Manchester

United & Manchester City.— Overseer of strong Football Conference Youth Alliance (68 Clubs) developing education and

football.

Weaknesses

— National Competition gives rise to travel difficulties.— The Football Conference feels “betwixt & between” the Professional Game and the National Game.

With its amalgam of predominantly full-time professional Club in its Premier Division and itpredominantly part-time professional Clubs in its North & South Divisions it is the “meat in thesandwich” between the Professional Game and the National Game.

— Failing Clubs in current economic climate.— Part-time/hobby time administration of most Clubs creates communication difficulties and reduces

training opportunities that would raise ability to work effectively and efficiently.— Clubs without potential or ambition to progress.— Clubs losing young players after investing in development, to professional clubs, without

receiving compensation.



— Notwithstanding financial grant aid from the Football Foundation (FF) and the Football StadiumImprovement Fund (FSIF), grant levels have decreased. Funding required to raise ground standardsto meet legislative demands, and the requirements for promotion, particularly to the FootballLeague, is difficult for Clubs to find.

— There is a lack of support for facilities, eg 3G artificial surface pitches, in the FC community ofits 68 member Clubs, where these Clubs are well positioned to deliver these projects.

— Lack of direction from the FA leads over use of artificial surfaces in competition matches leads toconfusion, eg selective use in the FA Trophy and FA Cup (not beyond First Round) but use ispermitted in European competitions.

— Funding for Youth Development schemes organised by Football League clubs relegated to theFootball Conference cease after two years.

— In common with all levels of football in Britain there is a lack of ethnic and gender diversity inthe administration of the game.

Opportunities— Opportunity to call upon governing body and senior football competitions and organizations for

help and advice.— National competition gives greater scope to sponsors & partners for wider exposure.— The FA Cup and the FA Trophy. Clubs welcome the opportunity to play in these competitions and

the Football Conference consistently provides both Finalists in the FA Trophy.— Premier Division Play-Off Final at Wembley Stadium. The 2009–10 Final attracted 42,669

spectators.— Opportunity to extend promotion/relegation agreement with the Football League from the current

two Clubs promoted & two Clubs relegated to four each way, in line with arrangement betweenDivisions within the Football League.

— Players have the opportunity to represent their country.— Opportunity for former Premier League and Football League players to prolong and/or resurrect

their careers.— The Club Community scheme provides players with the opportunity to identify different career

paths.— Through the Club, Club sponsors have opportunity to engage with local businesses.

Threats— Re-structuring in Leagues above taking top Clubs from Football Conference.— Current economic climate.— Declining interest, eg falling gates.— Mass media coverage of most senior Clubs and Leagues.— Television coverage and scheduling of senior Competitions.— End of season movement of Clubs affects stability and consistency of competition.— Rising cost of travel impinges on visiting supporters’ ability to travel, thereby reducing attendances.— Withdrawal of personal funding provided by ambitious Owners/Directors.

1. Should football clubs in the UK be treated differently from other commercial organisations?

No.

Football Clubs must be compliant with UK Company Law and meet all their commercial and legalresponsibilities.

It is acknowledged football clubs trade, and are often funded, differently to normal commercial organisations.Unlike conventional companies football clubs engage more deeply within their local communities and carrywith them the history of the area they represent and long standing allegiances and hopes of their local (andoften large) supporter base. Clubs compete against one another in competitions; despite variances in theirstructure, eg constitution of club, amount of resources available, and size of support. They must, however,meet all liabilities and responsibilities as expected of any other trading company.

Like Companies with responsibilities to shareholders, football clubs have responsibilities to meet with theirsupporters, communities and fellow participants. The difficulties of cash flow forecasting are understood, where“revenue gathering” home matches can be postponed by inclement weather and opponents having Cupcommitments, but these variances are well known within the industry and must be budgeted for. To suggesttreating clubs differently from other commercial organisations creates the possibility of treating those trading(and paying their bills) differently from those that are not meeting their creditors in full and in a timely manner.



This disparity will affect the competitive integrity of the competition. The FC has adopted financial systemswhich implement effectively the Competitions belief Clubs should be responsible for all their debts, in full.

2. Are football governance rules in England and Wales, and the governing bodies which set and apply then,fit for purpose?

The answer to this question is possibly relative to a Competition’s position within the game’s structure.

Historically, the FA has successfully governed football through a culture of Committees reporting to a FullCouncil comprising representatives from across the whole football spectrum, but predominantly from CountyFootball Associations. But the game has moved on. Its evolution over the past 20 years has been rapid,particularly since the formation of the Premier League. Competitions, Clubs and participants have becomemore professional. They have become lean organisations, requiring quick incisive decisions. Levels ofbureaucracy, with time consuming decision making processes, slow the fast moving industry football hasbecome.

The progression of the Premier League into an organisation commanding global appeal raising millions ofpounds, enables it to fund many aspects of the game and communities. The funding of several communitybased schemes, as well as many of footballs stakeholders including Competitions (and therefore, indirectly,clubs) puts the Premier League in a position of immense strength, and largely autonomous from the FootballAssociation. The effect has enabled the Football League to reach up with its own development of theChampionship, League One and League Two. These organisations comprise the Professional Game Board.Although the Football Conference has observer status on the Board, it heads the remainder of the footballstructure, under the control of the Football Association’s National Game Board.

The Football Conference understands this position and welcomes the involvement from the FA. TheCompetition worked closely with the FA to restructure the National League System in 2004. But theCompetition now has 19 of its 24 Premier Division Clubs with a full-time playing staff. Its Premier Divisionis required to comply with many regulations, including FIFA dictates, with which no other Competition in theNational League System (NLS) needs to comply. The Football Conference has reached the stage where it, too,needs to reach up. It requires a degree of autonomy from the NLS, within its Rules and procedures, to fulfilits responsibilities and objectives.

The Football Conference feels it is “the meat in the sandwich”, between the Professional Game and theNational Game. The Burns Report addressed the organisation of the game and it was left to the FA to implementthe recommendations. The FC would like to see the Report fully implemented.

The FC is content when matters of governance arise, that may concern it, they are dealt with fairly, butprocedures could be made leaner to increase the efficiency and effectiveness of decisions.

3. Is there too much debt in the National Game?

There is nothing wrong with debt, eg borrowing money, providing resources are in place (or are expected tobe in place) to repay it. Put another way, “there is nothing wrong in paying your bills”. For this reason the FCdoes not accept “football creditors” should receive preferential treatment. Football clubs have as great a dutyto ensure their suppliers, HMRC, and other creditors are treated as fairly as narrowly-defined football creditors.

Whilst the national debt has increased the FC has recognised its responsibilities to ensure a financial “levelplaying field” exists for all its members. Any Club not meeting is financial responsibilities gains a pecuniaryadvantage over its competitors by having funds available for other purposes, eg for better players, therebygaining a competitive advantage.

The FC has installed a quarterly reporting system whereby expenditure on players’ wages can be comparedwith turnover. Furthermore, in conjunction with HMRC the FC monitors the payment of Crown debt. The aimsof the FC initiatives in this respect intend to prepare Clubs for the rigours and risks of the game: encourageClubs to live within their means and become financially sustainable entities; and to ensure, should promotionbe achieved, they are prepared for the increase in costs a higher level of the game will inevitably bring.

There are many examples of Clubs going into Administration and incurring a deduction of points. In thecase of the FC, Clubs have been relegated from the Competition for failing to comply with the League’sfinancial procedures. If Clubs fail to observe the above measures, which are intended to prevent financialfailure—which affects the integrity of the Competition—it may be time to consider more vigorously, costmanagement systems in relation to turnover, eg expenditure on the playing squad.

Whilst there have been financial calamities and chaos in some quarters, football clubs are notably robust.They have a good survival record. With the help of support from their communities they continue to play thegame, even at an appropriate level, should circumstances and legislation dictate they cannot sustain the levelthey were once at.

The FC proposes to continue it endeavours to create sustainable Clubs and supports the regulatory changesemanating from the “top” of the Game.



4. What are the pros & cons of the Supporter Trust share holding model?

We are all Supporters, in some way shape or form. Supporters’ Clubs have always been around, raisingincome to support their Clubs in a tangible way.

Supporters’ Trusts (ST) often start from adversity, eg as a protest or as a result of a Club’s failure. Thereare examples of ST being emotional and passionate but without the necessary financial input, responsibility,skills and experience. On the other hand a ST’s run Club is controlled by one of the key communities it serves,ie the fans. The Club cannot be sold or mortgaged without the agreement of the fans. And where a Club hasland of its own, asset strippers cannot benefit. Fans have a closer involvement in how the Club is run, and withkey decisions, meaning greater “buy in” and ownership. Oversight by fans is more likely to prevent financialover-commitment in search of success and the stronger links to the Clubs brings greater benefits to thecommunity. Every Club is, however, unique. Their constitutions are different: one size does not fit all. Anyproper business model can achieve success, if run correctly. The FC does not advocate any model in preferenceto another.

Many Clubs endeavour to live beyond their means: mortgaging their future in search of success; reluctantto play at the level their resources more reasonably suit. Promotion and relegation are the life blood of themodern game, in which Clubs require considerable sums to survive, let alone progress.

Football is a disease, incurable in many cases. Supporters are proud of their Clubs; their allegiance stayswith them for life; they want to “belong” to their Club. But they also want success. Supporters and Supportersorganisations want to be part of a successful Club and have been known to raise funds for the purchase of aplayer. They are less well known to raise funds for that player’s wages and are less likely to want to share inthe losses their Club makes. Several professional Clubs now have a member of the Supporters’ Club or Truston its main Board, making a valuable contribution.

The game, however, is unique in terms of business models and there are many ownership styles. There willalways be exceptional Supporters’ Trust shareholding models arisen from failure or an offshoot of legalintervention, eg Exeter City and AFC Wimbledon. No two models are necessarily the same. Whilst Supporters’Direct was set up following the Task Force recommendations, Government has since ceased its financialsupport.

Supporters are the lifeblood of football and the FC supports and encourages their involvement in whateverway best fits the circumstances of each Club. Supporters Trusts are one important option available to supporterswho wish to become more involved. The FC welcomes this.

5. Is Government intervention justified and, if so, what form should it take?

Intervention, no. Participation, guidance, advice and tangible help, as a result of joint discussions amongstagreement involvement of all major stakeholders, most certainly yes.

The above should be on the understanding the FA and the major competitions accept the findings of such aCommission and agree implementation. Representation from the Professional Game, the present NationalGame, and Education, as well as selected individuals must be included.

6. Are there lessons to be learned from football governance models across the UK and abroad, and fromgovernance models in other sports?

Financing large increases in salary costs has dramatically affected football, and other sports, within the UKand Europe. Whilst in the USA salary/squad “capping” of these costs has been effective in the management ofmajor sports. The UK has several foreign Club owners and many more players from overseas that haveinfluenced the higher levels of football, whilst the lower levels are drawn into the spiralling cost culture, orsimply follow bad examples.

Football, it seems, is reluctant to look seriously at examples in other sports which may, if properly tested,positively influence the game, eg sin bins in hockey & rugby, 10 yard advancement of free kicks for dissent,technology. Maybe there is not a lot wrong with the game, certainly nothing that cannot be put right. Butfootball must not be insular in seeking solutions for its perceived problems, or simply keeping apace withdevelopment and/or the demands of the spectator. Football should look outward to keep the game interesting,safe and comfortable for all its stakeholders. Perhaps the vehicle expressed in the answer to question 5 willprovide the mode, but there has to be the will to provide the way.

February 2011



Written evidence submitted by Lord Triesman

THE FOOTBALL ASSOCIATION RESPONSES TO THE SECRETARY OF STATE FOR CULTURE,MEDIA AND SPORT, MAY 2009

Introduction

The Football Association welcomes the opportunity to respond to the questions from the Rt Hon AndyBurnham MP, Secretary of State for Culture, Media and Sport. The answers are occasionally inter-dependent.The FA wholly understands the strong interest in Parliament in English football, just as there is among thewider public, in its governance, decision making and long-term future.

The FA have noted with interest the All Party Parliamentary Football Groups report on English Football andits Governance and thank them for their contribution to the debate.

We attach a copy of the FA’s vision 2008–12 to which this response refers.

Context

Football is England’s most popular sport; it was born here and took root worldwide. The FootballAssociation, since its inaugural meeting in October 1863, has had the responsibility and privilege of overseeingfootball in all of its aspects in England and the Crown Dependencies of Jersey, Guernsey and the Isle of Man.We exercise the responsibility with a powerful and effective professional game and through our ownorganisation distributed throughout the country. However the overarching responsibility lies with The FA andwe are determined to meet our obligations in full.

The FA is well placed to handle these responsibilities. It is not only the oldest association in the world butis the association that many in the world football family look to. Standards of integrity and operationalexperience in organising at all levels have meant that The FA has the prestige of being asked regularly toassist throughout the world, just as emerging professional leagues seek the excellent guidance of the FAPremier League.

Football is uniquely successful. It is played in England by approximately 7 million adults and children, with125,000 teams competing in 1,700 affiliated leagues. There are currently 26,000 referees, 150,000 qualifiedcoaches and over 400,000 volunteers running the game.

The game has enjoyed a sustained period of commercial growth. New broadcast deals for England and FACup matches have secured £425 million over the next four years starting in 2008 and £145 million for theoverseas television rights. These sums are under stress in current economic circumstances impacting onbroadcasters, but The FA looks to continue to invest in the future development and growth at every level fromparks to the senior England team.

Other members of The FA’s football family, especially the FA Premier League, the Football League andtheir remarkable professional clubs, generate significant income in their own right from their clearly successfulcompetitions. The commercial advances of The FA and the Leagues are integrally related.

Yet it is important to understand the unique attributes of football and other professional sports clubs. Theyare not simply commercial businesses. They operate in a closed economic environment. While they obviouslycompete, each is also a monopoly supplier—the only supplier of that clubs history and affinity available to itssupporters. Those fans that pack grounds and create the unique atmosphere, whom the players applaud andacknowledge, are not “rational consumers”. It is highly unlikely they will transfer their allegiance whatevertheir dissatisfaction with their current supplier.

It is inevitable that the criteria for governance will go beyond those operating in a normal market. Thefinancial solidity and motivation of club owners is critical to the long-term viability and sustainability offootball clubs. For example, it is not an accident that solidarity payments from the wealthier to less affluentbusinesses characterises this sport, unlike other areas of business. This is because there is a unique element ofmutual dependency in sporting competition which recognises the fact that even the pre-eminent teams arereliant on the competition provided by other teams for the success of their business and sporting models.

The FA also has obligations to use its resources wisely including its subsidiary businesses—Wembley, FALearning and the National Football Centre. As a not-for-profit body we meet these responsibilities throughwidespread distributions to grassroots football, development of the next generation of players, coaches, refereesand administrators; and a significant contribution to the Football Foundation and charities. We work witheducation, health and social inclusion authorities, with the Police and the Armed Forces

The FA is a member of FIFA, the world regulatory body, holds a permanent seat on the International FootballAssociation Board (IFAB) that sets the rules of football and is a member of UEFA. Our international work isextensive. We are campaigning for the right to host the FIFA World Cup in 2018 or 2022.



For all of these reasons, we see our role as promoting a “One Football” approach, with one set of valuesguiding every level of football. To fulfil this vision, whether measured by the performance of representativeteams, financial growth, attendances or participation, The FA must also incorporate long-term sporting andsocial objectives (balance of competitions, integrity, sustainability of clubs as vital social institutions, thepositive social impact of football and so on). We are guided throughout by the Principles of the BetterRegulation Task Force—namely proportionality, accountability, consistency, transparency and targeting.

We celebrate success and we also have the duty to adopt a prudent approach, much challenged in the presenteconomic conditions, to protect the long term viability of our sport.

The FA’s Role as a Regulatory Body: General

One of the key Goals of the FA vision is to be trusted to lead. As well as The FA’s commercial andredistributive responsibilities we also have important responsibilities as the governing body for football whichrequire The FA to regulate the game at all levels. The FA must be trusted to lead across the full breadth of itsremit including its role as regulator, which as a core function of The FA will clearly have an impact on theperception of the organisation both inside and outside the game. In England we have this exclusive remit underFIFA statutes, and at European level the remit is endorsed by the organisers of European competitions, UEFA.

The FA’s role as regulator is handled through its Council which delegates responsibility for such matters tothe Football Regulatory Authority (FRA). The FRA is responsible for the Rules and Regulations of The PA,for the disciplinary processes relating to misconduct and for matters of policy relating to the regulation ofthe sport.

In addition to the constitutional framework that provides the backdrop to The FA’s work as regulator, TheFA is also mindful of acting in a responsible, open and accountable manner with its stakeholders. In doing so,The FA seeks to ensure that it is, as far as possible, able to drive better regulation through a consensualapproach. This accords with the Principles of Better Regulation and ultimately should ensure that The FA putsin place regulations that have the buy-in of the majority of its stakeholders and which are therefore easier tomonitor and enforce. Nonetheless, the ultimate responsibility lies with The FA.

The FA’s Role as a Regulatory Body: Legal Context

The FA’s role as regulator arises in a private law context; that is to say it is not supported by any statutoryor legislative framework. This means that The FA regulates via contract and the rules laid down by The FAessentially make up the contract that binds The FA and its participants together. As such The FA has to bemindful of, and act in accordance with, the legal framework provided by UK and European Community Law.

Arguably the two most significant facets of this legal framework insofar as The FA’s position as a privateregulatory body is concerned, are: the doctrine of restraint of trade and competition law.

It would be sensible for this specific set of obligations to be couched in Sports Law, legislation that resolvesambiguities that demonstrates inter alia the direct link between FIFA and The FA, with parallel arrangementsfor other sports.

Conclusion

The FA has to develop particular rules and regulations for the good of the sport, has a responsibility toensure that at all times it imposes a regulatory regime that is proportionate and legitimate and that is built towithstand, as far as possible, any legal challenge.

However, given the status quo, the current legal context sets the framework for a number, if not all, of theareas that arise in the seven questions, could and should more be done to protect this great game through amore robust regulatory regime.

Consequently, and in light of the undoubted success of English football, from the FA Premier League toevery local league, we advocate limited changes which build on what already exists. The changes should buildtrust and reduce the areas of doubt that are sometimes expressed.

1. How can we ensure that the regulation of financial matters in football is more joined-up and ensureconsistency between the leagues?

Context

The FA, the FA Premier League and the Football League undertake a significant level of collective workand operate closely together at all levels (from The FA Board down to day-to-day contact between the staff)and across a broad range of issues that affect the governance of the game. While a significant proportion ofthis work is centralised through The FA, there is also a significant amount of delegation to the leagues onissues that are competition specific.



The current environment

Some believe that in England the “professional” game is separate from The FA. This is wrong. In fact theprofessional game is an important constituent part of The FA and some of the key constitutional and executivebodies demonstrate the close inter-relationship.

— The FA BoardThe FA Board comprises the Independent Chairman, Chief Executive, five representatives of theprofessional game and five representatives of the national game. Three of the professional gamerepresentatives are appointed by the FA Premier League and two by the Football League. The FABoard manages the affairs of The FA and has wide powers which can be found in The FA’s articlesof association.

— The Professional Game BoardA number of The FA Board’s powers are delegated to committees and boards; one of the mostimportant is the Professional Game Board (PGB) which consists of four members each from theFA Premier League and the Football League. The PGB makes recommendations to the main FABoard about matters of importance to professional football.

— The Football Regulatory Authority (FRA)The (FRA), a division of The FA which reports into The FA Council, is responsible for performingthe regulatory, disciplinary and rule-making functions of The FA. After the initial three year period(July 2007—June 2010), the composition of the FRA will be four Professional Gamerepresentatives, four National Game representatives and four independent members.

— Football Management Team (FMT)In addition to the discussions which take place at more formal levels, directors of The FA, TheFA Premier League and Football League meet fortnightly to discuss the major issues affecting thegame and each organisation.

It is important to recognise that many of the Rules and Regulations that apply are broadly similar acrossThe FA, the FA Premier League and Football League. This provides a helpful basis for modest reform.

It is also important to recognise that there are areas where the leagues and competitions that are sanctionedby The FA face different challenges due, for example, to the scale of their operations. The challenges faced inthe FA Premier League are different in certain aspects from those faced by the Football League, FootballConference and leagues operating below that. Consequently a one-size-fits-all approach would simply not workand there has to be recognition that some divergence in the regulatory regimes is likely.

In principle there is little wrong with this approach. It ensures a reasonable level of autonomy at leaguelevel. While there will be areas where leagues have distinct concerns to address for their competitions, The FAand the leagues liaise closely to ensure that wherever possible issues across the game are addressedappropriately and with consistency.

However it is clear that there are areas where the organisations adopt differing approaches and where acoherent approach will make more sense and be more efficient—the most obvious example of this in the areaof financial regulation is probably the Fit and Proper Person Test (“FAPPT”) to which we will return inresponse to Question 5.

Issues for Consideration

Any significant changes resulting from the issues raised by the Secretary of State would follow full discussionwith the professional leagues. Consensus is desirable. The FA believes that some areas are best approached ona football-wide basis and others best delegated to the leagues. In these latter areas The FA should, of course,establish guiding principles to provide the framework within which the leagues can operate.

It is a control function of The FA as the governing body to protect the framework so that there is coherenceand clarity for those in the sport and the wider public.

Recommendation 1.1There should be one common standard for financial reporting by clubs on an annual basis, preparedby independent auditors, with the information to be lodged with The FA and the league in which theclub competes. The report should, for the clubs in the top four divisions (The FA Premier Leagueand the Football League Championship and Divisions One and Two), be based on:(a) The financial criteria of the UEFA Club licence.(b) The auditor’s statement on the “going concern” audit requirement.(c) Any further stress tests that The FA through the FRA may from time to time consider necessary.(d) Any additional information that the leagues require.Group business accounts should be treated on the same basis.



Recommendation 1.2The FA will publish on its website these annual returns (future financial information (included inUEFA licence) and stress test information may be particularly commercially sensitive and not suitablefor publication (eg competitors who may be negotiating against the clubs concerned).Recommendation 1.3Below these top four divisions The FA will design in consultation with the leagues down to tier 6, alesser set of requirements which nonetheless meet the objectives of consistency, clarity andtransparency.Recommendation 1.4At all these levels, The FA through its regulatory department will have the power to alert any clubto an identified problem and may require a proportionate set of conditions to be met to provide anappropriate solution. This will only be done in consultation with the appropriate league.

We believe that this is straightforward and logical. Those within the game and wider public will see aconsistent set of standards operated by the appropriate regulatory authority and based on the constantlyimproved standards already demonstrated by the leagues. Nonetheless, handling these issues is frequentlysensitive but the time is right to make real progress. It will clarify the hierarchy in governance including withthe international bodies. Jurisdiction, properly described, will lead to greater efficiency alongside greater clarityand consistency.

The Government should actively consider, in discussion with all sports authorities, whether it can assist themby clear specification of rights and responsibilities in financial and other matters either through legislation orother levers in public policy.

2. Is there a case for greater transparency and scrutiny of ownership of a club, including the amount of debtused to finance any takeover and whether the level of debt is sustainable and in the wider interest of thegame?

Context

Football is a sport. It has generated significant, valuable commercial enterprises but it remains a sport witha specific character. It is different from other enterprises in one vital sense—its fan base is not made up ofconventional customers who will switch between products in a normal open market. The enduring history andsocial significance of clubs flows from this monopoly supplier characteristic.

The Deloitte "Annual review of Football Finance" (May 2008) reported around £1.4 billion had been usedto fund changes in ownership of clubs in the FA Premier League and Football League Championship since thestart of 2005.

Responding to the Secretary of State it would be hard to argue, legally or in policy terms, that significantlydifferent rules should apply to football transactions than apply in the wider economy although the specificityof sport does have implications for probity, reputation and competition. The FA seeks the right balance in thelong-term interest of football.

Today, it would be myopic to disregard the global financial climate, credit restrictions, re-financingdifficulties and broad trading downturns that impact all economies.


The FA and the leagues have measures in place to address these issues.(a) Fit and Proper Person Test (“FAPPT”) Regulations

These exist to assess and monitor the probity of those persons who have management or ownershipcontrol over English football clubs.

(b) Notification of Changes in Ownership in ClubsThe FA and the professional leagues require they be notified of any changes in the ownership structureof clubs. A number of clubs which must also comply with the listing requirements on the LondonStock Exchange.

(c) Transfers of MembershipThe FA and leagues closely regulate changes in ownership when a club’s membership transfers to anew limited company.Most frequently this occurs when a club enters insolvency and its membership of The FA and leagueis transferred or sold as an asset to a new company. These provisions do not apply to a takeover whereshares in an existing company are sold to new owners. We deal further with insolvency in question 3.

(d) Dual Interest RulesBoth The FA and the leagues regulate individuals taking an interest in more than one club competingin the same competition. These rules protect competitive integrity and prevent inappropriate influenceon the outcome of matches.



(e) Statutory Provisions

Clearly the requirements under football rules are additional to other provisions that apply to the saleof companies and the source of funds used for such transactions. For example, any transaction mustbe conducted in accordance with UK company law and the Proceeds of Crime Act (“POCA”) 2002.

The FA has recently issued guidance on the application of the POCA (and money laundering) in a brochuresent to all the FA Premier League and Football League clubs.


In regulating the ownership of clubs it is important to identify and consider the specific problems that needto be addressed. The main issues are increased transparency, a strong threshold for probity and, so far aspossible, and a grasp of intention on the part of owners. Consequently we ask:

— Is there sufficient, proportionate regulation of potential new owners?— Are there issues about the sources of funding by new owners of clubs?— Are there disproportionate risks, especially under conditions where more rigorous stress

testing is prudent, as a result of debt levels?— Should there be concern over non-English investors becoming club owners?

In several of these areas, UEFA as a competition organiser is likely to modify its licensing requirements. Ifit does so, to ensure consistency of reporting to The FA, we are bound to consider these requirements inour regulatory system. We anticipate the major European leagues including the FA Premier League will dothe same.

The Regulation of New Owners

Any regulation in this area must be legitimate and proportionate. With the FAPPT the game has implementedan additional layer of regulatory oversight that applies beyond the statutory requirements of UK Law. Thefootball authorities believe their approach satisfies the requirements that apply to them as regulators i.e. theFAPPT is based on clear, objective factors and not subjective views or indeed unsubstantiated allegations.

Recommendation 2.1There should be a single FAPPT, administered by The FA, of all professional clubs in membershipof The FA. No doubt it will largely mirror the position in the leagues but the aim is a single,consistently applied, transparent requirement. It would apply to all individuals holding a Director’srole in the top six leagues. The tests we commend are set out in question 5 and they extend the ambitcurrently used and, as with current practice in the leagues, go beyond UK statutory requirements.

Sources of Funds

There are already legal requirements that funds may not come from illegitimate sources; and rules governingintegrity so that no more than one property in any competition can be owned by a single owner. Strongapplication of such rules will dissuade many would-be illegitimate investors who might view football clubs asrelatively lightly regulated, high cash turnover businesses.

However, given the number of high-value, multi jurisdictional transactions in football, it would beappropriate for any regulatory, governing body to base its approach on the right risk assessment. Naturally, ifany football authority is concerned about the legality of funding sources, it has an obligation to bring suchanxieties to the relevant authorities.

Recommendation 2.2The FA believes that with greater resources devoted and a mutual obligation to work with professionalpartners, the requirements for transparency in the regulation of this area should, as a minimum, mirrorthe existing regulations for the transfer of memberships and be applied consistently across the topsix leagues.It will never be possible to track financing arrangements entirely through multiple companies andoffshore corporations (as finance businesses worldwide have amply demonstrated). However solutionsadopted to ensure for accountability in t banking corporate transparency will help over the comingperiod.The minimum standard should be complete disclosure of the sources of the investment sums, theaccuracy and completeness of which are attested to by owners (and where appropriate their proxies).Penalties for mis-reporting could range from disqualification of directors or clubs, to pointsdeductions and fines since the purpose of misinformation is likely to be unfair competitive advantage.



Increasing the indebtedness of clubs

Clubs have raised money in a variety of ways to achieve remarkable success. It will, in any business, be forthose running the business to judge risk and make sensible decisions. It is right for those with the long termresponsibility for football in England to think ahead. In football there are already provisions including sportingsanctions where clubs have over-reached and thereby sought an unfair competitive advantage.

So a thorough discussion of the options does not undermine pride in the unquestionable successes. Indeedthe greater risks have occurred below the very top of the sport. The FA can play a positive role by fostering asustainable approach to the management of clubs as great community assets.

Recent club takeovers have seen significant levels of debt incurred to fund share purchase, in some casesadded to the club’s balance sheet together with the associated interest payment obligations. This is whollylegitimate in English law and happens in other industries.

The FA does not impose restrictions on the capital structure of a club. The Football League does specify theshare capital for a club transferring its membership to a new company. The key to sustainability is that thoseresponsible for the company manage debt appropriately. No doubt this is more testing in the current economiccircumstances, as the Deloitte Annual review 2008 demonstrates.

Our position is that debt is not wrong per se but one of the legitimate methods that clubs use to fundoperations and working capital requirements. Numerous clubs in the professional game have greatly improvedtheir facilities in the last 15 years as a result. Given there is no public funding comparable to that in Germanyand France, for example, to build or improve stadia or bid successfully for international competitions, the useof debt financing is more important in England.

The key questions for clubs and regulators are: is the debt serviceable as part of a sustainable business planand are the arrangements sufficiently transparent to the regulatory association?

We believe that given the rate of clubs facing insolvency events, sustainability is an issue. It is evident thata proportion of clubs trade continuously at or beyond their financial means. Thus the enhanced “going concern”provision The FA advocates is essential.

The generosity of many owners sustaining trading losses on the basis of growing debt nonetheless increasesrisk when not supported by an achievable business plan. The owners of some clubs have recognised that debtin this form may be unattractive and there is considerable admiration for the conversion of a proportion ofsuch debt from these “soft loans” into new equity at Chelsea FC. We recommend a discussion with professionalpartners of schemes to take such steps more widely, perhaps on an annual basis, adding to sustainability andtransparency. This would lessen the risk and impact of individual’s calling in debt at short notice.

With the professional leagues we would aim to agree a framework in greater detail that deals with clubs thatrepeatedly get into insolvency events; that make consistent losses without a realistic plan to extricate the cluband where the “going concern” report reflects this; and clubs whose owners fund debt on the balance sheet ata level unlikely to be resolved by a business plan and where conversion into equity has not occurred.

The FA would welcome an early discussion with the professional clubs, as an element of the licensingregime, to agree the appropriate ratio between equity and “soft loans” to be sustained at all times unless variedfor extraordinary reasons acceptable to The FA and the league in which the club competes.

The FA believe that it would be difficult to stipulate that clubs start any season with positive net assets(essentially the French licensing model) unless special arrangements are made to exclude capital investmentfrom any such regulations and a provision for conversion into equity is in place. The argument that it isunhelpful to distinguish between types of debt is understood but is unappealing. The standards set forsecuritisation of different types of debt is well-understood and therefore the likely extent of risk.

Recommendation 2.3

The FA should conduct a review with the FA Premier League and Football League to consider themerits of a more proactive approach to the financial security of football clubs, including measures toimprove stability, enhanced financial information, specify equity: debt ratios, equity levels, sourcesof funds and beneficial ownership within the umbrella of a domestic licensing regime.

Non-English Investment

The case against “foreign” ownership of clubs rests largely on the assertion that clubs should have a local(including regional and national) character. Owners failing to have this characteristic are perceived to lack adepth of affiliation to that club and its geographic environ.



The FA is clear. It does not accept discrimination on any basis including nationality. UK businesses includingutilities are often foreign owned and UK owners often own overseas businesses. It is both a reality of globalequity ownership and European commercial law.

Recommendation 2.4These anxieties can be alleviated by:(a) Boards of Directors of clubs voluntarily agreeing that one or more English nationals are a

member—indeed most satisfy now.(b) A formal relationship being developed with supporters groups, whether or not they have

secured Board representation, promoting discussion of the distinct local character of the cluband its community role.

(c) Boards publishing as part of the licensing requirement an annual statement of their plans forthe club, commitment to it over the longer-term and commitment to the underpinning valuesof England’s football.

Licensing regime

In the answer we have discussed what would be a number of new features of an enhanced licensing regime.While they often are derived from UEFA requirements, as a whole they would provide a better frameworkirrespective of whether clubs enter into UEFA competitions.

Recommendation 2.5The FA advocates that, like France, Germany, Holland and Spain that alongside the UEFA licensingframework, a domestic licensing regime is adopted in England, but adapted to our culture. We acceptthe research findings that (with the exception of Spain) such systems have led to more stable financesalthough in general they have not changed competitive balance for the better.In the event that England re-enforces its licensing system, aside from the FAPPT provisions discussedearlier, it would be appropriate to embody non-financial criteria to which most clubs are sympathetic.These include:(a) Minimum level of community involvement.(b) Minimum levels of supporter involvement and a customer charter.(c) Investment in youth development.(d) Security of tenure of ground.(e) Open meetings—including, of course, shareholder meetings where appropriate.Such a system would benchmark good governance and be commensurate with the better regulationprinciples

The FA, allowing for these propositions, recognises that the sport has been very robust at the highest level,and that the clubs are independent and autonomous businesses responsible for their own stewardship. We aimas do other regulatory bodies today to assist in securing the long term financial health of our “industry” namelythe whole football economy. In this light, The FA is a willing partner in any discussions that lead to significantchange in the structure of the football business sought by its participants.

3. Is there a need to look again at the rules that penalise clubs that fall into insolvency, including theintroduction of an early warning system in respect of clubs falling into arrears?

Context

According to research published in 2008 by the Centre for International Business of Sport at CoventryUniversity, since the introduction of the Insolvency Act in 1986, 56 clubs in the English league system havegone into insolvency with a total of 68 incidents of insolvency (some clubs having been declared insolventmore than once). The two most recent examples have occurred during the current season, Southampton FCand Stockport County FC.

The Premier League does not have any clubs that have experienced insolvency whilst in that league. Howeverrelegation would appear to be a key factor in causing clubs to become insolvent: in 30% of insolvency eventsthe club had been relegated in the previous 12 months; in 36% the club had been relegated in the previous 24months; and in 49% the club had been relegated in the previous 36 months.

The Football League must take great credit for the fact that, despite many predictions to the contrary in thewake of the collapse of ITV Digital, its competition is still intact, with 72 professional clubs taking part in itscompetition in spite of the significant number of its clubs that have suffered insolvency.



Current Environment

Football has established a set of provisions for insolvency events that have to be understood as a whole.

Football Creditors Rule

The Football Creditors Rule (FCR) prioritises debt within football itself and is frequently challenged by HMRevenue and Customs because HMRC has not got preferential creditor status.

Sporting Sanctions

Since 2004, The FA Premier League, Football League, Football Conference and feeder leagues to theConference have had sporting sanctions, namely the deduction of points, in place to apply to clubs entering aninsolvency event. The purpose is to apply a sporting penalty to member clubs mismanaging their finances andthereby potentially gaining a competitive advantage. This approach is usually perceived as harsh by supportersbut needs to be properly understood. For example, the 20 point penalty applied to Luton Town FC by theFootball League did not result from insolvency but failure to satisfy creditors once they had become insolvent.

Clubs may be sanctioned by not being re-admitted to a competition. Re-admission in any specificcircumstances is granted on specific terms since the alternative would be simple exclusion.

Broadly The FA does not believe that these sanctions are wrong but they are not the whole approach needed.

Insolvency Policies

Aside from Sporting Sanctions, the Football League and the Football Conference have Insolvency Policiesgoverning clubs exiting insolvency events. Since these leagues are most affected by insolvency problems andhave therefore done most to address the issues in order to protect competitive integrity, they deserve credit.

The Football League requires, inter alia, payment in full to football creditors and satisfaction of othercreditors through a Company Voluntary Arrangement (CVA) protecting football interests and addressing widerobligations. If these requirements are not satisfied, the League may attach additional conditions to an applicationfor membership.

The Football Conference requires payment in full of all creditors. Failure leads to the Club being removedfrom the Competition and that generally results in relegation by one or two divisions.

The approach of the football authorities has been “back end” to deter insolvency. The FA and all authoritiesprefer an “end to end” approach underpinned by the deterrent measures described. We need to try to preventclubs facing such dire outcomes.

In the last 18 months, The FA’s Financial Regulation Department has made progress by identifying andanalysing the problems and devising preventive measures.

HMRC Debt reporting

The FA has worked with the Football Conference on initiatives to reduce its club’s exposure to HMRC debt,reducing the risk of HMRC objections to any proposed CVA as an exit route. This also aims to increasecompetitive integrity by preventing clubs from continuing to accumulate significant HMRC debt whilst at thesame time maintaining expensive squads. Breaches of these league requirements lead to a registration embargo.

Clubs are required to self-report PAYE, National Insurance and VAT indebtedness with a two month periodof grace to pay it off or agree a repayment scheme with HMRC. The FA has supported the league in thisprocess including the registration embargo.

The Football League intends, we understand, to implement a similar scheme.


The approach across the whole of the professional football scene would benefit in wider public perceptionfrom consistency. This should be the case whether or not the competition has or never yet suffered aninsolvency event. The UEFA licence requires robust management of tax and football debt and this provides agood base.

Recommendation 3.1The FA believes that in discussion with the professional leagues it should devise one scheme forinsolvency events in all their aspects including re-entry allowing for a reasonable but restricted spreadof discretion to the leagues; and which prevents a club timing an insolvency event (as happened atLeeds United FC) to minimise the impact of sanctions



As the regulatory body, The FA should continue to embrace its “end to end” approach. With full and relevantreporting by clubs, it will be increasingly possible to devise measures to prevent crises in the first place. Wehave already invested heavily in capacity around early warning, not least in respect of HMRC

Recommendation 3.2For the measures to work fully The FA must exercise its right to inspect club accounts across theleagues if there are reasonable grounds. Again this is best done in partnership with the leagues in theprofessional game and national game.

The Football Regulatory Authority has formed a sub-group to consider insolvency issues and examine newscenarios, as have arisen recently with Southampton FC.

Recommendation 3.3The FA believe that it would also be worth considering whether, on those occasions where a newcompany steps into ownership involving Supporters Direct holding equity or the use of othercommunity based ownership structures, this might mitigate penalties to some extent as promoting anintention to pursue competitive integrity.

The FA believe that the proposed framework provides a reasonable level of intervention on a punitive andpreventative basis, at the same time recognising that clubs and club directors have to accept ultimateresponsibility for the proper management and stewardship of their clubs.

4. Do we need to reconsider the rule that requires insolvent clubs to pay "football debts" before other debts?

Context

Football and other sports clubs have in some cases stretched their financial resources beyond the limits inpursuit of success. This has principally happened in the second and third tiers of our sport.

The FA recognises the fact that to an external observer it can be hard to understand the justification for arule that may disadvantage local businesses and individuals when other football parties are afforded a greaterlevel of financial protection.

Current environment

The Football Creditors Rule (FCR)

Since its introduction in 2000 by the Football League this has provided an additional layer of protection tocertain participants in football through preferential status as creditors. It has withstood HMRC challenges inthe courts.

HMRC

The majority of insolvency events involve significant debts to HMRC. Having failed to challenge the FCRon policy terms, HMRC tends to vote to block CVA’s as a creditor and where owed more than 25% of totaldebt, is able to do so. This can lead to failure to exit a CVA since the club is bound to pay football creditorsin full but cannot satisfy HMRC if its ratio of debt is above 25%.

The FA and Football League have discussed this with HMRC not least because the Revenue has allowedclubs to build up significant tax debts. HMRC could remove this “credit line” and enforce greater responsibility.They fail to do so.


There is no agreement across football to remove the FCR, with arguments on either side of the case.Recommendation 4.1The FA through the Football Regulatory Authority’s sub-group on insolvency matters will seekgreater consensus on the application of the FCR.Recommendation 4.2All clubs should report, every two months, to The FA and their leagues in the same form on theextent of all classes of debt to HMRC and on any arrangement made where debt is deferred byagreement. This will reinforce the early warning system and trigger remedial steps early rather thantoo late.Recommendation 4.3The “going concern” report at audit should in every club address what has happened during the reportperiod on this matter specifically with appropriate recommendations. Such advice to clubs in avoidingundue risks would require specific proposals from clubs on how they intend to respond that givessufficient comfort to the auditors—broadly what is required of companies that are regulated by theFinancial Services Authority.



Recommendation 4.4In the same audit statement clubs would be required to show they have no debts to other clubs orfootball creditors other than those outstanding in a programme for payment mutually agreed

The FA Premier League operates a redistribution (solidarity payments scheme) devised to dampen the impactof relegation. However some of the most severe collapses have followed relegation

Recommendation 4.5The FA recognises the difficulties in addressing the problems of relegation, for example the parachutepayments may not wholly cover the consequences of relegation but may still provide a considerableadvantage over other clubs. The FA and leagues should address this matter thoroughly and soon toensure the risks of collapse following relegation are minimised.

5. Do the “fit and proper” persons tests need to be strengthened and should they be applied prospectively? Isthere a case for a single fit and proper’ person requirement in both the Premier and Football Leagues fordirectors and others involved in the management and ownership of clubs?

Context

Since 1999 there have been discussions of the best way to ensure that the stewardship of football clubs isin the right hands. All discussions have found it easier and more acceptable to devise legal tests) that gobeyond domestic and European Community law rather than more subjective ones. However, these issues areplainly back at the centre of discussion.

Current environment

In 2004, The FA Financial Advisory Committee created a FAPPT implemented by The FA for clubs in theFootball Conference and feeder leagues. The FA Premier League and Football League also introduced FAPPTtests for their member clubs. The tests involve a number of similar principles but there are currently three setsof rules in English Football.

The FA Regulations currently require any individual acting as a “Director” to complete and sign a formstating that they are not subject to any one of a number of “Disqualifying Conditions”. These are similar tothe conditions adopted by, for example, the Financial Services Authority. The FA defines a director not onlyan individual registered as such at Companies House, but also those exercising either direct or indirect controlover a club and any person holding 30% or more of the share capital of a club.

The Disqualifying Conditions comprise:— A disqualification order under the Company Directors’ Disqualification Act 1986.— Unspent conviction for any one of offences listed on a wide-ranging Schedule of Offences.— Being subject to any bankruptcy order.— Being a Director of one football club that has been subject to two Insolvency Events or two

football clubs that have been subject to one Insolvency Event during the preceding five years.— Being banned by a Sports Governing Body from the administration of that sport.

The three sets of FAPPT differ slightly from one another in respect of the tests although it is also true inevery case the test goes beyond the scope of existing legislation. All parties review the provisions regularly.For example the 30% provision was included in 2007–08 to mirror the City Code on Takeovers and Mergers,and further changes deal with “shadow directors”.


The FAPPT is a critical test both in terms of football and public confidence. It is not currently sufficientlyconsistent or robust notwithstanding efforts on all sides.

The FA believes that changes would be of real benefit in the following areas:Recommendation 5.1The FAPPT should be extended to cover not just those disciplinary or criminal offences alreadyrecorded, but also to whether a person has been notified of any potential proceedings or aninvestigation that might lead to those proceedings.This would include such considerations as the freezing of an individual’s assets and would followsimilar provisions to the FSA TestRecommendation 5.2FAPPT checks should extend to the annual reports of Human Rights Watch (The Foreign andCommonwealth Office) which can identify people not subject to legal threat, despite seriousallegations, because they control or can exercise control of the legal system that might otherwiseintervene in their cases. This has the merit of being the authoritative public domain review whichcommands global respect.



These extensions would protect clubs and the sport from reputational damage. These new tests would beapplied prospectively. Where these tests fail to identify grounds for a disqualification that subsequently comesto light, The FA believes that there would be a proper desire to put the matter right. In UK domestic law thisshould not be exercised so as to prevent unreasonably the opportunity of an individual to defend themselvesfrom charges.

Recommendation 5.3For clarity, The FA and others should share a single FAPPT. It should be widely published with fullexplanations to those it might affect (See Recommendation 2.1)

Whilst application forms might ask for commercially sensitive information this can be handled with completediscretion and should not deter prospective directors or investors. This discretion would not compromise theidentity of those seeking to purchase a club. These arrangements may not prevent acquisition of shares in theopen market, any more than with financial institutions, but would make it possible on discovery to ensure theexercise of proper pressure to divest/step down.

The FA believes that these provisions should form part of the domestic licensing regime.

6. How can we most effectively promote competitive balance and reward success in the professional gamewhile preventing the game from being too predictable?

Context

This is undoubtedly one of the most complex issues. First, football in England is regarded around the worldas passionate and of outstanding quality. This is reflected in attendances and the value of televised rights andsponsorship. It is a story of success. Nobody will welcome changes that diminish success and fair rewards forachievement. The success is dependant on a thoroughly competitive environment from the pinnacle of ourleague system to safeguard its attractiveness and hence its long term prosperity. Every business environmentchanges so it is appropriate to reconsider arrangements periodically indeed this is taking place in the FAPremier League. The FA and the Football League will have significant interest in this discussion.

At the heart of the structure is the pyramid, and the principle of promotion and relegation. By its nature thisprinciple increases financial instability as clubs move through very different trading environments.

So in the interests of football throughout the pyramid, The FA must try to ensure clubs are as evenly matchedas possible to sustain attractive football, avoiding exposure to unwarranted risks, while encouraging theexcellence that makes English football hugely attractive.

This is not simply a domestic issue. The funds that flow from UEFA both enable four English clubs to attractamong the best players in the world and to become increasingly distinct from other clubs, a pattern equallyevident in other major European leagues. Indeed it is vital to acknowledge that the FA Premier League sharesmore of its revenues than the majority of its European counterparts.


The UEFA Champions League is the leading international club competition and the success of the Englishclubs a matter of national pride. Distributions from the competition are worthy of consideration. Qualification,performance bonuses, the market pool and prize money make a fundamental difference not only for the bigfour English clubs but for Real Madrid, FC Barcelona, AS Roma, Internazionale, AC Milan, OlympiqueLyonnaise and Bayern Munich in particular.

UEFA solidarity payments in each league are equally shared. Hitherto this has amounted to 1/50th of therevenues earned by those competing in the group stages. In short this is negligible. This creates a significantfinancial advantage for those reaching the UEFA Champions League group stages compared with their domesticrivals. The Independent European Sports review recommended that in future there should be greaterdistributions of sums to grassroots football.

The FA Premier League

Without doubt, a huge success story. Like other top leagues, though it is hard to argue on the evidence thatits highest reaches have become less predictable. Only Everton (2005) has dented the complete dominance offour clubs—Arsenal FC, Chelsea FC, Liverpool FC and Manchester United FC—over the last five years. Itcould be argued that the league operates in three tiers. The UEFA Champions League is the greatest contributorto this outcome at the top of the table.

Because the FA Premier League is the most successful league on and off of the pitch, it is important tounderstand the data. The average revenue (broadcast, matchday and commercial) earned by the big four clubsis 3.5 times greater than average for the other 16 clubs. Nonetheless, the collective bargaining system used bythe FA Premier League clubs is certainly the fairest intra-league distribution mechanism for broadcastingrevenues in Europe. A redistribution mechanism formula secures this. For example in 2007–08 the top revenueearners, Manchester United FC received £49m from broadcasting rights and the bottom club, Derby CountyFC received £29 million, or 60% of the top clubs revenue. Objectively viewed this is a reasonable balance.



Of course, matchday and commercial revenues have an impact, and there has been a significant level ofinvestment in new stadia and facilities post the Lord Justice Taylor’s Report. Income consequently grew fromcorporate boxes, ticket sales and hospitality. The largest return is unsurprisingly at the largest stadia. The bigfour earned an average of £59 million from matchday revenue; non relegated competitors averaged £17 million;and relegated competitors £9 million. It is a similar picture when looking at commercial revenues. The averagebig four club earned £54 million from this source; for those clubs not relegated it was £15 million; and thoserelegated it was £8 million (all based on 2006–07 figures).

The Football League

We are not aware of any suggestions that the three divisions of the Football League suffer from predictability.We are also aware of the growing attraction to spectators of that competition with the Football League enjoyingits highest attendances for nearly 50 years and over 16.5 million fans attending the matches this season.

However the revenue gap with The FA Premier League is a considerable one. The Deloitte 2006–07 reportshows that The FA Premier League earned £1,512 million in total revenue between its 20 clubs and in theFootball League Championship earned £329 million between 24 clubs.

Many argue that the impact of the “parachute payments” for clubs relegated distorts the Championship. It ishard to sustain this case fully on the evidence. Fewer than one in three are promoted back at their first attemptand fewer than half get back before the parachute payments cease. lt does not appear that these payments havea particularly distortive effect on the balance of the Football League Championship. However, as stated inRecommendation 4.5, The FA and leagues should address this matter thoroughly and soon.


The balance needed to sustain great quality and enhance wider competition will not easily be found. No onewants to damage the former. Most people would welcome the latter. Over the years, people have exploredvarious options from salary caps to revenue sharing to handicapping systems to forms of distributing the talentpool of players.

Salary Caps

Salary caps are sometimes urged on the basis that they encourage prudent financial restraint rather thanexcess. Controlled wage costs would assist clubs to live within their means. In England this approach, a “softcap” where clubs agree on an upper limit on wage expenditure of 75% of income is in place in Football LeagueDivisions One and Two. A scheme in France was introduced and then withdrawn as it was unenforceable whenclubs incentivised players in other ways.

It is, in our view, a matter for the leagues to decide based on the range of financial circumstances they face.At the top levels it would face challenges of legality and would require Europe or worldwide consent toprevent damage to competitiveness. Additionally, freezing expenditure at a particular point—for example at apercentage of current revenues—would cement into the competition the advantage of clubs with the largestrevenues and they would simply dominate. At lower levels, the attractions would be greater to leagues whereinsolvency events occur more often.

Recommendation 6.1The FA believes there is merit in a preliminary discussion across professional football with The FAof a new element of redistribution. If clubs operated to an agreed and specified salary benchmark, itmight be appropriate to levy a charge against those choosing to exceed it, with the excess element tobe distributed in the game at youth and grassroots level, or within the league on a redistributive basis.

Handicapping systems in fixtures

While these systems may make outcomes less certain it would undermine the symmetry of the fixture listand the ultimate guarantee of competition. The FA does not consider this a viable option.

Distribution of the talent pool

Systems of this kind operate in other sports, for example the NFL and Australian (Aussie Rules) FootballLeague. They operate as “drafts” and have broadly been adopted by tough-minded business people to protectthe commercial value of highly competitive environments. It would change fundamentally the structures ofyoung player identification, the transfer market and a range of international arrangements. The FA does notconsider this a viable system.

Recommendation 6.2The FA believes that a preliminary discussion may be valuable in assessing the economics of youngplayer development, potentially improving the incentives for clubs to invest in talent development.A levy currently exists at the FA Premier League and Football League level where 5% is paid to theLeague in respect of transfers. It is paid to the PFA/Players fund, with surpluses returned to the clubs.Given the mechanism exists it may be possible that either a proportion of the fund or the returnable



surplus is retained and applied to young player development on a hypothecated basis or that a slightlyhigher percentage is paid for this purpose.

Revenue sharing

We have already noted the redistributive solidarity payments in England. The FA believes that it is timelyto consider sources of revenue that either do not enter the game or are too concentrated among too fewcompetitors.

Recommendation 6.3The FA would welcome a discussion on the revenues achieved by the gambling industry, both to:(a) pay for the costs of policing its relationship with football upon which it depends to a

considerable extent, and(b) for further distribution throughout the pyramid.

Recommendation 6.4The FA would welcome and would willingly participate in, a discussion between the EuropeanLeagues and UEFA on wider distribution of UEFA Champions League Broadcast income. Both thequantum and destination might appropriately be explored.Recommendation 6.5In the event of further discussion between the FA Premier League and the Football League about thedistribution, The FA believes that it would be appropriate to take full part.

There are no easy answers; however, we hope we have provided significant food for thought in terms ofpotential ways in which the current system and transfer market could be used to the greater benefit of the gameas a whole.

7. Is everything possible being done to develop and bolster the national side? Is there a case for introducinga specified number of home grown players in the domestic league to promote young talent?

Context

The FA currently sends 24 representative teams into World and European Competition. Our explicit visionis that they are winners. We aim to produce teams with a genuine chance of winning and our country expectsno less. The success of our great clubs and national teams is intimately linked.

Current Environment

As the Governing Body our first responsibility is the education and preparation of coaches, preferablyoutstanding coaches. It is a requirement of UEFA and FIFA statutes. We intend to develop a fully qualifiedprofession with standards directly comparable to other professions in terms of assessment and continuousprofessional development.

This will be done through FA Learning, the FA Premier League and Football League as well as stakeholdersthroughout the national game. Only with an exceptional profession (analogous to other teachers) and withacademies and centres of excellence (analogous to exceptional schools) can we achieve the development of thenext generations of footballers. We will write the core coaching manual to guide this work. This is our future.

At senior level, Club England supports the teams. The support level includes coaches, sports scientists,medical and physiotherapy staff and many others. This underpins the best performance possible on the pitch.

Our aim remains to have a world class hub—The National Football Centre.

At the youngest level of players, through age-specific coaching, we are improving the technical ability ofyoung players especially in the 5–11 age group. Work in the 12–16 and 17–21 age groups is also progressingand as the ages increase, so does the need for partnership with professional clubs. We are guided in significantpart by the Lewis Review (2007).


A number of proposals have been made about the ratios of players eligible to play for their country, in ourcase England, in the past year.

The FA have been in favour of exploring the “six-plus-five” principle advocated by FIFA because thedecreasing number of players in top club football eligible to play for England poses an appreciable risk to thesuccess of the national teams. Equally, we have all been aware that European legislation may prove a majorbarrier and this is unlikely to provide a quick change in any event. We understand that many would oppose iteven if legal.

In 2005 UEFA introduced a “home grown” player declaration. It emphasises the training and developmentof young players and argues their importance to the clubs that found and nurtured them. This concept is not initself one about nationality. These proposals have been sanctioned by the European Union and have been in



operation since the 2006–07 season although they only apply to UEFA’S own competitions (UEFA ChampionsLeague and the UEFA Cup (to be renamed the Europa League).

The definition used by UEFA for ‘home grown’ is those players regardless of their nationality, that havebeen trained by a club or by another club in their national association for at least three years between the agesof 15–21. Currently there have to be eight “home grown” players in the 25-man competition squad. The ruleis now well established and is to be reviewed by the European Commission in 2011. Since its inception 13 FAPremier League Clubs have complied with the rule and played in UEFA competitions.

The Football League voted to adopt a “home grown” rule to apply from the 2009–10 season broadly basedon the UEFA regulation. A ‘home grown’ player will have been registered domestically for a minimum ofthree seasons before their 21st birthday and at least four such players must be included in every 16 man squad.

The FA Premier League has announced it has reached a similar decision and we look forward to seeing thedetails of their proposal.

The FA believes that both Leagues should be congratulated. These measures may not necessarily have animpact on the national side but they are likely to do so.

The proposals need on-going thought. Under the UEFA rule if a player is signed by a club from Spain at 15(or 18 under the Football League Rule) he would qualify as a “home grown” player after three years. He wouldbe eligible for the UEFA Champions League but not for our own national team. Indeed, perversely, heconceivably might have kept someone out of an academy that would qualify for the national team. Hence theimportance of considering restricting the movement of young players.

Recommendation 7.1The FA supports these developments and welcomes them. We believe that the interests of youngpeople, their educational opportunities and families mean that it is undesirable that they move fromone nation to another, one education system to another, before the age of 18.We know many argue that 16 is an appropriate age. The whole thrust of mainstream education policyin Europe and the world aside from the poorest nations, is to try and retain all children in educationuntil the age of majority at 18. It is felt to reflect their best interests. In any event this may be amatter for EU Community law, by which we will all be bound but The FA is sensitive to the widersocial policy issues at stake alongside football considerations. UEFA is finalising proposals, with EUlaw in mind, for further discussion with associations, leagues, clubs and players and we look forwardto taking full part in those discussions.

Written evidence submitted by UEFA

This document contains the submission of UEFA to the inquiry into English football governance currentlybeing held by the UK Parliament: Culture, Media and Sport Committee.

The document contains a brief outline of UEFA and is then structured according to the six questions outlinedin the press release dated 7 December 2010. All comments are an objective, dispassionate, external view onthe relevant subjects and are intended to be as constructive as possible. It is evident that in a short submissionof six pages/3,000 words, only a short summary view can be given on each of these very important questions.

The six questions outlined by the committee are as follows:— Should football clubs in the UK be treated differently from other commercial organisations?— Are football governance rules in England and Wales, and the governing bodies which set and apply

them, fit for purpose?— Is there too much debt in the professional game?— What are the pros and cons of the Supporter Trust share-holding model?— Is Government intervention justified and, if so, what form should it take?— Are there lessons to be learned from football governance models across the UK and abroad, and

from governance models in other sports?

UEFA’s view on many of the questions being considered by the Committee are covered, whether directly orindirectly, within the submission of UEFA to the UK All Party Parliamentary Football Group “Inquiry intoEnglish Football and its Governance” (2008–09), and this document adapts many of those responses.

UEFA

According to the statutes agreed by its members, UEFA is an association of 53 national football associations,is the football governing body at European level, and organises competitions for national teams and clubs. Itwas formed in 1954 and is based in Nyon, Switzerland. It has a structure based on representative democracywhose main organs are the Congress (legislature) together with the Executive Committee and the President(executive). In addition, there are autonomous disciplinary bodies to carry out sports judicial functions. UEFAalso has a series of consultative committees and bodies which advise the Executive Committee.



The Football Association is a member of UEFA (and FIFA, the football governing body at world level). Aspart of its view-forming and decision-making processes, UEFA gathers opinions not only from The FA (onbehalf of English football as a whole) but also from European representative bodies of the different stakeholdergroups who are organised on a European level, for example:

— clubs (via the European Club Association [ECA] which represents the top clubs in Europeanfootball);

— leagues (via the European Professional Football Leagues [EPFL] which represents the top leaguesin European football);

— players’ unions/associations (via FIFPro Europe which represents the players’ unions/associationsin European football); and

— supporters (via Football Supporters Europe [FSE], Supporters Direct Europe, CAFE [Centre forAccess to Football in Europe] and other supporter groups).

There are also other very important stakeholder groups who are consulted (coaches, technical staff, referees,etc) via the relevant organisations, forums and bodies. In addition to The FA, UEFA also has some directcontact with other main national English professional football stakeholder organisations such as the PremierLeague, Football League, PFA, LMA, FSF, etc.

1. Should football clubs in the UK be treated differently from other commercial organisations?

The answer to this question is that professional football clubs already are treated differently from othercommercial organisations, in many different ways. For example, the framework governing the employmentconditions of the key employees of professional football clubs (the players) is very specific and contains manyfeatures (whether of international, European or national origin) which differ from those which would apply toemployees of “normal” commercial organisations. The question is more in what way they should be treateddifferently—and that is the task of the football authorities and the state authorities in their respective areas ofcompetence (and sometimes working together).

The various ways in which the treatment of professional football clubs, and sport in general, is different to“normal” commercial organisations can be classified as part of the “specific nature of sport” (also known as“specificity”). For example, where EU law comes into play and impacts on the activities of sports bodies,Article 165 of the EU Lisbon Treaty now requires that the specific nature of sport must be recognised. UEFAbelieves that sport is not “above the law”, whilst this new provision in the EU Treaty, together with numerousdecisions of EU and national bodies over the years, recognise that sport cannot simply be treated as any other“business”, without reference to its specific characteristics (ie the specific nature, or specificity, of sport). Thefirst post-Lisbon decision by the ECJ in a sports case (the Olivier Bernard judgement) certainly vindicates theidea that sport cannot be treated like any other industry, because of its specific nature (in this case in the areasof football education and training). Furthermore, the very fact that most states have a sports ministry, and aparliamentary committee responsible for sport, would indicate that sport, as with a small number of othersectors, deserves special treatment.

In conclusion, we believe that sport (and its professional clubs) is and should be treated differently fromother commercial organisations in line with its specific nature.

2. Are football governance rules in England and Wales, and the governing bodies which set and apply them,fit for purpose?

Whilst every country is of course different, there is still the need for a common basic framework. In everycountry the national association, as governing body, needs to set a framework to ensure coherence across thedifferent levels of the sport and to avoid the unnecessary duplication and layers of regulation, bureaucracy, andred-tape which inevitably results from too many parties trying to control the sport. For example, as regardsdisciplinary sanctions each league should have the competence to deal with disciplinary issues up to a certaindegree of gravity. Nevertheless, to ensure coherence across the sport and the country, uniform sanctions shouldbe fixed by the national association for certain types of offences.

Another key example is youth development—whilst it is clear that professional clubs are involved in, andcritical to, élite player youth development, the overall framework and control of overall youth developmentpolicy and technical matters should be with the national association for all levels of football in order to ensurea coherent national approach to player education.

It is the experience across European football and sport that, almost without exception, where there is morethan one governing body, whether these are formal or de facto governing bodies (who inevitably end upcompeting with each other), it does not help the overall development of the sport as a whole. The inevitableresult is disparity in the standards of governance because this means (by definition) a degree of incoherenceand fragmentation, and this is generally not good for the development of the sport.

To conclude, ensuring that there is one single genuinely empowered governing body per sport per countryshould help to ensure that governance rules are fit for purpose.



3. Is there too much debt in the professional game?

Debt in itself is not necessarily “bad”, and indeed, on the contrary, is often very necessary for sports andtheir professional clubs to develop. The question that needs to be addressed regards the type of debt, but alsohow this fits into the overall financial situation of a club (and therefore, in aggregate, into the financial situationof the game as a whole). As the Committee will be aware, UEFA has taken steps to introduce further and moreeffective financial regulation for clubs competing in UEFA competitions, under the general banner of the“Financial Fair Play” (FFP) initiative.

Back in 2008 when the FFP discussions started, UEFA had to decide on a basic systemic approach andfound a lot of concern and confusion around the role of debt in football (eg destabilising football competitions,threatening the financial sustainability of individual clubs, etc). During the extensive consultation process therewas considerable opinion frequently voiced that UEFA should centre FFP on limiting “debt”, which UEFAmore or less resisted. Although debt levels will be taken into consideration, the ability of a club to break-evenover a period of time and the ability of a club to service all its debts and future obligations will be of primaryconcern for FFP rather than simply the level of debt.

To add a European perspective to the discussions, UEFA’s annual report “The European Club FootballingLandscape” (which we enclose with this submission) sets out a fairly dysfunctional situation across Europe,not just in England. Amongst the main points are net losses reported by European top division clubs of €1.2billion (€11 spent for every €10 of revenue) and one in eight auditors of 600 clubs expressing doubt as towhether their club would continue to trade in 12 months time. The report also discusses debt, setting out therelatively large debt burden that English clubs have, underlining the considerable confusion around the term“debt” and also highlighting the fact that a typical set of financial statements includes many more detailednotes explaining the financial position (balance sheet) than the financial performance (profit and loss account).In other words, to understand the debt profile of a club, or indeed the aggregate debt profile of a country’sclubs, is not easy and needs context. With FFP in mind, the members of the relevant decision-making bodieswill need to consider, amongst other things, not just the size of debt, but the type of liability, any assets secured,the terms of the debt and the maturity of debt repayments against the projected cashflows.

Regarding the relatively high level of debts of English clubs, there would appear to be several differentfactors and issues at play. Firstly, it is somewhat natural that English clubs report a level of financial debtexceeding their counterparts in other European leagues since the stadiums are generally owned and can providesecurity to the lender, whilst elsewhere only 20% of European top division clubs own their stadium.

UEFA does not see a problem, and indeed will encourage under FFP, serviceable debt funding for capitalprojects such as a stadium or training facilities build. Some of the debt in the professional game no doubt fallsinto this category, either through new projects or a legacy of previous investments. However, UEFA sees adistinct difference between (a) debt financing for such long-term football development purposes and (b) morespeculative activities where debt is increased to fund transfer fees or increased salaries (which often has aknock-on effect on most other clubs, as well on the competitions). Economically speaking therefore, “newmoney” coming into football can be divided into (a) investment and (b) consumption, respectively.

The use of large levels of debt connected to leveraged buy outs is thankfully less common and a separateissue but in general appears to act as a burden, soaking up club’s operating profits, whilst offering little meritto the club and their supporters. For football clubs a more common and long standing type of debt arisesthrough the benefactor model, with the build-up of owner debts, sometimes in the form of interest free “softloans”. Putting aside the wider impacts of this business model beyond the individual club, the risks from thesesituations are certainly less clear cut and are centred around a potential over-dependency of a club on anincome stream with the potential to dry up, leaving difficulty meeting ongoing financial obligations.

In general we would categorise the high debt in the professional game as both a symptom and a cause ofoverheated spending, primarily on players, in the pursuit of success. The various rules within Financial FairPlay will attempt to address this overheating through a systemic approach, indirectly limiting debt taken byclubs for speculative purposes, although UEFA’s reach only extends to rules for its own cross bordercompetitions.

4. What are the pros and cons of the Supporter Trust share-holding model?

All governing bodies, where they are able, have a duty to try to ensure that football develops in a balancedway across the territory that they cover. On UEFA’s level, this means to consider whether it is helpful to thebalanced development of European football that investment and development funds go to the parts of Europewhere they are least needed. While there is no uniform European concept or tradition regarding ownership offootball clubs, the fan ownership model seen in certain parts of Europe (eg in Germany or at clubs such asBarcelona and Real Madrid) has many positive features, not least the stronger intrinsic link that this structurecreates with local and regional communities and the relative degree of stability that may be achieved as a resultof this. Whilst such associative structures bring their own set of challenges, it cannot be denied that suchsystems do not permit clubs to be “bought and sold” or otherwise “traded”, as such clubs will always belongto their fans. For these reasons, UEFA continues to support the Supporters Direct initiative in the UK and alsothe roll-out of this best practice from England/the UK across the rest of Europe.



5. Is Government intervention justified and, if so, what form should it take?

Firstly, it should be pointed out that there is a vast amount of government intervention (both direct andindirect) in sport in the UK, including the following:39

— London Olympic Games and Paralympic Games Act 2006.— National Lottery Act 2006.— Gambling Act 2005.— Horserace Betting and Olympic Lottery Act 2004.— Communications Act 2003.— Licensing Act 2003.— Football (Disorder) (Amendment) Act 2002.— Office of Communications Act 2002.— Tobacco Advertising and Promotion Act 2002.— Football (Disorder) Act 2000.— Football (Offences and Disorder) Act 1999.— Horserace Totalisator Board Act 1997.— Broadcasting Act 1996.— Olympic Symbol etc (Protection) Act 1995.— National Lottery etc Act 1993.

The above list does not include other key legislation for UK, European and international sport such as actsrelating to listed events, copyright and patents, ticket touting, and so on.

There are many examples of the football world, working together with government and politicians, achievingimprovements for football. For example, together with other football stakeholders UEFA and the Europeanprofessional leagues, with several government’s support, managed to find a balanced and legally sound solutionto the international transfer system when it was under threat from the EU in 2000–01. A similar partnershipsaw big efforts in convincing the EU to permit legitimate central marketing of rights by UEFA and the EnglishPremier League. A current example is that a large coalition of sports bodies from many countries, includingUEFA and English football bodies, are asking for government intervention to support the right for sportscompetition organisers to receive a fair return from betting operators who often pay nothing for using the“organiser’s” rights of sports bodies for their own commercial gain, without giving anything back to sport.

Therefore, the question is not whether government intervention is justified, because government interventionin sport is extensive everywhere—and is even often being requested by sports bodies. The question is ratherhow this intervention takes place.

Therefore, in order to avoid government intervention it might be asked whether The FA could be furtherstrengthened in its role as regulator and governing body in England. In this respect, it may be noted thatEngland (and the rest of the UK) is unlike most of the main European footballing nations in that there iscurrently no “enabling” sports legislation which:

(a) defines the limits of governmental intervention;(b) ensures coherence in key areas (eg youth education and development);(c) eliminates the risk of unnecessary inefficiencies, bureaucracy and excessive red tape which is created

through having different controlling bodies; and(d) empowers the national governing body to run its sport and fulfill its functions.

Such legislation is relatively simple to draft and implement and can help to protect different sports from theunwanted side-effects of the hap-hazard way that sport has developed—by helping to ensure that sportingobjectives are prioritised for example. In certain countries (including England), the absence of a properlegislative framework means that the control and development of top-level sport can simply end up being theoutcome of pyrrhic turf wars between sports bodies, with generally negative results for the sport and countryin question. It is clear that national parliaments and governments should not run sport—sport should run itself.However, the experience of many other countries is that the parliament and government can—and perhapsshould—help sport to run itself, in particular by the adoption of appropriate “supporting” legislation and notsimply sitting by as sports develop as a function of the outcome of turf wars.

6. Are there lessons to be learned from football governance models across the UK and abroad, and fromgovernance models in other sports?

One possible area where the football governance model could learn from abroad, is as regards the make-upof decision-making bodies. Actors in professional football are many and varied—the national association,clubs, leagues, players, coaches, supporters, referees and so on. This is reflected in the structures of the39 Source: www.sportsthinktank.com



decision-making bodies in many of the other main footballing nations where the relevant board will often haverepresentatives of players, coaches and referees, as well as the technical component in some cases—all ofwhom are football people. One large European national FA now has a supporter representative on its board aswell as its congress. Lastly, it may be noted that, in England, organisations such as the Professional FootballersAssociation, the League Managers Association and the Football Supporters Federation are both representativeand respected.

There are of course many other areas where lessons can be learned, and UEFA has programmes such as theTop Executive Programme (for President and General Secretaries) and KISS (Knowledge & InformationSharing Scenario) programme (for middle management) which try to help different European countries learnfrom the experiences of others.

Relevant background paper:“The European Club Footballing Landscape: Club Licensing Benchmarking Report Financial Year 2009”http://www.uefa.com/uefa/documentlibrary/index.html

March 2001

Written evidence submitted by Ian Watmore

I am writing this note in advance of my appearance before your Committee tomorrow.

Coincidentally, it was a year ago tomorrow that my resignation from the FA was first made public. I havenot discussed football in public since, preferring instead to concentrate on my new role in the Cabinet Officeand Number 10 helping the Coalition Government.

I should like to start by saying I have no personal animosity towards the FA or anyone within it. They werekind enough to invite me in to their fold as CEO, and it was my choice, and my choice alone, to leave the joba year later.

But I am pleased that you are considering what to recommend to the Government in order to create a modelfor football governance in England, one that is fit for the 21st Century. Whether the football public in Englandplay, coach, referee, spectate or participate in some other way, they surely deserve a better system than wehave today.

I should also like to acknowledge the staff at the FA who suffer daily under the public perception that theFA is dysfunctional and incompetent. However critical I think you must be about the governance of the FA,this must not apply to the staff.

In my experience, the staff at the FA are talented, hard working, modern in outlook, energetic and diverse,relatively lowly paid, passionate about what they do, and great fun to work with. They achieve so much, oftenin unsung ways, and I can’t speak too highly of them.

It is obviously for you to decide what to recommend based upon the evidence you receive. But central toyour recommendations should be that football in England need not be a constant set of battles between themain protagonists. For example, it ought to be possible to have:

a strong FA and a thriving Premier League;successful, multinational Clubs and winning England teams; andglobal leadership for men’s football and a fast growing and popular game for women.

In my evidence, I will argue that the role of Government and Parliament at this time should be threefold:to set strategic objectives for the game as a whole;to create an FA that is totally independent of its so called vested interests; andto give the FA (and other football bodies) clarity over its role

I have listed the main points that I think should be recommended under each of these headings.

But if there is one recommendation of mine that supersedes all others, it would be to create a totallyIndependent FA Board to lead the whole game in this country, free to spend its money as it thinks fit,and with full transparency to the public.

Once the Committee has reported, its recommendations must then be implemented in full and at pace. Themenu should be seen as a table d’hote menu, rather than á la carte. As we found after the Burns review,allowing each recommendation to be considered on its own and then either ignored or implemented in apiecemeal way, leads to glacial progress or distorted change.

Even if people want to go back to the original Burns recommendations, time has moved on, and just doingBurns would, in my judgement, be insufficient. We now need to be in a Burns-plus era—with full independencefor the FA Board and staff from the FA Council and the professional game, with control over how it spendsits own funds. If the Committee needs to be convinced, just imagine how little Ofcom would achieve withSky, BT and the BBC on its Board?



Can an Independent FA really be created without a footballing civil war? The Balkanised state of footballgovernance today might suggest not, and almost certainly not without external intervention from Parliament.But we have tried other means, and few believe that what we have ended up with is remotely fit for purpose.

On this basis I have concluded that the FA Council should give substantial further decision making groundto the Independent Board and the FA Executive. The FA Councillors from the counties are an extraordinarilydecent group of people who have put their lives into football for minimal or no financial reward. There aremany other Councillors, such as the Chair of the LMA, and the CEO of the PFA, whom I also admire greatly.They collectively have much wisdom; they have a major role to play on many fronts, and should always beconsulted widely by the FA Board.

I have also seen references to “the governing bodies” to include the Premier League and UEFA. There are,in fact, only two governing bodies in any country playing football—FIFA and the local version of the FA. Itis essential to reassert that principle of football governance in England. The Premier League is a fantasticglobal competition, but it is not a governing body. UEFA is a confederation of national associations. Both usetheir competition rules to influence behaviour from their participant clubs. But this should not be confusedwith the strategic and regulatory role of the world and national associations.

Finally, I have recommended that the FA funding formula be ended, so that all monies earned by the FA(and not spent on its direct operations and competitions) can be channelled into football development and notdistributed 50:50 with the Premier League/Football League as at present. This money would be under thecontrol of the Independent FA. It would primarily be channelled through the national game and the NationalFootball Centre to meet strategic objectives, but also used to help fund the contribution from referees, playersand managers, and geographically strategic clubs in localities not well served by top Clubs.

Each time the reputation of the FA appears to hit rock bottom, the next year it starts to drill. It is time toreverse that trend.

The FA will be 150 years old in 2013. For its special anniversary, the FA should be celebrating an excitingnew future, rather than apologising for the previous 50 years of hurt, as Baddiel and Skinner might put it. Withyour help, the new Chairman, David Bernstein, can lead the FA back into the sunlight.

I look forward to the Select Committee tomorrow.

1. Overall Strategic Football Objectives:(1) Strong, unified governance for the whole game, respected in its own country and influential abroad.(2) Thriving national game for all ages, abilities, gender, ethnicity.(3) Winning England teams—men’s, women’s, all ages, other eg disabled—with a strong pipeline of

playing and coaching talent.(4) World leading sustainable Premier League clubs for men and Super League clubs for women.(5) Sustainable strength in depth for other professional and semi-professional leagues.(6) Outstanding, accessible and safe stadia, pitches and other facilities.(7) Investing in the future of the English game—skills, coaching, refereeing, international relations,

facilities, science, medicine, digital, technology...

2. FA Governance Recommendations:(1) Board of FA to be totally independent of its interested parties—ie no “representative” or “vested

interest” delegates on the Board.(2) Board of FA to contain (say) six voting Executives—(Note 1.)........Plus (say) six voting Non

Executives, totally independent of current club, league, county or other footballing interests—(Note 2.)(3) Current FA funding model to be ended—so that all monies earned by FA and not spent on its direct

operations and competitions to be channelled into football development through (primarily) thenational game, National Football Centre, LMA, PFA and strategically located clubs, and not split50:50 with the Premier League and Football League as at present.

(4) FA Council to cede more decision making to Independent Board and FA Executive—but still to beconsulted widely and play significant representative role in international tournaments, in disciplinaryhearings, at Wembley, at National Game finals etc and be great honour for all who achieveCouncillor status.

(5) Primary governance role to be reasserted for FA direct through to FIFA. Premier and Football Leaguesare not governing bodies. Similarly UEFA is Confederation, not an intermediate governance layerbetween FA and FIFA.

(6) Board and staff of FA to be representative of the football population it serves and to be diverse inage, female, BME and other relevant terms.

(7) Independent nominations body to appoint FA Chairman and assist in Non Exec Appointments.(8) Create influential, but non-binding, FA Stakeholder Group(s) with representative delegates—eg

Supporters, Club owners, Players, Managers and coaches, Referees, Media, Sponsors, Diversity.



(9) Current Football Regulatory Authority to move inside FA—to set regulatory policy etc -under theguidance of the Independent Board.

(10) Current Compliance Unit to move outside FA—thus not controlled by the FA Board—headed byindependent football Commissioner—to make decisions about breaches of discipline and regulations,apply sanctions, and hear appeals etc.

(11) Total transparency of operations, finances, policies, decisions... probably scrutinised by FootballOmbudsman or similar reporting periodically to Parliament and the public.

Note 1—probably CEO, MD Club England, Men’s Football Director, Women’s Football Director, FootballServices/Regulation Director, Head of National Game and be attended by finance director and companysecretary.

Note 2—probably Independent Chairman, Independent Football Leader, Education and Skills, Marketing/Communications, Regulatory/Legal, Finance/Accounting/Commercial (all experienced Board members fromfootball, business or public service).

3. Clarity of role and remit for FA: eg:(1) To govern and set the regulatory framework for all football in England, so as to achieve Strategic

Objectives above.(2) To participate positively in FIFA and UEFA over the long term to support the interests of all English

football, and assist in the global development and administration of the game.(3) To part fund and assist the national game (pretty much as per today’s National Game strategy).(4) To promote respect and diversity throughout the game—kicking out racism, sexism, disability

discrimination, homophobia, faith discrimination.(5) To develop the managers and coaches and coaching/playing philosophy of the future (pretty much as

per new St. George’s Park vision).(6) To develop the referees and assistants of the future at all levels of the game.(7) To monitor and grow the pipeline of playing talent for all the national teams—all ages, genders,

disability etc.(8) To manage and support all England teams in competition and friendlies.(9) To run FA competitions collaboratively with other competition organisers eg PL, FL, UEFA.(10) To manage the national stadium—with football (not rugby or rock concerts) at its heart.(11) To secure specialist investment in the future of the English game—skills, facilities, science, medicine,

digital, technology.

March 2011

Written evidence submitted by Richard Scudamore, Chief Executive, The Premier League

Sir Dave Richards has asked me to respond to your query about Premier League inquiries into potentialowners.

At your Committee hearing of 15 April Niall Quinn used the language of covert operations to describe ourprocess and clearly this has aroused some concern amongst some committee members, particularly MrSheridan.

What actually happens when a change of ownership appears likely is that the Premier League makes detailedinquiries as to the identity and circumstances of potential buyers. Unless these persons or entities are alreadywell known to us then we engage specialists in corporate investigations and intelligence. These are wellestablished companies of good reputation and there is nothing melodramatic about their methods. A better termthan covert would be the simpler “confidential”, because we do not announce that checks are underway andthe identity of potential purchasers is generally not disclosed until it is apparent that they are serious andcredible bidders and the selling owners are actually considering a genuine offer. Many ownership inquiries aremade of the Premier League and of individual Clubs which do not proceed and it is unnecessary andinappropriate for every single inquiry—spurious or serious—to be dealt with in public. We fully understandthat fans have an interest in ownership issues but we believe that, as with many commercial transactions,transparency is required at the point of contractual engagement rather than earlier when there is oftenconsiderable uncertainty as well as issues of commercial confidentiality to consider.

We remain committed to our Rules which require ultimate ownership interest above 10% to be declared andpublished. The text of this Rule and of the Owners and Directors Test are attached.

I hope you find this clarification helpful. I look forward to discussing this and other football issues with younext week.



PREMIER LEAGUE HANDBOOK, SEASON 2010–11

Section D

Owners’ and Directors’ Test

2. A Person shall be disqualified from acting as a Director and no Club shall be permitted to have anyPerson acting as a Director of that Club if:

2.1 either directly or indirectly he is involved in or has any power to determine or influence themanagement or administration of another Club or Football League club; or

2.2 either directly or indirectly he holds or acquires any Significant Interest in a Club while he eitherdirectly or indirectly holds any interest in any class of Shares of another Club; or

2.3 he becomes prohibited by law from being a Director (including without limitation as a result ofbeing subject to a disqualification order as a director under the Company Directors DisqualificationAct 1986, or being subject to the terms of an undertaking given to the Secretary of State underthat Act, unless a court of competent jurisdiction makes an order under that Act permitting anappointment as a Director); or

2.4 he has a conviction (which is not a Spent Conviction) imposed by a court of the United Kingdomor a competent court of foreign jurisdiction:

2.4.1 in respect of which an unsuspended sentence of at least 12 months’ imprisonment wasimposed; or

2.4.2 in respect of any offence involving any act which would reasonably be considered to bedishonest (and, for the avoidance of doubt, irrespective of the actual sentence imposed); or

2.4.3 in respect of an offence set out in the Appendix 12 Schedule of Offences or a directly analogousoffence in a foreign jurisdiction (and, for the avoidance of doubt, irrespective of the actualsentence imposed); or

2.5 he makes an Individual Voluntary Arrangement or becomes the subject of an Interim BankruptcyRestriction Order, a Bankruptcy Restriction Order or a Bankruptcy Order; or

2.6 he is or has been a Director of a Club which, while he has been a Director of it, has suffered twoor more unconnected Events of Insolvency (and for the purposes of this Rule D.2.6 and Rule D.2.7a person shall be deemed to have been a Director of a Club which has suffered an Event ofInsolvency if such Event of Insolvency occurred in the 30 days immediately following his havingresigned as a Director of that Club); or

2.7 he has been a Director of two or more Clubs or clubs each of which, while he has been a Directorof them, has suffered an Event of Insolvency: or

2.8 he is subject to a suspension or ban from involvement in the administration of a sport by anyruling body of a sport that is registered with UK Sport or Sport England, or any correspondingnational or international association, whether such suspension or ban is direct or indirect (forexample a direction to Persons subject to the jurisdiction of the ruling body that they should notemploy, contract with or otherwise engage or retain the services of an individual); or

2.9 he is subject to any form of suspension, disqualification or striking-off by a professional bodyincluding, without limitation, the Law Society, the Solicitors’ Regulation Authority, the BarCouncil or the Institute of Chartered Accountants of England and Wales or any equivalent bodyin any jurisdiction outside England and Wales, whether such suspension, disqualification orstriking-off is direct or indirect (for example a direction to Persons subject to the jurisdiction ofthe professional body that they should not employ, contract with or otherwise engage or retain theservices of an individual); or

2.10 he is required to notify personal information pursuant to Part 2 of the Sexual Offences Act 2003;2.11 he is found to have breached (irrespective of any sanction actually imposed), or has admitted

breaching (irrespective of whether disciplinary proceedings were brought or not):2.11.1 Rule V.34; or2.11.2 Rule E.8 of the Rules of the Football Association (as amended, or replaced from time to

time); or2.11.3 any other rules in force from time to time in relation to the prohibition on betting on football

matches played in England and Wales.

Persons Prohibited by Law from entering the United Kingdom etc

25. No Person may acquire any Holding in a Club if, pursuant to the law of the United Kingdom or theEuropean Union:

25.1 he is prohibited from entering the United Kingdom; or25.2 no funds or economic resources may be made available, directly or indirectly, to or for his benefit.



Section V

Dual Interests

11. A Club shall forthwith give notice in Form 51 to the Secretary if any Person either directly or indirectly;11.1 holds; or11.2 acquires; or11.3 having held or acquired, ceases to hold any Significant Interest in the Club.

12. A notice given pursuant to the provisions of Rule V.11 shall:12.1 identify the Person holding, acquiring or ceasing to hold the Significant Interest in question; and12.2 set out all relevant details of the Significant Interest including without limitation the number of

Shares, their description and the nature of the interest; and12.3 set out where appropriate the proportion (expressed in percentage terms) which the relevant Shares

in respect of which the Significant Interest exists bear to the total number of Shares of that classin issue and of the total issued Shares of the Club.

13. Each Club shall publish the identities of the ultimate owner of each Significant Interest in the Club.

“Significant Interest” means the holding and/or possession of the legal or beneficial interest in, and/or theability to exercise the voting rights applicable to, shares or other securities in the Club which confer inaggregate on the holder(s) thereof ten (10) per cent or more of the total voting rights exercisable in respect ofthe Shares of any class of Shares of the Club. All or part of any such interest may be held directly or indirectlyor by contract including, but not limited to, by way of membership of any Concert Party, and any rights orpowers held by an Associate, Nominee or Connected Person shall be included for the purposes of determiningwhether an interest or interests amounts to a “Significant Interest”;

March 2011

Written evidence submitted by the Football Association

I refer to your letter dated 3 May 2011 in relation to Sir Dave Richards and a possible conflict of interestinvolving Glue Creative Production Solutions Limited (“Glue”).

We are aware of the article that appeared in the Yorkshire Post on 21 April 2011 under the heading“Exclusive: Premier League boss’s son won a series of football deals” which references amongst other thingsthat Glue “secured deals” with “the Football Association’s (FA) 2018 World Cup bid”.

The World Cup Bid was operated through a separate subsidiary company—England 2018/2022 Limited(“England 2018”). Sir Dave was involved with England 2018 for a period of time but was not formallyregistered as a director of that company. Any conflict would have been declared to the subsidiary company,however, because this was a lower value contract for supply it was not a matter that received the England 2018Board’s attention and there is therefore no formal declaration of interest recorded at an England 2018 BoardMeeting. Instead the matter was dealt with at a staff level principally through David Magliano who at therelevant time was the Director of Commercial and Marketing. England 2018 wished to obtain some promotionalmaterials for the launch event in May 2009 and for other subsequent use and Glue provided some promotionalmaterials/giveaways such as scarves, badges etc. Glue were appointed following a review procedure carriedout by England 2018’s event production agency Unspun and Glue were one of a number of suppliers used toprovide promotional materials based on quality, price and ability to meet the relevant production timescale.

As you will be aware England 2018 no longer exists but The FA’s Company Secretary Alistair Maclean hasbeen in direct contact with Simon Johnson, the ex COO of England 2018, David Magliano and Unspun. Thesepeople have confirmed that there was no undue influence placed by Sir Dave on using Glue and the appointmentwas made at the staff level with the relevant people being aware that Sir Dave’s son was involved in GlueProductions. Furthermore, as set out above Glue were one of a number of companies used for the supply ofpromotional materials.

The FA has also used Glue from time to time to provide low value gifts. They are one of a number ofsuppliers and similar to the position with 2018, the use of a supplier at this level has never been an issue thathas warranted The FA Board’s attention and the matter has therefore not been declared at Board level. SeniorExecutives within the Group were aware of the relationship between Sir Dave and Glue and those Executivesare satisfied that no undue influence has been placed on any members of staff to utilise Glue.

In relation to your wider request about conflicts of interest with The FA, our constitution contains provisionsrelating to conflicts of interest which allow for conflicts of interest to be declared to The FA Board and thereis a Directors Code of Conduct which specifically looks at conflicts at the Board level. The directors have alsobeen given information about the provisions of the Companies Act.

I cannot comment on the conflicts of interest position within the Premier League.



I hope that this covers the points raised in your letter but if you require any further information please donot hesitate to contact me.

May 2011

Further written evidence submitted by The Premier League

In your letter of 3 May you ask for clarification about apparent conflicts of interest concerning the award ofcontracts to a company run by Sir Dave Richards’ son. This issue was raised recently by the Yorkshire Postalthough the facts of the case are perhaps more prosaic than the over-heated presentation by the paper inits reports.

The Premier League has placed business with Glue, the company in question, for small quantities of giftitems. The recipients vary widely, from visiting football administrators to young children taking part in one ofour good cause programmes such as our school tournament. We do not carry stocks, as demand variesconsiderably and in any event we have limited storage space.

The sums involved are insignificant and all transactions were undertaken in the normal course of businesswith no involvement of Board members. Our Chairman had no influence over, nor knowledge of, the individualtransactions in question, as they were entered into by individual managers acting on their own initiative and incompliance with company policies. The staff involved were aware that Glue is run by Sir Dave’s son but weresolely concerned with the core questions of price, quality and deadline. Glue is generally competitive on price,quality and reliability, on the basis of which they were able on occasion to secure some relatively small orders.These orders will typically have been placed by middle managers and all were signed off by a member ofsenior management to make sure the relevant processes were being observed.

Given their relatively small value, these transactions did not require the Chairman’s or the Board’s approvaland so there is no question of the Premier League’s interest having been subordinated or a material conflict ofinterest arising with the Chairman’s position. Our processes for larger contracts do require Board approval, thatwhere appropriate, a fully transparent tender process be carried out and that any potential interest be declaredbefore decisions are taken. No Glue contract has been above the delegated authority levels that require reportingto the Board.

I hope that this gives you the information you seek. Of course if you require anything further I would behappy to provide it.

May 2011

Written evidence submitted by Supporters Direct

Supporters Direct (SD) was set up in 2000 following a recommendation in the Football Task Force report“Investing in the Community” published in 1999.

Funding arrangements for SD activities in England & Wales since 2007 are summarised below and in theattached table.

Activities in Scotland, Europe and rugby league in England have been funded separately by Sport Scotland(until April 2011), UEFA and in the case of rugby league by the RFL and the Coop movement. Summarytables for these activities are also attached.

Funding in England & Wales

In 2006 a 3 year deal was agreed from April 2007 to 31 March 2010 for funding from the Football StadiaImprovement Fund (FSIF).

Agreed funding from FSIF for SD was £574k in 2007–08, £591k in 2008–09 and £610k in 2009–10.

From April 2010 the funding arrangements for the Football Foundation were reorganised and the intentionwas for the FSIF to be re-constituted and to consider applications for funding for supporters groups includingSD from cash to be provided from the Premier League. In the interim the Premier League agreed to fund SD’score running costs until such time as the new long term arrangements were in place.

Under this interim arrangement the Premier League provided quarterly funding which totalled £610k in the12 months to March 2011. ie SD was funded at the same level as the previous year.

SD is awaiting confirmation from the Premier League of the level of interim funding available for the periodfrom April to June 2011.

The FSIF has now set up the Fans Fund to manage funding for supporters groups including SD. The intentionis to award Fans Fund grants on the basis of applications for projects and to reduce the funding of core coststo 50% within 3 years. The Premier League has told SD that it wants Premier League funding to be used forSD to focus on delivery of support to trusts and clubs and it does not want to fund SD’s policy work.



SD has submitted applications for projects and core costs with a total level of funding that reduces each yearfrom £562k in 2011–12, £512k in 2012–13 to £382k in 2013–14, reflecting funding of only 50% of core costsin 2013–14.

On this basis, if all applications are approved by the Fans Fund Panel, SD will have to find funding fromother sources of £50k (8% of overall costs) in 2011–12, £139k (21%) in 2012–13 and £276k (42%) in 2013–14to maintain activities and staffing in England and Wales at the current level.

Any shortfall in the level of grants approved by the Fans Fund Panel will of course create a larger gap forSD to fund from other sources.

The table overleaf summarises the level of actual and projected core funding and the size of the gap to befilled by SD if all current applications to the Fans Fund are approved.

SUPPORTERS DIRECT (SD) FUNDING FOR ENGLAND & WALES- £K

Year (April-March) 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14Actual Actual Actual Actual Projection Projection Projection

FSIF 574 591 610Premier League 610FSIF/Fans Fund applications 562 512 382SD fundraising 37 128 * 21 15 50 139 276Total 611 711 631 625 612 651 658% SD fundraising 6% 18% 3% 2.5% 8% 21% 42%

* includes Virgin Media sponsorship allocated to reserves and used for football and rugby league.

SUPPORTERS DIRECT (SD) FUNDING FOR SCOTLAND—£K

Year (April-March) 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14Actual Actual Actual Actual Target Target Target

Sport Scotland 95 90 65 45SD fundraising 3 10 3 1 164 167 170Total 98 100 68 # 46 #% SD fundraising 3% 10% 4% 2% 100% 100% 100%

# additional expenditure was funded from SD Scotland reserves

SUPPORTERS DIRECT (SD) FUNDING FOR EUROPE—£K

Year (July-June) 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14Actual Actual Actual Actual Projection Projection Projection

UEFA 65 65 65 168 168 168SD fundraising 0 0 0 0 0 0Total 65 65 65 168 168 168% SD fundraising 0 0 0 0 0 0

SUPPORTERS DIRECT (SD) FUNDING FOR RUGBY LEAGUE—£K

Year (April-March) 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14Actual Actual Actual Actual Projection Projection Projection

RFL 15 15 15Coop 12.5 12.5 12.5SD fundraising 17 17 18(from sponsorshipreserves)Total (rounded) 45 45 45% SD fundraising 38% 38% 39%

June 2011



Further written evidence submitted by the Premier League

Response by the Fans’ Fund to unacceptable comments by the then Chief Executive of Supporters Direct

Your Committee members may find it helpful to have a record of the events leading up to the FSIF/FansFund decision to withdraw funding from Supporters Direct in the light of unacceptable comments made by its(then) Chief Executive. You should note that his departure and replacement by the acting CEO Brian Burgesshas removed the Fans Fund’s concerns as to SD’s leadership and the Premier League’s interim funding has beenrestored to cover staff and office costs for June and July while consideration of SD’s grant application resumes:

1. The Premier League has been providing interim funding to SD since the last Government decided that itwas inappropriate for DCMS money to fund non-participation sport projects and that the Football Foundationfunding scope should be adjusted appropriately. They asked the Premier League to fund SD once theirFoundation grant expired, which we agreed to consider (and have paid over £500k so far);

2. The PL felt that grant-aiding supporter groups, like any of our other good cause programmes, belongsmore comfortably with an arms-length body and so decided to create the Fans’ Fund to carry out the processof considering applications. The Fans’ Fund is accountable to the Football Stadium Improvement Fund (FSIF)and administered by staff at the Football Foundation;

3. The Fans’ Fund received a number of applications from fan groups and about three months ago agreed torecommend to FSIF that SD be awarded a significant sum;

4. FSIF agreed the recommendation, subject to the normal grant criteria which include the requirement foran applicant to show us their accounts;

5. SD did not make their accounts available to the FSIF until 10 June (coincidentally the day Dave Boyleresigned) and so had not received notification of the grant decision;

6. Dave Boyle made his offensive comments on Twitter on 21 May;

7. They were brought to my attention on 22 and 23 May by several people who follow him on Twitter;

8. In my opinion these comments, vulgar in themselves, displayed a level of irresponsibility inappropriatefor a person who was Chief Executive of a high-profile organisation. It was the irresponsibility rather than thevulgarity, unpleasant though it was, that was the issue in terms of deciding whether our funding would beproperly administered by SD;

9. I discussed my views with the other members of the Fans’ Fund, the members of FSIF and individualsinvolved in grants awards in other areas of PL Good Cause work. They shared my concerns, and in passing,agreed with my view that we would not accept behaviour like this from employees of the Premier League orFootball Foundation, nor from our voluntary sector or public sector partners;

10. I shared the comments with DCMS, yourself and your Chairman, the Opposition CMS spokespeople andothers who I felt had a public policy interest in the case;

11. I wrote to the Chair of SD asking for her views;

12. She replied that Mr Boyle had apologised, removed the remarks from Twitter, had been warned as to hisfuture behaviour, and she hoped that we could end the matter there;

13. I referred Dame Pauline’s reply to the individuals previously consulted, saying in my view the responsewas inadequate. There was general agreement with my view.

14. We agreed that Dame Pauline and her colleagues had every right to stand by their Chief Executive butthat we had no obligation to continue funding an organisation whose Chief Executive we no longer hadconfidence in;

15. The Chair of the Football Stadium Improvement Fund, Peter McCormick, wrote to Dame Pauline on 9June to inform her that the FSIF had decided to rescind its pending offer in the light of the irresponsibilityshown by the CEO and the weak disciplinary action taken by the Board. His letter made it clear that thisdecision was made on the basis of the unsuitability of the individual and not on any change in the policy ofthe PL or the FSIF/Fans’Fund to grant-aid supporter organisations or because we were not willing to supportSD’s core activities. The letter also made it clear that SD could resubmit their application should circumstanceschange and that the funds allocated to this area would not be channelled elsewhere;

16. Mr Boyle resigned on 10 June;

17. The SD Board met on 11 June and appointed Brian Burgess (a Board member) as acting CEO;

18. Mr Burgess sought a meeting with me to discuss funding in the light of Mr Boyle’s departure;

19. Mr Burgess was unable to meet with me until 17 June as he was at a Conference in Barcelona;

20. At the meeting Mr Burgess confirmed that they wished us to reconsider their existing application whichI undertook to ensure. He undertook to look at the questions that arise from their accounts (received by me on14 June) and asked me whether the Premier League would consider meeting their payroll costs in the short



period while these questions are resolved. I agreed to recommend this to our Chief Executive and Director ofFinance, and reply to Mr Burgess before 28 June at the latest.

21. We received elements of the January-May management accounts for SD on 21 June. This enabled thePremier League to estimate the staff and office costs for SD’s activities in England and Wales and an ex gratiapayment for the appropriate amount to meet those costs for June and July has been approved and will reachSD before 30 June.

I hope that the above summary clarifies the situation, in the light of misleading comment in the press. Pleasecirculate it to your Committee, and as I understand that several of them continue to be unaware of Mr Boyle’soriginal comments, I have attached them again for them to make their own mind up as to their suitability.

The FSIF process of considering SD’s application in the light of the recently received accounts will nowcontinue, unaffected by the events of the last few weeks. It is not possible for me to indicate how long thismay take as it depends on SD dealing with the questions related to their accounts, but Mr Burgess has alreadyresponded promptly to the points I raised on Friday so it seems unlikely that the process will be a lengthy one.

I hope this gives you sufficient information to answer your Committee members’ questions, and I will ofcourse keep you up-to-date with the remaining stages of the discussion related to the SD grant. Feel free toadd this note to the evidence section of your website should you consider it helpful.

July 2011

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