Football Governance Follow–Up
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House of Commons Culture, Media and Sport Committee Football Governance Follow–Up Fourth Report of Session 2012-13 Volume I HC 509 House of Commons Culture, Media and Sport Committee Football Governance follow–up Fourth Report of Session 2012-13 Volume I Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/cmscom Ordered by the House of Commons to be printed 22 January 2013 HC 509 Published on 29 January 2013 by authority of the House of Commons London: The Stationery Office Limited £0.00 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) Mr Ben Bradshaw MP (Labour, Exeter) Angie Bray MP (Conservative, Ealing Central and Acton) Conor Burns MP (Conservative, Bournemouth West) Tracey Crouch MP (Conservative, Chatham and Aylesford) Philip Davies MP (Conservative, Shipley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Mr John Leech MP (Liberal Democrat, Manchester, Withington) Steve Rotheram MP (Labour, Liverpool, Walton) Jim Sheridan MP (Labour, Paisley and Renfrewshire North) Mr Gerry Sutcliffe MP (Labour, Bradford South) The following members were also a member of the committee during the parliament: David Cairns MP (Labour, Inverclyde) Dr Thérèse Coffey MP (Conservative, Suffolk Coastal) Damian Collins MP (Conservative, Folkestone and Hythe) Alan Keen MP (Labour Co-operative, Feltham and Heston) Louise Mensch MP (Conservative, Corby) Mr Adrian Sanders MP (Liberal Democrat, Torbay) 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/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 of the written evidence are available in a printed volume. Additional written evidence is published on the internet only. Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Grahame Danby (Second Clerk), Kevin Candy (Inquiry Manager), Victoria Butt (Senior Committee Assistant), Keely Bishop (Committee 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] Football Governance Follow-Up 1 Contents Report Page Summary 3 1 Introduction 5 Our follow-up inquiry 6 The state of the game 6 Recent developments 7 2 Reform of the governance structure 8 Our 2011 Report and the response to it 8 The FA as regulator 10 The Board 14 The Council 15 Term and age limits 17 Representation 17 3 Club ownership 19 Ownership models 19 Transparency and the owners and directors test 20 The licensing model 23 4 Financial Matters 25 Problems caused by levels of debt 25 Financial Fair Play 26 The Football Creditors Rule 27 Parachute payments 30 The grass roots 31 Division of revenues 31 5 Supporters 33 A radical change? 33 Representation and involvement 33 Funding for supporters’ groups 35 Independent Football Ombudsman 36 Conclusions and recommendations 37 Appendix 1 41 Appendix 2 60 Appendix 3 76 Formal Minutes 86 2 Football Governance Follow-Up Witnesses 87 List of printed written evidence 87 List of additional written evidence 87 List of Reports from the Committee during the current Parliament 89 Football Governance Follow-Up 3 Summary In December 2010 we launched an inquiry into domestic football governance after concerns were expressed by supporters and commentators about the sufficiency of checks and balances on financial management in football as well as wider failures of governance. In our Report, published in July 2011, we concluded that the Football Association—English football’s governing body—was in need of urgent reform. We were concerned that the leagues—and the Premier League in particular—had too great an influence over the decision-making processes of the Football Association. We were particularly concerned that increasing commercialisation of the game, coupled with a lack of financial regulation, was leading to significant financial risk-taking among football clubs. The football authorities jointly responded to our report with proposals for reform which they described as “extremely radical” and “progressive”. However, these proposals failed to go far enough in addressing the crux of the governance problem, that the structure of the Football Association led to delegation of too much responsibility away from the Main Board and towards committees dominated by the Premier and Football Leagues, and they also failed to provide the greater financial stability that the game needs. While progress has been achieved, further reform is needed, especially in relation to the licensing model, the failure to ensure that membership of the Main Board, Council and influential committees is fully representative and balances interests adequately, and the way in which supporter engagement will operate at club level. Most fundamentally, the financial proposals were hugely disappointing, with the only really positive development being the eventual introduction of Financial Fair Play rules despite the football authorities’ initial reluctance. We recommend that the DCMS make it clear to the football authorities that further progress on these issues is expected within twelve months. In the absence of significant progress, the Government should introduce legislation as soon as practically possible. Football Governance Follow-Up 5 1 Introduction 1. In the 1990s the formation of the Premier League and the influx of money from broadcasting deals transformed the face of football in England. However, the new model of football brought with it new problems, summed up by the comment of the Sports Minister, Hugh Robertson MP: “football is the worst governed sport in this country, without a shadow of doubt.”1 In December 2010, we launched an inquiry into domestic football governance after concerns were expressed by supporters and commentators about the sufficiency of checks and balances on financial management in football, as well as wider failures of governance. 2. Our inquiry had the following terms of reference: — 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? 3. On 29 July 2011, we published our Report detailing the serious problems facing our national game and setting out potential solutions to some of those problems.2 The main findings of our Report were that: — The commercialisation of the game had encouraged significant financial risk-taking which had led to a high rate of clubs entering administration; — The Football Association required urgent reform in order to carry out its function as the national governing body of English football; and that — There had been a lack of strategic direction and leadership in the development of youth football and a review of spending on the grassroots game was needed. 4. We recommended that a formal licensing model for clubs be introduced, to be overseen and scrutinised by the Football Association, which would make the final decision on controversial licence applications. We also recommended that various changes be made to the governance structures of the Football Association making it more representative and able to act as an effective governing body and not simply as an association of interests. 1 HC Deb, 8 September 2010, col 73WH 2 Culture, Media and Sport Committee, Football Governance, Seventh Report of Session 2010-12, July 2011, HC792 (hereafter ‘Football Governance’) 6 Football Governance Follow-Up Other changes we called for were the abolition of the—morally unjustifiable—Football Creditors Rule and the introduction and consistent application of robust ownership rules as part of a new licence model. 5. All of these recommendations were designed to create a consistently well-regulated and financially fair and stable professional game able to provide support and direction to the grassroots game and the next generation of professional players. 6. The Government broadly welcomed our report, publishing its reply on 12 October 2011.3 However, many of our recommendations were directed towards the football authorities rather than the Government itself. These authorities, namely the Football Association (the FA), Football League, Premier League and National Game Board, made their views known in a joint response to the Department for Culture, Media and Sport (DCMS) on 9 March 2012.4 This response—and the subsequent detailed proposals put forward by the “Core Group”5—failed to engage with several of our key recommendations and disappointed, in particular, supporters’ groups. The Secretary of State asked for our further recommendation on whether we considered that the joint response had adequately addressed our concerns. Accordingly, we launched a further brief inquiry into the proposals put forward by the football authorities in the joint response and subsequently.