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10 Feb 2010 : Column 288WH—continued

11.30 am

Sitting suspended.

10 Feb 2010 : Column 289WH

Professional Football (Regulation)

[Sir Nicholas Winterton in the Chair]

2.30 pm

Tony Lloyd (Manchester, Central) (Lab): As ever, Sir Nicholas, I welcome you to the Chair.

It is interesting to note that we are discussing the governance and regulation of football on the very day when three clubs are appearing before the courts of our land in winding-up hearings. Portsmouth is a premier league club that has received lots of publicity. Cardiff City and Southend United are lower down in the football family, but they are nevertheless central to the interests of their supporters.

I want to establish today that football is the supporters' game. It was built by the fans over the years, and it is the fans who have made all our clubs-from the international household names down to the smallest and seemingly least newsworthy. All are of tremendous importance to the communities and the people they serve. However, when we look at this great game of ours-a national and a global game; the beautiful game, as Pelé once described it-we have to set it in the context of the almost reckless level of management that we have seen in modern times.

I shall speak a little about two of England's finest clubs, which between them can claim credit for the constant debate that I have with my hon. Friend the Member for Halton (Derek Twigg) about whether Liverpool or Manchester United are the most successful club in modern times. That does not matter today in a sense, because we can join with the supporters of both clubs. They would agree on almost nothing, but they would certainly agree that the crisis brought about by modern ownership risks the very existence of our football clubs, and that could be a tragedy.

Last Saturday was the anniversary of the Munich air crash. I am old enough to remember with awe and fondness those players who gave their lives for Manchester United. Their sacrifice lives on in the hearts of those who, tribally, are Manchester United supporters. I say "tribally" advisedly, because it matters so much to them. They have pride in the history of Manchester United, just as Liverpool supporters have pride in Liverpool, and the Portsmouth supporter has pride in Portsmouth. It is the same throughout our great footballing family. When Portsmouth played Manchester United last Saturday, the supporters of both clubs displayed the same green and yellow scarves. They had a common identity; they would have not agreed about the game that took place on that day, but they would have agreed that the reckless way in which those clubs have been managed is unacceptable.

The clubs might say that they treat their supporters as customers-to an extent that is true. However, ordinary supporters sometimes feel that, instead of being treated as customers or fans, they are simply mugs who are there to be milked with ever-increasing ticket prices and by the clubs finding even more ways to raise money. The reality is that, throughout the length and breadth of the football family, it is now seriously argued that the club model of football is a failed business model.

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Bob Russell (Colchester) (LD): I am concerned to hear what the hon. Gentleman says about Southend United. May I advise him that I challenged the Government on the matter on 10 December 2007? In response, the Secretary of State for Culture, Media and Sport said:

a royal commission on football-

What has happened during the past three years to prompt the hon. Gentleman to think that the Government should now become involved?

Tony Lloyd: Who said that it was not for politicians to step in? I do not think it was me. What I would say to my right hon. Friend the Secretary of State, who is a very good friend and a man of great credibility, is that the world has changed. The world that said two years ago that we should not regulate the banks is now regulating the banks. The world that said that we should not regulate manufacturing industry is now seeing the Kraft takeover of Cadbury. The world might be seeing the equation in a new light.

Mr. Andrew Pelling (Croydon, Central) (Ind): I congratulate the hon. Gentleman on securing this important debate. I am sure that there is nothing peculiar in politicians always wanting to support business, but these businesses employ many people. They employ not only the stars on the most significant sums a week, but ordinary working people. They, too, are important, which is why politicians should take an interest.

Tony Lloyd: The hon. Gentleman makes an important point. That is absolutely the case. A football club represents something of enormous importance to its fans, but it is important also to the wider community in cities such as Manchester or Liverpool.

It is probably not well known that Manchester has the highest number of day visitors anywhere in the nation outside London, and one driver for that is certainly the Manchester United and Manchester City football clubs. People come from all over the world to take part in acts of reverence at Old Trafford or-I say with a certain degree of irony-at the City of Manchester stadium. Both are important for our city. Liverpool and Everton are both important for the city of Liverpool, and one could go around the whole footballing family and say the same thing. My hon. Friend the Member for City of Chester (Christine Russell) tells me that Chester City, which was once a Football League club in its own right, is in danger of being thrown out of the Blue Square league. That is a tragedy. It is unable to field a team because it has not paid the players' wages for some weeks, and that is not untypical.

Bob Spink (Castle Point) (Ind): The hon. Gentleman is making some excellent points. My constituents largely support Southend United and they are watching the tragedy unfold before their eyes. They know that the taxman wants only a small proportion of the money that the club has received, and they wonder what has happened to the greater sum. They are looking for ways to control the problem and remove this self-inflicted financial crisis. Does the hon. Gentleman believe that
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limiting the amount that clubs can pay in salaries to a proportion of the club's football-related income should be considered by the Football Association?

Tony Lloyd: It is certainly a matter for consideration, but if the hon. Gentleman will bear with me, I shall come in a moment to some of the things that we ought to consider. Without Government intervention, we will not see the kind of action that could help Southend and the rest of the football family.

Hugh Bayley (City of York) (Lab): York City football club was almost brought to its knees by the poor business decisions that were made by its owners when it had a traditional private company structure. However, a supporters' trust that received assistance from the Department for Culture, Media and Sport helped to rescue the club. Does my hon. Friend see a good case for supporters having seats on the boards of such companies so that people with the best interests of the club at heart are following the financial transactions being made by the board?

Tony Lloyd: My hon. Friend probably remembers York City beating Manchester United-it is going back a week or two.

Derek Twigg (Halton) (Lab): I certainly do.

Tony Lloyd: My hon. Friend, as a Liverpool supporter, perhaps remembers that better than I do.

The York model, like the model at Exeter City, with supporters taking over the clubs, has worked. I shall come later to the role of the supporter but the fans are central to the future of football. They built the clubs, and they are the future of the clubs, so a proper role for the fan is fundamental.

The fact that we have already had a geographical tour of the nation is interesting, because this issue will be dismissed by some who will say, "Why are parliamentarians talking about football?" Does football matter when we could be debating the global financial crisis or the success of the national health service and all the things that you, Sir Nicholas, believe in as passionately as I do? Actually, football does matter. It matters to hon. Members on both sides of the House and to the people whom we represent.

Mr. Mike Hancock (Portsmouth, South) (LD) rose-

Tony Lloyd: It also matters to the people of Portsmouth.

Mr. Hancock: How does the hon. Gentleman envisage us changing the way in which football clubs are viewed? They are seen in regulatory terms as a financial institution, rather than as a cultural and sporting asset to any city or town in which they are located, which is how most of us in the Chamber see them. That is the mentality that we must shift, and Government have a role in ensuring that that shift comes into play.

Tony Lloyd: I wonder whether the hon. Gentleman will allow me to make a bit of progress, but I will come on to those issues because they are central to what we are discussing.

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We are now dealing with a failed business model. It is one that has seen many of our clubs-from the large to the smaller-soaked in debts to such a level that they are put at risk. Let me refer to Liverpool football club, which was taken over some years ago by its present owners. The owners made quite extravagant promises about building a new stadium, but they have in fact spent the past three years trying to repay the interest payments on the debt that was accrued.

Derek Twigg: I am sure that my hon. Friend is aware of the absolutely massive opposition to the current Gillett and Hicks regime at Liverpool. Given the amount of money that is involved in the top football clubs, the situation becomes dire if anything goes wrong. Promising to do something and not delivering on it is one thing but when big amounts of money are involved in football, the impact can be massive.

However, smaller clubs such as Runcorn, which will shortly move to a new ground, are just as essential to the game. Although we should concentrate on some of the concerns around the big clubs, we need to consider seriously the whole issue of football and its importance to this country.

Tony Lloyd: My hon. Friend is absolutely right, and that is central to what I want to get across. It is about the whole of football. Yes, it is about the big clubs such as Manchester United and Liverpool, and my hon. Friend is right to say that the sheer volume of debt that has been dragged into those clubs puts their very basis at risk. However, the same applies to the minnows-I do not use that word dismissively-in football, which are absolutely vital to the long-term future of our national game.

In the context of Manchester United, may I just say that their support base is aggrieved? Last Saturday, tens of thousands of the 75,000 supporters were waving green and yellow flags-as my right hon. Friend the Member for Sheffield, Central (Mr. Caborn) is demonstrating-to show their unhappiness, anxiety and concern about their club, which was once free of debt. The takeover by the Glazer family in May 2005 cost £810 million. Of that, some £540 million was in loans. In the period since the takeover, £340 million has left the club to service the debt that was brought in to finance that highly leveraged deal. That is a preposterous amount of money to be leaving a club such as Manchester United, even though the club, along with Real Madrid, lays claim to being the biggest or the second biggest sporting venture on the globe. That money has been put in week after week by supporters and customers.

Last year, Manchester United reported a profit of £32 million. Only the sale of Ronaldo for £80 million-he was clearly an asset, but I was not necessarily sorry to see him go, given the saga that took place-turned a loss of £48 million into a profit of £32 million, and arguably that was in the most financially successful playing period in English football in recent times. I do not say this with any happiness, because it is clearly a very unhappy situation, but the situation has become even more perverse, with the club floating a bond of £500 million to retire some of the debts. We are told that as a result of that, and of the commitments that have been made, the Glazer family can take £172 million out of Manchester United next year, which is a phenomenal
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amount of money for a club with a sales turnover of £280 million. Such figures do not add up in the long run. It might be that the Glazers have a cunning plan, but nevertheless I must say to my hon. Friend the Minister that we now need transparency at club level to ensure that the supporter knows what is going on.

If there has been a failure at club level, there has also been a failure at league level. We see so many clubs-the ones that we have already talked about up and down the country-in difficulty, and that is felt at a national level. A sad reality is that it makes economic sense for clubs to scour the world looking for nearly-ready talent to come into our game, rather than putting the money into the development of the next generation. That is why the smaller clubs matter in football. Clubs such as Chester City and Stockport County were the feeders for the bigger clubs, and then the bigger clubs were feeders to the even bigger clubs.

Ann Coffey (Stockport) (Lab): I entirely support my hon. Friend in his efforts to get a new framework that will give greater protection to football supporters.

Sir Nicholas Winterton (in the Chair): Order. Will the hon. Lady address the Chair? I am getting on, and my hearing is not quite as good as it used to be.

Ann Coffey: I apologise, Sir Nicholas. Before Christmas, I wrote to the Football League after a meeting with the administrators of Stockport County. Basically, I was seeking assurances about the release of the club's share of media funding. When I read the response from the Football League, it was very clear to me that there is very little flexibility in the rules and regulations that govern the operation of the Football League. Does my hon. Friend agree that it is essential for clubs such as Stockport that we have a review of those regulations and rules to ensure that the Football League operates in the wider interest of the public and of football supporters?

Tony Lloyd: I agree with my hon. Friend. Let me turn to the regulatory framework, which simply does not work. Whether we talk about the Football League or the premier league that have commercial interests or the FA that supposedly takes the high-order view of the global interests of the game, I regret seeing clubs operating by standards that do not work. When the FA wrote to me in preparation for this debate, it said that it has made great progress in recent years, working alongside its professional game partners to ensure collectively that the football authorities provide the right balance of regulation and incentive to ensure the sustainability of football clubs. If that is the case, where have the FA been in recent times? An FA that is so complacent is an FA that is not fit for purpose, which is why we need external regulation.

Graham Stringer (Manchester, Blackley) (Lab): I am grateful to my fellow United supporter. I have been following his arguments very carefully and find that I agree with them. United's competitors are not York City or Southend or even really Portsmouth. United's main competitors are Real Madrid, Barcelona and Bayern Munich. We need a level playing field for international competition, and that is the responsibility of FIFA and UEFA, and they should introduce regulations to ensure
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transparency and to limit the amount of debt, and that would stop leveraged buy-outs, as happened to Manchester United.

Tony Lloyd: My hon. Friend anticipates part of what I am going to say. He is absolutely right: if we do not have an international dimension to all this regulation, we fail our national game, because there is no doubt that at every level-not just the top level-the interrelationship of clubs across Europe and around the world matters. Even in the lower leagues in England, we see players being drawn in from south America or Africa. Our game is global at almost every level and that is why we need to internationalise the regulation.

At no point would I argue that there is no room for debt in football. Debt is probably a necessity when clubs-whether Runcorn or Liverpool-are looking to develop new stadiums. It is quite possible that the introduction of some debt is legitimate. I am also not arguing against foreign ownership and least of all against foreign players coming into the English game. There are good examples of foreign owners. Randy Lerner at Aston Villa is an American and he has shown a real commitment to the game of football, to Aston Villa and to all that the club means to the people of Birmingham and beyond.

However, we must now have something that begins to bear down on the excesses that have taken place in football. My right hon. and hon. Friends in government-our Ministers-have a responsibility to look seriously at the Government's role. We can no longer accept a hands-off approach from central Government. Football is our national sport and an international issue, and if we are taking this argument into Europe and around the world, we need the Government to be behind it, as they are, for example, rightly behind the campaign to bring the World cup to England in the years to come.

We need to look at establishing some principles. We need to say that the development of the national game is vital, so that any strategy for football must look at the game as a totality and not just at the individual clubs. We must look at the need to develop home-grown players and at how we bring those players through the system. We also must look at the role of the supporter. My hon. Friend the Member for City of York (Hugh Bayley) raised the issue of the supporter, and we have to put the football fan at the centre of the football family.

There is a paradox: 10 years ago, the football taskforce produced a very sensible report. Its majority report made very sensible recommendations; yet a decade on, we are still waiting for their implementation. In fact, the all-party group on football, which includes a number of Members who are in Westminster Hall today, including my hon. Friend the Member for City of Chester, made very sensible recommendations a year ago about the future of football. In that sense, there is nothing new in what I am about to say. However, what is frustrating is that we have seen so little action on this issue, although football is now arguably in a state of financial crisis.

We have to put the Football Association back in charge of football. However, it must be an FA that, first, is not cowed by the money in the premier league or the Football League and, secondly, does not express the complacency that I evidenced earlier and begins to say that it will stand up for the stakeholders in modern football.

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