CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 792-i

House of commons

oral EVIDENCE

TAKEN BEFORE THE

Culture, Media and Sport Committee

Football Governance

Tuesday 8 February 2011

Patrick Collins, Sean Hamil and Professor Stefan SzYmanski

Lord Burns, Graham Kelly and Lord Triesman

Evidence heard in Public Questions 1 - 55

USE OF THE TRANSCRIPT

1. This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 8 February 2011

Members present:

Mr John Whittingdale (Chair)

Ms Louise Bagshawe

David Cairns

Dr Thérèse Coffey

Damian Collins

Philip Davies

Paul Farrelly

Alan Keen

Mr Adrian Sanders

Jim Sheridan

________________

Examination of Witnesses

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

Chair: This is the first hearing of the Select Committee’s inquiry into football governance. I welcome our first three witnesses: Patrick Collins of the Mail on Sunday, Sean Hamil of the Birkbeck Sport Business Centre and Professor Szymanski from CASS Business School.

Q1 Ms Bagshawe: Could we start with a brief overview of things as you see them? How robust do you think the English model of football is?

Professor Szymanski: Partly I think the question is what do you mean by the English model of football? Are you talking about professional football? Are you talking about football in the top leagues––the Premier League, the Football League? Are you talking about the national team game? Are you talking about grassroots? Are you talking about local club football? Are you talking about, indeed, mass participation in football on an informal scale? Part of the problem is which bit we are talking about.

If we talk about the professional game, my view is that the professional game is extremely robust and very successful. We have the most successful football league in the world in the Premier League. We have the most popular lower tiers of football anywhere in the world: the English Championship is by far the most popular second league in the world, the third tier and fourth tier are very strong. They have very high levels of attendance and of income. Although on the face of it people say, "It looks like they have lots of individual problems", taking the system as a whole, it is very robust.

If you think about the national team, obviously people talk about issues with that, but that is a very special problem. If you think about the grassroots, in terms of participation, people participate very strongly in football in this country. There are lots of facilities and I would say overall I think it is fairly strong and robust.

Sean Hamil: It has a lot of strengths, but there are problems, and I think that is the reason why this Committee is conducting this investigation. The professional leagues are strong in the sense that they generate a lot of turnover, a lot of people want to watch it and English teams perform comparatively well in European competition, but if you focus on one key financial indicator, there have been 53 incidences of financial administration in English football since 1992. There has not been a single year since the foundation of the Premiership that the clubs collectively have made a pre-tax profit. Football is different but turnover is vanity, profit is sanity. I have got a copy of the Portsmouth administration document here. It is sorry reading, and one of the problems is that essentially what you have in administration is that, because of the football creditors rule, the key football creditors all get paid 100%, which means that the tax authorities get proportionately less and all the small creditors, such as St John Ambulance, do not get paid. Even looking at that as an isolated episode, that should be intolerable. I recommend that everybody read this document, because it is available on the Portsmouth website, and all the administrations follow the same pattern.

It should not be acceptable in any industry that says it is a private business but has a loss-making financial model. Essentially, it receives a de facto subsidy from the public purse through the non-payment of taxes. To be fair to the football authorities, they have recognised this fact and we now have early warning for tax payments, but there has been a long history of non-payment of taxes at football clubs, and you have to ask why is it only now that it is being addressed? The reason, in my opinion, is because the tax authorities have finally said, "Well, we’re going to get serious here".

The other fundamental problem with a loss-making model is that it is about the quality of the owner that you get. If you have a scenario where someone of the quality of Delia Smith, a successful entrepreneur or Sir John Madejski, successful entrepreneur and local boy who tried to build a sort of major sporting institution in his hometown, decide it is not worth it and that they would like to get out, I think that that is a problem.

Similarly, if you look at the Liverpool situation recently, in the nick of time, there was some very effective work by the interim chairman and his team to deal with failed owners who basically bought the club with borrowed money It’s all very well to say that money invested by new owners is money being brought into the game but where you have a leveraged buyout, money is going out of the game. In our written submission from Birkbeck, we acknowledge all the many strengths of English football. It is very important to do that if you want to have a balanced discussion, but there has to be a realistic assessment of this particular issue. If you are losing money year after year after year, I’m sorry, that is a problem. Secondly, we have the recent example of the lack of financial regulation in the credit crisis. I make no bones about this: there is a role for effective regulation. That is the lesson of the financial crisis. The only question is what form it should take.

Patrick Collins: Essentially, I agree with very much of what Sean has just said. If it were sufficiently robust, we would not be having this Committee at all. I also think that the game tends to get judged on the success or failure or otherwise of the Premier League, which is a mistake. The Premier League has great weaknesses, which spring possibly from its foundation. I think it was conceived in the spirit of greed and over the years it has probably got a good deal greedier. This is one of the central problems of the game: judging everything by how much money it can make rather than what sort of contribution it can make.

The solution is obviously far broader than this, but the notion of having two independent directors of the FA is an excellent one, because one of the central things that is going wrong with the game is the ongoing conflict between the Premier League and the FA. That has to be resolved. Once that has been resolved, we can look at the game much more calmly. I have some hopes of this Committee because it has been long, long overdue that Parliament has taken a proper look at it. I have urged for years that there should have been an inquiry of this sort and I am very pleased that you have decided to have one.

Q2 Ms Bagshawe: Thank you very much. That leads me neatly on to my follow-up question. If we think of the structure of English football as a pyramid, from the Premier League down to League One, League Two, Conference, semi-professional football, has overall the introduction of the Premier League, would you say, strengthened or weakened the English football pyramid as a whole? Mr Hamil, what do you think?

Sean Hamil: I think any high-level competitive league where people want to watch it is a good thing, so I don’t think the Premier League is a bad thing. It would show a lack of focus on the part of the Committee if the way that it proceeded was that there is a problem with the Premier League. I don’t think that is the problem. The issue, as you allude to, is the relationship between the Premier League and the rest of football.

It is well recognised in all sports models that there is a pyramid, because the grassroots provide the players, even in an international marketplace, but they also provide the fans and the whole participation culture creates the interest. It is well recognised that there should be solidarity from the top to the bottom. The critical issue is how that solidarity relationship is organised. My own view, it won’t surprise you to hear, is I think there should be greater solidarity between the Premier League and the grassroots, either through the Football Foundation, through payments down to non-league football or through partnership with the FA. But the Premier League itself is not the problem. The problem is that the relationship has got out of kilter, and you can see that, as Patrick alluded to, most obviously on the board of the FA where, instead of having a unitary board that tries to serve the interest of the wider game, you have two sectional interests who are not quite sure how to relate to each other.

Professor Szymanski: I agree with Sean about this not being just about the Premier League. One thing you need to take into account is the context of English football around the time the Premier League was formed. The history here is that in the post-war era, up until 1985, attendances were continuously in decline at English football. We all know the history of what the problems were in English football: neglect of investment, poor facilities, poor crowd control, hooliganism, a sense of danger and it not being a safe place to be.

If you look in my written submission, I show a chart of the actual movement of attendance in English football; that reverses in 1985 and since 1985 it has gone continuously in the opposite direction. In terms of people going to football, we have just got back to where we were in 1960, and one of the things this Committee should think about is what brought about those changes. Why has English football become so much more popular? The Premier League is part of that in the sense that the Premier League was motivated by the advent of satellite broadcasting, which was again motivated by partly or largely by deregulation of broadcasting in Europe, which created competition to own broadcast rights, which created competition to be able to show things like English football. That competition bid up the value of the rights, which brought money into the game and that money has been used to buy players and make the game more attractive. That is that part of the story.

Of course another part, as Sean would probably draw your attention to, is the improvement in football stadiums, which was motivated partly out of Government intervention following the Hillsborough tragedy and the Taylor report that followed on from that. But I would also point to another big change, which was an internal change that happened in English football in the early 1980s, which was that following the recession of 1980-81, the Football League authorities looked at football again and said that one of the problems in English football was that it was not commercial enough. You could not pay directors, you could not pay dividends and, essentially, the Football League’s own investigation concluded that it needed to adopt a more commercial approach. That is what, I think, underlies all the changes that have gone on in the last 20 or 30 years. Football has become more commercial. Of course this has caused a lot of outrage because ticket prices have gone up, and there is new merchandising and new ways of selling football. Certainly people of my generation or older look back and say, "Oh well, things must have been better in the past."

But in reality you have to look at the level of national and international popularity of the game and say, "Well, it has really been very, very successful." Sure, there are issues you can talk about and problems that you might focus on, but the overall background picture should be one of this is one of Britain’s most successful export industries right now and, before you think about interventions that the Government might make or the state might introduce, you should ask yourself, "Could we jeopardise any of that success and popularity in the future?"

Q3 Ms Bagshawe: Mr Collins, have you anything to add, particularly in relation to how the Premier League affects the other strata of English football?

Patrick Collins: I think, and it is going way, way back to roughly the time Stefan was talking about, some people have a certain yearning for the kind of equality which prevailed before 1983, when each club took their home gates and paid the away team 20% of that gate. The result was a rough equality among the 92 clubs. In fact, going right back to 1965, the first television contract for the season was £5,000 when the 92 clubs received around £50 each. I would not recommend that, but after that in 1985 when it started to change-the first division took 50% of the revenue from television, the second division 25% and the third and fourth 25% each-it produced a game that I agree had many of the problems that Stefan spoke about but it was also an age in which clubs succeeded by virtue of their ability. Derby won a league title and Nottingham Forest won two European cups, not because they were richer than the rest but because they found a manager who was better than the rest. The game seemed to be then centred on sport rather than money.

It is absolutely inconceivable that you could have a Derby or a Nottingham Forest, totally inconceivable. They couldn’t approach the feats that they did. I find some regret in the way that the Premier League came and corralled the huge percentage of the money and made a much more unequal game. So you now have people coming into the game with huge spending power, you have a sheikh here, another guy up there, who can determine the course of the season by the power of their purchasing. Sport lost a great deal when it lost the kind of equality that used to prevail.

Q4 Mr Sanders: As we are going to be dealing with supporters trusts in this inquiry, I have to declare I am a member of the Torquay United Supporters Trust. That leads me nicely to my question: is there sufficient redistribution of income down the pyramid to sustain football’s structure in the longer term?

Professor Szymanski: That is a very good question. I guess again it comes down to what one would mean by "sufficient" in this context. In a sense, you don’t need any money to trickle down the pyramid in order for there to be people interested in playing football and people to want to play. For example, if you cut off all solidarity mechanisms now from the Premier League to the lower levels, the lower levels would all continue, people would still go to watch. If you went to a school and asked how many kids would like to play Premier League football, if you cut off all the solidarity mechanisms, that number of kids would not go down. Ultimately, football is a game played by people and the key incentive is, "Do you want to play this game?" and that is not going to change, regardless of the solidarity mechanisms.

That does not mean to say there is no justification for money trickling down, and it is perfectly reasonable to say that money should come from the top levels in order to help provide facilities and provide investment and maybe improve the quality of the game. That is no doubt true, but again one of the things we should perhaps ask ourselves is: where do we want our footballers to come from? A lot of people are very concerned that there are not enough young footballers coming from this country and too many footballers coming from abroad. In other words, Premier League money is being used to track down talent globally rather than nationally. Is that a bad thing? Should we think that it is more important that we have more English footballers or more Welsh or Scottish footballers, rather than having more African footballers? We have not had any major stars in the Premier League from India, for example, but no doubt that will come at some point, and more Chinese players and so on. Is it bad that they spend their money on that?

In a sense, when you talk about the trickle down and is there enough money being redistributed, ultimately all the money that gets spent in football goes on footballers in one way or another, and the teams at the top are looking to find the best players that they can. I do not see any particular reason to say that there is not enough money currently going down to the lower levels.

Sean Hamil: Your question brings us back to the problem of loss-making. On the current system, there is a famous academic paper by Peter Sloane that says what sports club owners do is they maximise utility not profit. They want sporting success, therefore they always overspend. Alan Sugar used the rather crude expression "the prune juice effect" about Tottenham: money goes in one end and out the other end to players.

What happens in that scenario is that unless you are able to deal with this fundamental challenge about how you can stop clubs spending more than they earn on salaries, you will always have chronic financial instability. To go back to the trust example, I was an elected director of Supporters Direct. It is well known I am a passionate supporter and continue to be, but one of the problems we faced at Supporters Direct, post-ITV Digital, was that 17 clubs went into administration because of a collapsed TV deal. At one point I think there were seven league clubs in fan ownership, basically because there was an investor strike, because no one would buy a league club in that brief period of 18 months, so it was like a financial accident and emergency. The volunteers took over, they cleaned up the balance sheets through voluntary labour, fans’ investment, and at the end of the period when the situation stabilised of course the fans said, "We can’t compete because our rivals have got a sugar daddy.". So what happened? They were reluctantly forced to sell back to private owners. In other words, financial virtue did not have its own reward.

That is why the principles of UEFA financial fair play are absolutely critical. The fact they happen to come from Europe is neither here nor there. They should be applied in every league in Europe independently because what happens is that if you are overspending on players you are not spending on disabled facilities for local fans, you are not spending money on that family facility, you are not spending money on that outreach into the community. Stefan, who is one of the most pre-eminent sports economists in Britain, throughout Europe, has written extensively about this whole business of somebody has to pay somewhere along the line.

Q5 Mr Sanders: Where do you regulate and who regulates?

Sean Hamil: It is absolutely clear who should regulate. The regulators should be the football authorities but the Government has a role in nudging them in the right direction. If you take the Taylor report, football could not reform itself at that point; Government had to intervene and say, "We’re sorry, but you’re going to have to modernise your stadia." I think we’re at a similar turning point.

From 1992, four factors came together to create a perfect storm for football. First of all, stadia were being modernised with a 25% subsidy over 1992 to 1997 from a levy on the pools betting duty. English teams had just re-entered European football in 1990. The pay TV revolution had just started, and we had just started 15 years of uninterrupted economic growth through to 2007 and, as we all know, as growth rises, a disproportionate amount is spent on leisure. That ended in 2007. We are in a paradigm shift now and it is important that the football authorities focus on that. Things have changed. European money is now a necessity not a bonus. The TV money domestically has plateaued. They have to pay for their own stadia money now and we are in a financial downturn. That is an appropriate time for reflection. But to come back to your fundamental point, something has to be done about loss making because loss making basically means spending everything you have on players and not building the club as a viable institution, which not only benefits its shareholders but also the wider community.

Q6 Mr Sanders: You mentioned the football authorities. A lot of people give that answer, "The football authorities should do something". Who are the football authorities?

Sean Hamil: The FA should be the lead body because the FA is the governing body of football, and on the board of the FA are representatives of the Football League and the Premier League. When people attack the FA, they are actually attacking the Premier League and the Football League as well. It is the governing body. If you read the submissions from the Premier League, they acknowledge the relationship and so on. There is no need to reinvent the wheel. What is necessary is to recalibrate the relationship between the two leagues and the FA and, in my opinion, to allow the FA to get on with its historic role of governing the game in the wider interest. The job of the leagues is to run two successful leagues. It is not to govern football.

Q7 Mr Sanders: Can I come back to my original question about the pyramid? The pyramid is not just about an agreement of income going down; in the past a lot of transfer money also went down the pyramid that now tends to go overseas. Would Patrick want to say something on that? There also used to be more redistribution within by sharing of gate receipts, which went out of the window, which clearly benefits the bigger club against the smaller club.

Patrick Collins: The transfer money point you make is very relevant. In the last transfer window, I believe I am right in saying that the leagues outside the Premier League benefited by about £12 million, which is obviously peanuts given that about £200 million was spent. So this doesn’t happen. We hear about this trickle-down effect. One of the great dangers of the so-called trickle-down effect is that when a monstrous fee is paid, for instance like the one that has just been paid for Fernando Torres, it sets the bar at a different level. People who have other players to sell say, "Well, if he is worth that, mine must be worth that." It is not just the fee but of course the ancillaries that go with it, the salary even more so than the fee. I do not know what Chelsea are paying Torres but it would be enormous. The next agent will know what Torres is being paid and he will negotiate on that basis. The idea of this wonderful pot of money going down and doing good all over the place seems to me to be a misnomer.

I take Stefan’s point that the Premier League has fulfilled many of its aims and ambitions, but I remind you that one of the central reasons it was brought into being, one of the reasons under Graham Kelly, who I believe is speaking to you later, under the blueprint for football he devised, which effectively brought the Premier League into existence, was that the Premier League would make for a successful England team: because of the extra time players would have to prepare because of fewer games and so on, we would have a successful England side. As we all well know, every two years we have inquests and eruptions when first England fails at the World Cup and then it goes out at the European Championships. The Premier League does a good job of preparing the world’s players to perform at major tournaments, but since there are fewer and fewer English players playing in the league it does less well with England players.

Q8 Jim Sheridan: Stefan, if I picked you up right, you said that the money generated in football tends to stay in football. Can I therefore ask you about the role of football agents, because from where I am sitting the agents take money out of the game. That money doesn’t go back into the game; that money goes out of the game. There is a self-interest in agents moving players around clubs in order that they get their commissions fee and so on. Given the fact that there is only one source of income for football, and that is the paying fan who buys the merchandise, the televisions, the tickets, they’re the only people that put the money into football, is there an argument to regulate agents so that they do not move players or encourage players to move around clubs and get these extortionate, ridiculous sums of money? That is money that is leaving football; it doesn’t come back in again.

Professor Szymanski: Before answering that, can I just briefly go back to a point that you were raising. Your comment about the trickle-down effect is, I think, completely wrong. If you go back historically, there never has been a trickle-down effect. If you go back to the very first Government report, the Department of Education and Science’s report in 1968 by Sir Norman Chester, it showed that, in fact, teams in the third and fourth divisions were paying net money to the top division. The trickle-down effect is a myth and that is part of the problem with the whole approach when people talk about it. They do not base the arguments on researched facts. I am sorry, that is not a particular criticism of you, but in general there is a reluctance to look at the data about what we know and more interest in talking about emotions.

To come to your question now, from the day that agents came into the game, it was clear that the clubs and the football authorities hated them and would like to get rid of them. Why is that? It is because football agents drive up the wages of their clients, and of course they have been unbelievably successful in the last 20 or 30 years in doing that, so you will get a lot of calls for regulation of football agents because of the damage that they allegedly do. If you think about the situation we had before we had football agents, we had the retain and transfer system in football, which effectively tied players to the clubs for their lifetime. Up until 1960, we had a maximum wage rule that said that players could only be paid up to £20 a week maximum. Effectively, all the money that came into football was kept within the clubs, within the organisations that run the clubs, and the players got nothing.

There are two points one could make about that. One could make an ethical case and say, "Is it fair that the people who create the performance on the pitch get a tiny fraction of what is paid?" We could argue about the ethics of that. Most of these people would play for nothing. Any of us would love the chance to play at the top level and so maybe they do not need to be paid that money. But the other question to ask is, when the money did stay with the clubs and the organisations that ran football, was it well used? Was it invested for the future? Was it invested in developing the game? Arguably, that coincides with the period of dramatic decline in English football. It is so easy now, 25 years on, to forget the scale of the crisis in English football that was continuing and persistent over a quarter of a century. The game really was on its knees. Allegedly, Margaret Thatcher talked about shutting down football in this country. It is unimaginable.

Q9 Jim Sheridan: Football has changed in 25 years. We have come a long way in 25 years. I am not suggesting for a minute that the clubs keep the money and do not pay the players appropriately, but the bottom line is it is the supporters that are paying £50 million for players. That is supporters’ money.

Professor Szymanski: Absolutely, but the supporters willingly part with the money because they go to watch the football and they watch the football. Nobody is forced to go to watch football. Again, if you are talking about any high-quality product, people pay a high price to get that high-quality product. We would not be having a committee here about any other high-quality service that is being provided. We wouldn’t be talking about Gucci shoes or luxury cars and saying, "People are paying large sums of money for this. Why is that money not being used for the right purposes?" The point about this is that the agents negotiate on behalf of their players to get them a reward for their services. This is true not just here in English football, it is true worldwide. If you look at the United States, for example, very much the same situation prevailed up until the 1960s: the players got nothing and the teams took all the money. Then players got freedom of contract, agents came into the game, and the players’ wages went up dramatically. The clubs told everybody and you can look at congressional hearings where the clubs and the franchises all say, "Oh, you’re destroying our game and it’s ruining the game" but the fact is that there, again, attendance has grown, people have become more interested and the coverage has increased.

Regardless of the ethical question, in terms of does it damage the health of the game, I think not. Partly the reason is that the agents have the incentive to go and find new players. What they have done is the quality of football has gone up, I would argue, because there has been this persistent search globally to find the best possible players.

Patrick Collins: I butt in because you do not often hear defences of agents. I think they are a scar and a stain on the game. The money the agents have taken out––we cannot be sure because all the figures are not available. Everyone has terrible stories about football agents because so many regard them, not as Stefan seems to, but as leeches and parasites. There was one 12-month spell around 2009 when Premier League clubs paid them a total of £70.7 million. That is money the game will never see again, and for what? It is money that is just lost to the game and I think that is quite scandalous.

A couple of examples. When Wayne Bridge moved from Chelsea to Manchester City, the agent, Pini Zahavi, was paid £900,000. Now, Bridge wanted to go to Manchester City, Chelsea wanted to sell him and City wanted to buy him. Both clubs had chief executives who could have picked up a telephone and done the deal in about five minutes, I would guess, yet Zahavi took £900,000 from this deal and nobody thought that was appalling. Years ago, in 2004, Manchester United paid an agent named Rodger Linse £1.3 million for renegotiating the contract of Ruud van Nistelrooy––not negotiating a contract but renegotiating it, and he got £1.3 million for it. Yet there is something called the Association of Football Agents whose chairman is somebody called Mel Stein, and he wants them to have a seat on the FA Council, because he says, and I quote, "Agents perform a valuable role and should be acknowledged as stakeholders in the game." Those arguments, at the moment, go unchallenged by the football authorities. We need people there who will take on this nonsense and we do not have them at the moment.

Sean Hamil: May I just make a very brief observation? The thing about agents is that it is legitimate. I have done a bit of active trade unionism myself. It is legitimate that you have a representative, but the problem with agents is that there has been so many abusers taking money from both sides and so on, but there is also potential for corruption. At the heart of the Calciopoli scandal in Italy in 2006, agents had players who they effectively controlled on both sides in a game. The role of agents in sport is much more complex than it is say, for example, in movies, and for a whole lot of different reasons it needs to be very aggressively regulated.

Q10 David Cairns : It struck me in reflecting on what has just been said that there is a connection, which is that when all this money goes on wage inflation and to agents, it is the people who make Gucci handbags and Lamborghinis who benefit from this. Maybe we should get them in as part of it.

We are going to talk about debt financing and leveraged buyouts later, but just a couple of specific questions before we do. Picking up Adrian’s point about redistribution, although this is an inquiry primarily focusing on England, there are clearly implications for Scotland and Wales and all the rest of it in terms of fit and proper persons, leveraged buyouts and foreign ownership, so we will bear that in mind. One of the things that rankles in Scotland is that the clubs that get relegated from the premiership get 30 times more money than the team that wins the SPL. Isn’t this parachute payment-it is a form of redistribution and I understand the logic of it-just a big fat reward for failure? You come last, so you get extra money for it. It is a Fred Goodwin model of rewarding people. Worse than that, doesn’t it import into the championship wage inflation that would otherwise not be there, because of this grotesque distortion?

Professor Szymanski: The point you make about rewarding failure is a very important one, because the Committee will think a little about the American model and why something like the NFL––we just had the Superbowl––is so incredibly successful. One of the points people make about that is that it is a system that rewards failure as well. The traditional football model we have in Britain, Europe and most of the world is a model that punishes failure through relegation, and that is one of the things that drives the clubs to live financially on the edge. They live financially on the edge in order to avoid relegation and to get promoted up the system, so we have a hyper-competitive system. This is true not just of this country; it is true everywhere in football. It has always been true, because of the nature of the incentive system.

The NFL is the most profitable football sports league in the world by a country mile. The 32 owners are incredibly wealthy and they get incredibly wealthy out of American football, and they do this by being, as they describe themselves, 32 socialists who vote Republican, because what they do is they share everything in common: 40% of the gate money goes to the visiting team. They share all the broadcasting money absolutely equally, they share all the merchandising income equally. Imagine Manchester United sharing its shirt income with Stoke. That is what goes on in the NFL: every team shares equally. They also have a salary cap, which limits the amount that they can pay players, and they have a draft system, which rewards the worst performing team with the first pick in the draft, which in addition gives them exclusive negotiating rights, which helps to keep the wages down. They have designed a system that keeps wages down.

Q11 David Cairns : What is the salary cap?

Professor Szymanski: I cannot remember the latest. It has changed. They are just about to have a big strike probably because the collective bargaining agreement-they have a union and an unionised-

David Cairns : It is socialism then.

Professor Szymanski: It is socialism. Again, in America all the players are represented by strong unions. The old agreement I think was 58% of revenues. I think it was 58% but I would have to check the figure.

But they have these arrangements, which mean that things are held in common. One interpretation of the parachute payments, to come to your question, is that in fact the Premier League is setting about doing the same thing. One implication of the parachute payments is that teams that benefit from these payments are very likely to get promoted again. They have just extended the parachute payments, so in other words they are reducing the size of the club that can participate in the Premier League.

One way of thinking about what they would ultimately like to do to run it, to be successful and to avoid all the financial problems that they have, is to become a closed league like the NFL, get rid of promotion and relegation entirely. In many ways, when you think about the mechanisms that you might think about to bring financial security to the Premier League, you might be helping to move it towards an NFL style organisation in the future. I think that is something you should bear in mind in your discussions.

Patrick Collins: I would agree with Stefan’s analysis, though perhaps I would not share his sympathies. One of the principal reasons for sport is winning and losing. You win, you succeed; you lose, you suffer the consequences. But I do agree that the Premier League, deep down, wants to be a closed shop. Phil Gartside, the chairman of Bolton, has tried once or twice to bring in this idea of no relegation, keep the whole thing, so you won’t have to worry about losing vast sums when you go down. It was a rather subtle way of doing it. In order to bring this about, the parachute payments, which I think are a really important subject with regard to this inquiry, have now grown to enormous size. They are £18 million for the first two years and more over the next two. This seems a lot anyway, but when you realise that, from television alone, every old-time second division club gets £1 million whereas every Premier League club gets £45 million, the gap is horrendous. The parachute payments involve going down with £18 million in your pocket when everyone else has got £1 million and so the likelihood is, as Stefan says, they will come straight back.

The idea of at least a two-division Premier League is still lurking there. In that sense, again it is what I was saying earlier, the whole thing has become who can wave the biggest cheque, and I don’t think sport should be like that. It should be more than a battle between billionaires, and the public rightly expects more of it than that, but that is the way it is going at the moment.

Sean Hamil: Stefan is correct when he says that an obvious solution to the loss-making is to have a closed league and the increase in the parachute payment looks very like a de facto attempt at that. But you can deal with that within the European system of promotion and relegation, and the way you deal with it is to say through some version of financial fair play it is written into your membership of the league that if you get relegated you have to renegotiate your salaries. I am not a fan of the football creditors rule, I don’t think it is sustainable in the current environment, but the leagues have enormous power because they control ownership. If you want to play in the league, you have to get the league’s permission, and if the league is really serious, it can say when you get relegated, particularly if you have the financial principle that you cannot spend more than you earn, then written into every player contract is renegotiation of salaries. It can be done. There has to be radical thinking about this. The key thing about sport is that it is a joint product. The reason why the Republicans vote socialist is because they recognise the peculiar characteristics of sport. Even the children in the schoolyard know "I pick one, you pick one" if you want to have a competitive product. Only in sport do you want a strong competitor, and it is not for any political, ideological reasons that you need to regulate. You need to regulate because of the peculiar nature of sports competitions, and this particular conundrum is just one more example.

You just need to be a little bit imaginative. We can still have all the good things of promotion and relegation. Hopefully AFC Wimbledon are going to embody that by getting back in the Premier League soon from starting again in 2002. The problem with a closed league is you get rid of that romance and that magic, which is at the heart of the economic power of English football.

I just want to add one thing. Salomon Brothers in 1997 brought out a report on how you value a football club. It was a very insightful piece of work by a group of hard-headed analysts. They said fans’ emotional attachment to their clubs––fan equity––you can put an economic value on it, because they won’t substitute. You know if you get relegated and you’re Leeds United you will still have 28,000 supporters and you can borrow against that. They did borrow against that and it was a disaster, but that is not the point. The point is that you can put economic values on these factors. They understood the peculiar nature of fans’ relationships, and because they were clever and imaginative, they were able to define it in financial terms. That is the challenge here. Let us try to understand the peculiar nature of this industry and to come up with regulatory measures, like the renegotiation of players’ salaries when you get relegated, which are a moderate response to that problem, unlike the radical response that would be a closed league.

Q12 David Cairns : As a Merton councillor at the time that the local community was stabbed in the back by Wimbledon FC, I entirely agree with you about AFC Wimbledon.

May I change the subject and ask a question about supporters who are, after all, at the heart of all this? At the risk of coming over all jumpers for goalposts, I remember as a boy hanging around outside Cappielow asking random strangers for a punt over the turnstiles. Obviously that does not happen any more and I do not encourage children to ask random adults for that, but is there any cause for concern that according to the Daily Mirror, an outstanding organ, the average age of a Premier League football fan is 43? Speaking as a 44-year-old, that is still young, but it cannot be good that the average age of a football fan is 43. The corollary of that as well is, maybe not outside London but certainly inside London, it is becoming increasingly a middle-aged middle-class pastime, and our future players are not coming from the ranks of the middle-aged middle-classes. It may be sustainable at the minute but long term is there not a problem if you get an ageing middle-class fan base?

Sean Hamil: Yes, there would be.

Professor Szymanski: I think you will get the pattern here. No, it is not a problem: think of the Premier League as a luxury car. Who has luxury cars? Typically, middle-aged wealthy men, no kids. Are Porsche saying, "Crikey, the average age of our owners is 43. Have we got a long-term problem that people won’t buy our cars?" Of course they are not, because people know that that is something you only get to have if you have a high enough income. If you cannot afford a Porsche––I cannot afford a Porsche––you go down the ranks. We have tiers of football as well that people can go to. It is noticeable that, while the Premier League’s attendance has grown by only 70% in the last 25 years, against a background when prices have increased more than seven or eightfold in real terms. What has happened in the Championship is attendance there has risen by 180%. That is partly because prices have not risen by so much. Back in 1985, you could go to a Premier League game or a top division game for £2.80, that was the average price of a ticket, which in today’s money is about £6.60. Imagine if that was still the price today. The stadiums would have lines outside of them going for miles round the corner because you just could not fit all the people who would want to go and watch. It is so popular. Of course that overflow has gone down into the lower leagues and it reflects the overall popularity of the game. You might say, "Is it terrible that it has become gentrified?"

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

Professor Szymanski: No, no. That is completely wrong.

Mr Sanders: My club’s attendances are significantly less than 40 years ago.

Chair: Adrian, we are going to have to move on, we are very short of time.

Q14 David Cairns : I understand that as a model. I do not accept it; I understand it. If I can’t afford a Lamborghini, I buy a Ford Sierra, fine. If I’m a young kind growing up in Tottenham and I can’t afford to get into White Hart Lane, I am not going to go to Torquay to get into it, so I think, the analogy is faulty. But the question isn’t about whether or not it works as a business model today but whether there are any implications for the long-term health of the game if young working-class kids are not getting access into the grounds to see these things and inspire them? Maybe this is tied up to our inability as Scotland and England to produce decent players that can win tournaments.

Patrick Collins: I think it absolutely is. I think too that Premier League clubs recognise this increasing problem. At the moment, the Premier League charges the most for tickets in all of Europe; it is the dearest ticket in Europe. The average price is difficult but in London it is perhaps between £40 and £50. There are family deals and concessions until the age of 16 and then comes the gap. It used to be one of the rites of passage that you went to football on your own, usually when you were younger than 16, but certainly from 16 you went on your own. Now they cannot afford it because they have to pay full price and they cannot do it. So between the age of, say, 16 and 30 they are priced out of the game. They still watch football, they go down to the pub and watch it on television. They watch the Sky broadcasts in the pub. Those are the people who are most likely to be lost to the game because you then take the risk that after all these years of watching football relatively cheaply down the pub, they are going to go off and buy a season ticket at Highbury or somewhere and it probably won’t happen. It is a real cause for concern that one.

Q15 Alan Keen: I want to give you the chance to talk about debt, but first can I ask you a very basic question. Who are we doing this inquiry for? When I say "we", I mean everybody. All the people here have a great interest in football. I was brought up in a non-political family. The first time I was offended by something, which I didn’t know was political until years later, was when I went to buy tickets at the old Ayresome Park, Middlesbrough’s ground, came back and asked my mother why it said Middlesbrough Football and Athletic Company Limited on the doors. I was shocked to find that there were shareholders. I thought I owned it in the same way as I owned the recreation ground equally. I mention it because of the current debate. The other thing that offended me around about the same time was finding that Imperial Chemical Industries, that saved Teesside economically, owned the Cleveland hills at the beginning of the Yorkshire moors and that offended me, and it is particularly pertinent with the forestry debate that is going on.

Are we doing this because we care about the football supporters? If they are offended, of course it will affect the money people afterwards, and you have just been touching on that. Why are we doing the inquiry? What do you think we should be recommending at the end?

Sean Hamil: You are doing it because football is not just a business but it is a very significant national cultural institution. I absolutely acknowledge the tremendous success of the Premier League and the Football League, and Stefan is right about this. Crowds are up significantly and that is down to good management, good marketing and improved stadiums, and a lot of private investment as well as public investment, but it is obvious that there are problems. I make no bones about it: I do not think that you can leave everything to the market because you end up with negative equity and a lot of other nasty, unpleasant things. There is a role for Government intervention. Always remember that the Taylor report was the catalyst for the reform of English football. There is disquiet at the moment about what is happening on a number of fronts. People are not rejecting the genuine successes. I think it is legitimate that the elected representatives of the people should take an interest in a subject that is close to people’s hearts.

Professor Szymanski: I have a very specific answer, which again is in my written evidence, but I think you should be guided by the Treasury Green Book when you think about this, which recommends the basis on which there is action justifying public intervention. It has to be either some kind of market failure, and specific types of market failure are listed in the Green Book, or some need to redistribute income because for some social basis it is not justified. My paper explains that there is not a market failure that I can see very obviously, and it does not fit the normal characteristics. If you argue there is an income redistribution element, I come back to my luxury cars point. There is an income redistribution point in the same way that poor people do not have access to luxury cars.

Patrick Collins: I think you are doing it because it matters. These things matter because football is the game that the nation plays and it is the game that the nation loves. As we have already said, it holds a place in the history and in the affection of the country. You can see it when the World Cup comes around and for some people football is an expression of the nationhood in a sense, and the disappointment is always crushing when it happens. The game has lots of things going for it: a large passionate fan base, wonderful stadia, wonderful players. People know that and it is frustrating because we know we can do better. I heard the Minister for Sport talking about football being the worst run sport in the country, and it might well be. I do not know how he measures that. That is not good enough. If overnight the television money dried up––the Murdoch money dried up and Sky walked away––and all we had done in that time was create a lot of wealthy young men and rich agents and a few very wealthy directors, it would not only be a sporting tragedy but something of a national tragedy.

Q16 Alan Keen: On the debt, because we are short of time, I will restrict it to one question. The fair play rules meaning that clubs will not be able to compete in UEFA competitions from 2013, what effect will that have? Will that solve the debt problem? In a way it has got to, the clubs have got to solve that problem. But we would love to hear what you have to say about it.

Sean Hamil: We will not know until it is implemented, but my view is that, for all the reasons I have outlined, I just do not believe that you can run an industry long term loss-making without problems. I think that UEFA, for its own reasons, has realised that. The European Club Association, which represents the major clubs in Europe, supports them 100%. The proof of the pudding is will it be able to force it through. If it is able to do it, if it is able to establish the basic principle that you should not be able to spend more than you earn and that money on youth development, stadia development is exempted, then everybody will benefit because what will happen is the Delia Smiths and the Sir John Madejskis of the world will say, "I don’t have to sell" and you will get a step change in the quality of the owner, and things will improve.

The problem at the moment is that there are too many people with an unhealthy appetite for financial risk. I am sorry to keep emphasising this point, but sooner or later that ends in tears. The Portsmouth example, they said there would never be an administration in the Premier League. Well, there it is, read it. It is a sad read. What went on at Manchester City with Thaksin Shinawatra was absolute skin of the teeth escape from a financial disaster. The same thing up at Liverpool. Now, how long do you have to continue to be lucky? The central point is English clubs will not be disadvantaged because everybody in Europe, if it is implemented correctly, will be subject to the same rules. What is necessary is for the English football authorities to now engage in active partnership with UEFA. I am not saying they are not active partners at the moment but just that maybe they could be more active partners, because what English football has to say is important for the future of European football.

Patrick Collins: I very much agree with that. It is risking everything to speak about debt with two economists here, but we are constantly told that debt is no bad thing, that everybody has debt, that sustainability is the thing. Then we see Manchester United, a club that never owed a penny, suddenly saddled with £750 million worth of debt and Liverpool, run by the much loved Hicks and Gillett, amassing debts of £351 million. Those are extraordinary figures and the public thinks that is wrong, and I think the public are right to think that.

But there was one thing I noticed. One of your next witnesses, Lord Triesman, in 2008 said, and I quote, "I don’t think anybody who is rational can look around this environment we are in and think they are immune. Football is obviously carrying a pretty large volume of debt. People will be making business judgements about whether it is sustainable or not but it is carrying quite a large volume of debt. We now have a position where it is very hard to track things. It’s not transparent enough and we don’t know, if we are able to track it, if the debt is held by people who are financially secure or not." Triesman was roundly condemned for that but I think he had it absolutely right and I think he is still right.

Q17 Paul Farrelly: The St John Ambulance situation was mentioned earlier by Sean. If I am running a business that is going bust and I do a special deal with some creditors, that is illegal because it is called preferential treatment. If I am a new owner of any usual business, I do not pay off the previous creditors unless it is worth my while, yet in football I am forced to do so, setting up a post facto preferential treatment of particular creditors. Is that wrong and should it be made illegal?

Sean Hamil: There is an argument in sport, because of its peculiar economics, for special arrangements. You could have made an argument for the football creditors rule in the past by saying that there is a need to protect clubs who manage their businesses reasonably effectively from the odd exceptional reckless behaviour. But the trouble is the recklessness now is absolutely endemic and therefore a direct answer to your question: I personally do not believe the football creditors rule is sustainable. I think the football authorities, all three of them, have sort of recognised that in their more assertive approach to demanding that their clubs demonstrate they are paying their tax debt they are sort of halfway there. It is in their own interests to drop it now. Who knows what is going to happen with the court case. The point about the football creditors rule is that it is totemic, because what they are basically saying is, "If you’re in the club we are going to look after you. If you’re outside the club…" I don’t think it’s sustainable.

Professor Szymanski: For once, I completely agree. I think it is a crazy rule and it should be eliminated. Once you start to treat football as a special case, once you start to say, "Oh well, it has got this special significance in our society", that is when you go down this route of having crazy rules that do not work. The same thing is going to happen with financial fair play. It is 80 pages long at the moment. In five years, it will be 800 pages long. The lawyers are going to crawl over it and money, a lot more money, won’t be going to agents, it will be going to lawyers, but once you start to regulate these things, it mushrooms and you get into inconsistencies and regrettable situations.

Patrick Collins: I agree totally with my colleagues here. It is very difficult to make the case for being a force for good in society when you attempt to enforce such an antisocial rule. The idea that football must look after itself first and that everything else comes in a distant second is offensive.

Q18 Paul Farrelly: There is a bigger question on the financial fair play rules, which have been welcomed, as to whether they will bite, because they seem to me to be terribly open-ended and subjective at the end of the day. That is something for the future to resolve. But currently, for good or ill, across all sectors of business, leveraged buyouts happen. As long as they are conducted legally, it is very hard to stop them, but they certainly make business more risky. Is it time for the football authorities to act and put in greater disincentives? In particular, is the nine points deduction rule sufficiently strict or should clubs that go bust be made to start right at the bottom again?

Professor Szymanski: I do not think that leverage has a huge amount to do with the reason that clubs go bust. The fundamental reason is ambition, the ambition to be successful or the desire to avoid relegation. It is inherent within the system that clubs will take every risk available to them. It is perfectly reasonable to say the football authorities can invoke rules and regulations, and probably quite sensible if they do, to try and limit some of those financial risks, and maybe this Committee can encourage them to develop those rules. But right now, of all the 53 administrations that Sean referred to, where are the victims? Okay, the teams get relegated and the fans are disappointed. Are the fans disappointed that the club lost money and went into financial administration or are they just upset that the club got relegated? I think it is the latter. I do not think anybody, apart from the owners, cares about the money. What is important is the level at which the team plays. But the point about that is nobody wants to abolish promotion and relegation. We want teams to fail. In other words, you could get rid of all the financial problems of debt and so forth, and the fans are not going to be any happier on average because they will still be losing out when their team gets relegated.

Sean Hamil: In 1999, in answer to the minority report of the Football Task Force, the football authorities said, "We don’t need any regulation". Post ITV Digital, they introduced points penalties because they recognised the insolvency process was being abused, notably by Leicester. Since that time, they have produced a whole series of reactive measures, which fundamentally come back to this problem of financial instability. They already know there is a problem with the insolvency situation, otherwise we would not have the points penalty. They already know all this. UEFA already knows it, because it is a problem all over Europe. What UEFA has done-John Henry, the American guy who bought Liverpool, acknowledged it. He said that it has recognised there is a need for action a little ahead of everybody else. What Henry said, one of the reasons he bought Liverpool was he thought that financial fair play might create an environment where at least he would not lose his money. I think the football authorities privately already know that they are at a place now where something needs to be done; it is just the form of it. That is the part of the role of this Committee.

Fundamentally, it comes back to quite a simple problem at the heart of all this, and the football creditors rule and all these other things are just the same: it is the question of how you can get these clubs to at least break even, because ultimately debt-financed success is financial doping. That is what it is. It is an attempt to rig the competition by spending more money than you generate. Therefore it goes against the entire sporting ethic, never mind financial common sense.

Q19 Paul Farrelly: Patrick, should the penalties be harsher?

Patrick Collins: Do you know, I think it touches on the fit and proper person test. If you had fit and proper people running football clubs, there would be fewer bankruptcies and administrations. The one that is always picked out is Portsmouth, of course. They had four different owners last year. This is one of the great stories of modern football. One was a fantasist who made lots of promises that were quite baseless. Another, much more intriguingly, it was reported, did not actually exist. People doubted the existence of this man. He was said to be a figment of somebody’s imagination. I do not know how true that is, but that is how bizarre things became and yet everybody was deemed fit and healthy according to the Premier League. I find that bizarre, and I think much flows from that.

Q20 Paul Farrelly: One was the son of an arms dealer, as I recall.

Patrick Collins: It is reported, yes.

Q21 Damian Collins: Following on from the fit and proper person test, should there be sanctions against directors involved in a club that goes into administration? Without wishing to sort of pick on anyone in particular should, say, someone like Peter Ridsdale have been banned from football?

Sean Hamil: If you get a club into administration twice, you are banned now. I think one of the ex-directors of Rotherham was in that situation. That is something for the football authorities to decide. There is a wider issue about who should own the clubs and their competence to mange, but the fit and proper person test is certainly something that should be looked at. I don’t think Thaksin Shinawatra was a fit and proper person. He obviously bought that club for purely political reasons. He spent all the money off a three-year TV deal in the first year. Potentially, he could have destabilised the whole competition. If they had gone bust halfway through the season when they could not pay their wages what would have happened? A team in the Belgium league last year dropped out halfway through and then there was 15 teams instead of 16 teams. There is an issue of sporting integrity there as well.

Professor Szymanski: You can impose all sorts of regulations but you will not change the fact about owning these clubs––these are honey pots, these are some of the most attractive assets in the world. Powerful people everywhere want to own them, and it is true in every country. Whatever regulations you impose, that is going to continue to be true. If a powerful person cannot get ownership directly, they will find proxies, or whatever way they can, to seize control of these assets, and there is going to be huge competition. My view is that it is better to have open competition and be able to see what is going on rather than have some of the rather less transparent systems. I emphasise that we have one of the most transparent systems of anywhere in the world. The finances of English football clubs are far more transparent, for example, than the finances of German football clubs, which I know everybody admires as the great model right now. I think that is crazy. Most of the German football club finances you cannot find anything out about, going back five years. French football, that is admired but it is not very transparent. The Americans have very stable systems but no transparency, so you cannot see what is going on. So I think it is more to do with rather than putting on more and more tests and regulations, it is creating transparency so that people know what is going on.

Q22 Damian Collins: We had a submission to the Committee from a law firm that does quite a lot of work with football clubs and they touched on points to do with tax, which Sean mentioned at the beginning of the session. I wonder whether this makes it a legitimate area for Government to look at because there were financial consequences for the Treasury. They talked about the level of tight financing and indebtedness of clubs that they said: "Had led to a practice of using cash set aside for Revenue & Customs as working capital for the club. In any other industry this is an incredibly serious offence that typically leads quickly to a winding-up petition and personal consequences for those involved." What are your comments on that?

Sean Hamil: What can I say? They are right. It should not have been allowed and it was allowed because football has the power to emotionally-I need to choose my words, but the non-payment of taxes as an unofficial overdraft was custom and practice and was tolerated within the industry, and HMRC didn’t challenge it. Now, you could argue that it should have done, but in reality football should never have allowed that to come about because that was a sign of a club, or many clubs, out of their depth financially. It should never have been allowed and it is only in the last 18 months that that problem has been got to grips with and only because HMRC has said enough is enough. You might want to look at the Leeds case three years ago where there was a spectacular attempt to use the insolvency process in a way that personally I do not think was terribly edifying.

Q23 Damian Collins: From what you have said, it sounds like we could consider not necessarily special rules and regulations and extra burdens for footballs clubs but simply applying some of the normal business practices that everyone else has to work to?

Professor Szymanski: Absolutely. The more we treat these organisations as special cases, the more exemptions and loopholes we are going to create for them. So I would say, yes, as far as we can, accepting there is something special about the way sport is organised, but as far as possible let us treat them as ordinary business organisations to the extent that they are businesses.

Sean Hamil: A very clear area where sport is treated differently is in the collective selling of broadcasting rights. Anywhere else that would be an illegal cartel but it is recognised by everybody now, after two inquiries, that it is legitimate. There is a balance to be struck between what is appropriate, the specific regulation for the sector, and where it goes too far. I think the tax payment, everybody can see that that was not acceptable.

Chair: We have to move to our next session, but I thank the three of you very much for your evidence this morning.

Examination of Witnesses

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

Chair: I welcome our second panel of witnesses this morning, in particular Lord Burns who chaired the FA Structural Review in 2004, Graham Kelly, the former Secretary of the Football League and Chief Executive of the Football Association, and Lord Triesman, the former Chairman of the FA.

Q24 Mr Sanders: Mr Kelly, is the Premier League today the Premier League you envisaged during negotiations for its establishment?

Graham Kelly: No, Mr Sanders, it is considerably different. If you were to read the Blueprint for the Future of Football you would struggle to reconcile that with the animal that exists today in the form of the FA Premier League. I do not know if the coalition that runs the country at the moment is the coalition that emerged from the negotiations back in May but it seems it is rather different. The football that existed in the middle of the 1980s has already been referred to this morning. It was thundered during the middle of the 1980s by one eminent leader writer that football is a slum sport played in slum stadiums followed by slum supporters and we had to break out from that situation.

After the Taylor report, the Government report into the Hillsborough disaster of 1989, I commissioned the FA blueprint on the instructions of the FA executive committee. The FA executive committee was 12 leading members of the FA Council; there were no directors of the Football Association at that time. The FA Council comprised 92 members of the FA. The board members of the FA were those 92 members of the FA Council. The FA did not have a board whatsoever at that time and one of my first duties upon taking office as FA chief executive was to attempt to institute some reform of the FA but we were unable to effect any significant change. Upon taking office we tried to effect some reform. Be that as it may, the Hillsborough disaster sadly occurred and the Taylor report was the outcome.

A lot of things happened in the 1980s, as you have heard already this morning. The Taylor report came about, the blueprint happened and the FA Premier League was formed in 1991-92. The model for the FA Premier League was the French league, the French football federation or the German football federation, both of which entail vertical integration. The league in both those two countries is an integral part of the Football Association and the key members of the league were intended to have key roles within the Football Association Council. Nine members of the Premier League were intended to have seats on the FA Council, but because of challenges to the blueprint and because of various litigation and recriminations, the original plan for the blueprint was not implemented.

Q25 Mr Sanders: With hindsight, should the FA have secured more commitments from the Premier League with regard to supporting the national team and the lower leagues?

Graham Kelly: I think probably it should. As Mr Collins said this morning, one of the prime aims of the FA Premier League was to improve the conditions of success of the England team. At the time, the number of teams in the top division was 22 clubs; that was reduced. There was to be a phased reduction from 22 to 18 and that was one of the aims of the Premier League, to come down to 18. That came down over four years from 1992 to 1996 and I think probably the commitment should have been or could have been stronger. There was, as I say, a lot of recrimination between-

Q26 Mr Sanders: Do you mean stronger in the sense it should have gone down to fewer clubs or do you mean stronger in other ways?

Graham Kelly: Not necessarily fewer. There perhaps should have been a stronger commitment from the Premier League to the success of the England team perhaps in the initial stages maybe, but I don’t know.

Q27 Mr Sanders: Lord Burns, how happy were you with the FA’s reaction to your review?

Lord Burns: A certain amount of the recommendations that we put forward have been implemented and some have not been implemented. There has been, undoubtedly, progress since I did that report. We have had the introduction of an independent chairman, and the chief executive is now a member of the board. The process by which the rules and regulation are implemented has improved since that time. Some of the proposals we made about the national game were partly followed: having a separate board and a funding rule that means it gets a proportion of the revenues from the FA. It has been left to manage them itself, and that has worked pretty well. I think that whole national game board side has worked pretty well.

The main recommendation, of course, which was not followed was with regard to the board. I recommended that there should be at least two independent directors and if the chairman was an independent director then there probably should be another two as well. The pattern whereby the board, which essentially I think now consists of a chairman, a chief executive and five members from the national game and five members from the professional game is really not a sensible basis for going forward. I do not want to put too much emphasis on this because England’s performance in the World Cup has very little to do with governance. The fact that we did not get the World Cup here in 2018, I am not sure has an enormous amount to do with it. But I listened to the conversation this morning in terms of how the game is being taken forward and how the FA really needs to become an effective regulatory body. If we are to have regulation of football, which I assume we do want, and as we implement the rules that have now been developed in UEFA, then it needs a board that is constituted differently from that which it is now. The present board, is as if with the Financial Services Authority we had a controlling interest by the banks whom they are regulating. I do not think anybody would regard that as really being a satisfactory state of affairs. So a lot depends on what you think the purpose of the FA is. Is it to run the England team? Is it to be an effective governing body and regulatory body of football? The more you want it to play the second role, the more that it has to have some people on the board who do not have vested interests in the regulation that is taking place.

Q28 Mr Sanders: Lord Triesman, when the former Government engaged with football bodies on football governance, your response to the then Secretary of State was to refer him to the responses submitted by the Premier League and by the Football League. Why did the FA not submit its own?

Lord Triesman: The former Secretary of State asked the three organisations to prepare a joint response to his questions, and I thought that was absolutely right. It would be very good if it was possible to come to some amicable agreement about how to carry forward the regulation of the game. The Football League was completely willing to engage in that with the Football Association; Lord Mawhinney was completely willing to do so; the Premier League was not. After some period of trying to persuade everybody to come together to do it, the Premier League produced-I think we have probably all read it-its own response to Andy Burnham.

The Football League then produced a response to Andy Burnham and the FA, which had been doing very considerable amounts of work on football regulation for some time past and discussing it with all the partners, produced a document that was submitted to the FA board, having been discussed with a number of other people. The professional game representatives on the FA board took perhaps a maximum of two minutes to say that the document should not be submitted and to issue a board instruction that a response should be made simply referring the Secretary of State to the wisdom of the professional league, and in particular the Premier League. I thought that was a grave disappointment and, Mr Chairman, just in case it is helpful, I have brought the response that we would have made.

Q29 Mr Sanders: I was going to ask were there any substantive proposals that you would have liked to have submitted but were unable to do so?

Lord Triesman: There were a significant number of substantive proposals, some of them were to do with tightening the overall arc of financial regulation, because it was very apparent that we were in extremely choppy waters financially and that you could see very great football clubs with very long histories in severe trouble. It was by no means clear that they would all pull out of that severe trouble. We could see a whole range of difficulties in the fit and proper persons area. I heard earlier the example of Manchester City being mentioned. Quite aside from the financial thing, as a former Foreign Office Minister, I thought that there were other very, very grave doubts about the person who had taken over Manchester City and, indeed, had been sent by the Foreign Office to encourage him not to dispose of his political opponents in quite as ruthless a manner. But none the less, he was able to take over that club.

I believed that it was entirely possible to have one set of regulations for finance. It might, rather like our company law, have a different requirement for plcs to limited companies. Of course you could have something that graded the level of difficulty so that you would not be asking a very small club to perform as though it were a massive club, but none the less one set of regulations, preferably coherent with the emerging UEFA regulations. It would be possible to have one set of regulations about fit and proper persons and so on, right through the regulatory system.

I answer the question in that way because one of the things I have found, not least with colleagues in the media, is trying to describe how the bodies all have completely different approaches and how things fall through the gaps between the different approaches is very difficult. When you try and describe that to football supporters, it becomes almost impossible. It is a thoroughly unsatisfactory system with the key consequence that the FA itself, in my judgment, having been its first independent chairman, has, apart from on-field discipline-red and yellow cards and the like-has backed out of regulating altogether.

Q30 Chair: Lord Triesman, we are extremely grateful to you for bringing a copy this morning of the submission that was not put forward by the board. Are you providing that to the Committee?

Lord Triesman: I am, Chairman, because I think that the response of the FA must have been all but unintelligible to the rest of the world. It was to me. But I thought it best that people should see the body of work, and very kindly a former colleague at the FA last week sent me a copy and I have brought it.

Chair: Thank you. We will read it with considerable interest.

Q31 Dr Coffey: I have to declare an interest. I am undertaking a sports parliamentary fellowship with the Football Association. I have done one day. You specifically mentioned the former owner of Manchester City. Is it your view then that the Foreign Office, either proactively or reactively, said this person does not pass the fit and proper test? I am trying to understand what you just said, because you were saying as a former Foreign Office Minister there is no way he would have passed the smell test, but are you sure that the Foreign Office said that, either proactively or reactively?

Lord Triesman: I do not know, because I had left the Foreign Office by that stage. All I can reflect on is that there were severe difficulties, which you can find in the human rights annual report, which were associated with that individual. While there are rules about who is and is not a fit and proper person, it is extremely unlikely that somebody at that stage, a head of state or immediate past head of state, is going to fall foul of the courts in that country. That is not what is going to happen. Consequently, you know that these are issues, that they have not been tested in law, but the body of public knowledge about the individual is quite large enough to say, "Is this an appropriate way?" I can answer the question a little more by saying that were this to happen in a plc, I have no doubt whatsoever that the board of a plc would say, "We’re not going to do that".

Q32 Damian Collins: I would like to pick up on the fit and proper person test, just to follow up on the question I asked in the previous session. Do you think there should be greater powers for redress against the directors of football clubs who preside over their club going into administration-clubs like Leeds and Portsmouth are particularly strong examples-to act as a disincentive for people to engage in bad practice and as a message to say that if people have done that in the past, "We don’t want you in this game"?

Lord Triesman: I think there is a very strong case for that. The principal reason that I say that is because most of the clubs that have got themselves into that position-and this would not be 100% of all clubs that have got themselves into that position-have got into that position by spending money, as I think was described in the last session, related to their ambition rather than to their business model. They want to beat other clubs; they spend what they believe is necessary to do that. The model falls apart-Leeds is a very strong example of that-and they are left with a huge financial crisis on their hands. People in other clubs reflect not only on the amounts that were spent but on the unfairness to the competitive regime that it creates.

I know people think that "financial doping" is a rather dramatic term but it is a pretty accurate term for what is described. From my own experience, this is not a matter of an outside observer believing that that is the case. Most of the people I spoke to who ran football clubs were among the people who were fiercest about it, fiercest about the points deductions, argued often for greater points deductions or for other kinds of sanctions. People want it to be a fair competition on a level playing ground, and they are right.

Q33 Damian Collins: Lord Triesman, following your comments earlier, you talked about the fact that the FA, other than regulating the rules of the game, does not get that involved any more in the regulation of football more broadly and I just wanted to ask a couple of questions about that. Do you think there is scope on certain issues that are linked to the way clubs are run where the FA should have more of a voice? David Cairns mentioned Wimbledon in the previous session. Should we have clearer rules that say you cannot pick up football clubs from one part of the country and move them somewhere else? Should the FA have a voice on whether it is desirable for Tottenham to move their club from north London to east London? Should those be the sorts of the things where the FA speaks for football?

Lord Triesman: That is a very sensitive question to ask me. The FA has a large book of rules, much as the Premier League and the Football League do. The question is whether it applies any of those rules in any systematic way. My view is that it should do so: it should do so systematically, it should do so transparently and everybody should know the reasons for a decision, including on-field decisions incidentally. I see no reason why those should not be publicly disclosed; not just the penalty but the reasoning. One of the key reasons for doing so is that under FIFA’s statutes, the FA is supposed to fulfil that role. That is one of the things of the independent football associations of each of the countries that are members of FIFA are supposed to do. Subcontracting it is obviously a model that does not fit with the international regulation of the game. I have no doubt that in the course of hearing evidence you will hear people who will say "The FA does do all of those things and it is not realistic to say that they don’t, and here is the book that sets out all the regulations." I am just saying at first-hand experience that it has subcontracted and does not question the subcontractor in those key roles.

Q34 Damian Collins: Do you think the way in which the game is run drives this incentive for clubs to take financial risks and spend more than they can earn? Does the way the game is structured encourages that? I am thinking particularly of the transfer windows. We have just seen the very large expenditure at the end of the January transfer window. Do you think that acts as an incentive to clubs to pay higher signing fees and salaries, because they know they have literally a rapidly closing window of opportunity and that can be exploited by other clubs and agents to drive up prices in a sort of shotgun transfer?

Lord Triesman: It does do so. It certainly does for clubs fearful of relegation, although I do not think they were the main people spending money in this last transfer window. It does it for clubs who are fearful of not getting a European slot at the end of the season, because that is the key to the door of very, very much larger sums of money. The answer to it, I am very confident in my own mind, lies in the arrangements that Michel Platini has advocated. Sadly, because he is French or because it was not made here, he also was attacked very roundly and very frequently. But saying to a business that over a period of time it really ought to wash its own face, that it should not drift further and further into debt as an attempt to buy that kind of success, seems to me to be absolutely right. Believe me, I am no mad advocate of massive regulation. I would like to think of myself, particularly when I was in Government, as a deregulator rather than a mad regulator. But with a little further adjustment in, for example, debt ratios-excluding the building of new grounds and improving facilities, which is a different sort of borrowing usually secured against the asset-you could probably get fair competition across Europe and without the excessive risk.

Lord Burns: Can I just comment how it seemed to me from an historical perspective? The FA grew up in much the way that many of the governing bodies of sports did whereby there was a Council of people who came up through the national game- effectively, through the county football associations - and they had a whole series of committees. The tasks that they set themselves were basically to do with running the England team, running the FA Cup, the on-field rules, regulations and discipline. They really spent relatively little of their time in these other matters that we have been talking about with regard to regulation. Then we had the emergence of the Premier League and the huge amounts of money that have come from television, including the FA Cup, the European competitions and the vast amounts of money that are involved in these. The game became a very different game. The role of the FA in principle then, of course, became much wider as far as regulation is concerned and they also set up a board of the FA that initially had the job of trying to simply deal with the financial aspects of the Football Association.

I would not like the idea to emerge that somehow historically the FA had played a very important role in off-field regulation of football or of the structure of football and it has retreated from that area. It seems to me what has happened is that the game has changed and the requirement and the interest in some of these off-field aspects of regulation has become much bigger, because the sums of money involved are much greater. It has become a much more international business, both in terms of the matches that are played, in terms of the ownership of clubs, in terms of the interest worldwide in watching the games on television and therefore the value of the rights. That has set up a different set of issues.

My perspective on this is that the FA has struggled to come to terms with the extent of the change in the game and therefore the burdens and the requirements that have been placed upon it. It has operated a sort of subsidiary model as far as the management of the leagues is concerned. We now have the slightly strange situation where the lead has been taken by UEFA in terms of the fair play rules and they are beginning to carve out an approach to it. Our FA, I have to say, looks to me to be being dragged along behind that rather than, as one might have expected given the historical position of the FA, having been more in the lead on these issues.

Q35 Damian Collins: Do you think UEFA can create an equitable system for the European leagues? There has always been a lot of competition between the European leagues and one thing we might credit the Premier League for is that there is a lot more money in the English game and a lot more of our players play here. I looked up that when England played Germany in 1990 in the World Cup, seven of the starting 11 had either or did go on to play football in European leagues. In the last World Cup when we played Germany, none of the England starting 11 had. Now, you can draw your own conclusions as to whether it is a good or bad thing for players to play abroad but it used to be a big factor that we supplied the European leagues with players and now they come to us. We cannot turn the clock back and we must be concerned that we might hamper the Premier League in that regard.

Lord Burns: First of all my perspective on the way that UEFA has approached this. It has not been that its seeking to regulate our leagues or our games but it is seeking to regulate fair play among its own competitions. Therefore, it all comes down to the licensing of the clubs who might be eligible for the UEFA competitions. The rest, I am afraid, is a matter of judgement. My observation would be that the huge amount of money in England for football has meant that this has become the real marketplace where everyone is competing to be - much the same, say, as with financial services. The result has been, of course, that it has become more and more difficult for our players to get into the Premier League teams. Also the people who are very good, the outstanding players, can make a very good living here by comparison with going abroad, whereas once upon a time some of the more successful teams were overseas. So there has been a shift in the balance.

Graham Kelly: The shift has been over here because the majority of the money is here. The Sky money, the satellite money, is here and it has attracted more of the players here.

Lord Burns: And kept our good players here.

Graham Kelly: Our clubs are more able to retain the best players and to attract the best players here.

Q36 Damian Collins: The Minister for Sport, Hugh Robertson, said that he thought football was the worst governed sport in the country. I know Patrick Collins was asked this question on the radio this morning, and he said that, with all due respect to the Lawn Tennis Association, it was. Do you think that is a fair assessment by the Minister for Sport on the governance of football in this country?

Lord Burns: I do not want to answer that directly. But if we were looking at this in terms of outcomes I find it very difficult to imagine that that was the case because we do have the most successful football in the world. It is taking place in the UK on our television screens, that a huge amount of people can watch. We have wonderful stadiums and we have wonderful playing surfaces. I compare this to the kind of football that I watched when I was much younger, and it is completely different, looked at in terms of what is it that is being produced. It is really quite remarkable what has taken place over this period in terms of the quality of the football that is now played in this country and that you can turn up and see at the stadiums in this country. You cannot say that that has been a result of brilliant governance or management by the football authorities. It has been a combination of events, as has already been mentioned. But in the light of that, it becomes quite tricky, and I would say quite difficult, to substantiate the charge that this is the worst managed sporting organisation in the country. I would not like to have to justify that. David may have a different view.

Lord Triesman: I think in terms of outcomes we obviously have fantastic success in the Premier League and that is to be applauded. It is an amazing competition; last weekend was an amazing example of that competition. If we look at outcomes for England as a country playing international football, the outcomes are very poor and I do not think they are satisfactory to England football fans. I count myself as a straightforward England football fan in that sense and I think that we have done very poorly. As a system, if the Minister was thinking about whether we have a good system, we have systemic failure. The board is heavily conflicted. By the way, Terry-if you do not mind, Chairman-I ought to say that after a small while I learned that I should never use your name in FA headquarters. I could talk about the reforms but if I wanted some sort of means of frightening the children I would quote you.

We are deeply conflicted. Terry was saying would you have a banking regulatory system. The model that always went through my head was would you have Ofcom exclusively made up of Sky, ITN, the BBC and possibly ESPN now. The answer is you would never ever construct something that way, which is why the original recommendations on independent members is such an important proposition. The reality is we have now seen some extremely good and extremely sophisticated people coming into the management of parts of the football business: Ivan Gazidis at the Arsenal, not my club, as many people here will know. There are people of great quality who have come in, but generally speaking as you go round, is this broadly a successful group of people running such an incredibly important institution as well as business in our society?

Other sports have changed in those last areas, in their systems and in the people. They have become diverse; we did not. They have not the same conflicts of interest in the way in which they govern; we do. Hugh Robertson has made a point that should not be dismissed. Cut into the layers of it, it is a serious point and should be taken seriously.

Graham Kelly: I’m sure, Mr Chairman, the FA fully accept that they must take on board the concept of independent directors. They know they have to go for independent directors. They know, the Premier League know that there must be independent directors at the FA. I’m sure they will welcome that recommendation. They have to be committed to that now. They have to go for that now.

Chair: They didn’t welcome it before.

Lord Burns: It was very interesting because the people who are on the FA board from the national game see this as the pinnacle of their life in football. This enables them to be on the various committees, go down and shake the hands of the England football team, go down when the FA Cup final is taking place, nice seats to watch the games, and they are highly respected by their colleagues. They see that they have worked for years and years and years through the county associations and therefore this is an honour and it is the peak of their ambitions in football. To then say to them as I tried to, "Well, I’m sorry, you can’t have five or six people from the national game on the board of the FA, it should be reduced to three" and all of a sudden there is panic as to, "Which three of us are going to have to leave and over which period and what does it mean?" The professional game was not so concerned about the number. They would have reduced their numbers, but of course it wanted equality with the national game. You cannot have a system whereby you simply increase the total numbers of people on the board otherwise it would have become unmanageable.

So, whereas most of them would agree about the principle of independence they had two problems. One was, "What does it mean for me and therefore what does it mean for my colleagues and for the number of people who will be able to be on the board?" The second, which was put to me more than once, is they would say, "What is the point of having independent directors because independent directors clearly don’t know anything about football and what is the point of having people here who don’t know anything about football?" Whereas the idea was, in principle, acknowledged-I’m sure Graham is right that many people would like to see it––there is an awful lot of built-in resistance to this. I am not holding my breath about a big change in this area unless there is some real push from someone.

Q37 Chair: Do you stand by the recommendations in your original report?

Lord Burns: Yes. Everything that has happened subsequently confirms that this is the direction of travel. Indeed the only slight regret I have is that maybe I should have been more ambitious about it. I was hoping to have a set of recommendations that went in the right direction, that went far enough to make a real difference but which had a reasonable chance of being accepted, because I knew the whole problem about turkeys voting for Christmas. It may be that instead of saying there should be two or three independent directors, if I was looking at this now I would be looking for a larger number of independent directors.

Graham Kelly: I wouldn’t want there to be any misunderstanding about this. I am very, very proud of the Premier League for a lot of reasons. Last year, £36 million was distributed by the FA and the Premier League via the Football Foundation. You talked to the previous witnesses who talked about the trickle-down effect: £36 million trickled down and was distributed by the FA and the Premier League throughout football through the Football Foundation. That goes down throughout football to all levels: to stadiums, to grassroots, new pitches, new small sided pitches.

It isn’t the Premier League that was originally envisaged, I know that, I’m not stupid, but before it came into effect, ITV had a cartel. Patrick Collins talked about Derby winning the first division championship, and they did because they had a brilliant manager and they had a good team, brilliant team, but by and large Liverpool had pre-eminence over a lot of years in the 1980s. There was the big five and in 1988 to 1992, ITV signed a secret agreement with five clubs. Nobody knew about that in 1988 and the money-only a small number of clubs were guaranteed exposure under the television contract in those four years. So until that was broken, there was not the spread of television matches like we saw last week with West Brom versus Wigan midweek. So there wasn’t the spread of matches like there is at the moment, so there isn’t the concentration of power in the Premier League like there was in the old first division. So, football isn’t quite so romantic as sometimes we like to think it was.

Q38 Chair: Lord Triesman, Lord Burns suggested that he might have been even more ambitious had he been able to. Going on your experience when you were chairing the FA, do you think the Burns recommendations would have done a lot to make the FA a more effective organisation and would you like to go further, as he is now suggesting that he would?

Lord Triesman: We would have been more effective if we had adopted all the recommendations and it would have been good to go further. The reality is that what counts in this country as being an insider in football or somebody who comes in who is independent is probably a rather blurry line. I do not know whether I would have counted-I was independent, I was the first independent chairman, but I had played football right the way through to my mid-30s, got to the bottom ranks of the senior categories of referees and had my coaching awards. Apart from occasionally going and earning a living, I always felt that I was deeply embedded in the sport and probably people who would have come in as independent directors would have also had that love and engagement in the sport.

Lord Burns is completely right, also to say, as people used to say to me, that there was no appetite for changing the personnel at any level. That was not because members of the council had not made a great contribution around the counties. I can think of one or two of them: Ray Kiddell from Norfolk who had been one of the great driving forces in women’s football, for example, and should get great credit for that, and David Elleray in refereeing. But if you try to raise the question of, "Why is it that this room is entirely made up of men, bar two, that there are two black faces, one of whom came in partly because of the report, Lord Ouseley, why is it that hardly anybody here has played professional football or has been a coach in professional football?" the answer, of course, is you do need those voices and you need that knowledge and that experience in any professional and amateur sport but they weren’t there and no one was going to change it. I understand that people see it as the summit of a great deal of very valuable work. Of course that is true, but other sports have managed to change and other sports reflect what Britain is like today in ways that have not damaged those sports.

Q39 Paul Farrelly: Thank you, Lord Triesman, for providing us with the FA’s proposed response. It is has helped save the FA time, effort and expense in complying with a polite request from this Committee to provide it, so hopefully it will go on our website as soon as possible for the world to read. The title of this inquiry is football governance and I wanted really just to probe further into how the board of the FA operates. Lord Triesman, you have given me the perfect example when you cited the case of the representatives of the professional game taking just two minutes to look at your document and then it was decided not to submit it. By my arithmetic, the board is made up of 12 people, five from the professional game, and that leaves seven others. What happened? The numbers were with you.

Lord Triesman: Just so you get the sequence right, the professional game board meets usually the day before the FA board and it comes to a conclusion. It is led by the most powerful force in professional football because the most powerful force in professional football controls such a high proportion of the money that flows through. At that stage, there were 11 because we were between CEOs; there were 11 people rather than 12. When you get into the room the point was made, as it happens, by the chairman of the Premier League, that this should be disregarded from that point on and we should simply acknowledge the work that had been done by the Premier League principally, but by the professional game, and reminding the members of the national game, the amateur representatives there, where their money came from.

Q40 Paul Farrelly: So in good Leninist style, the representatives had had a pre-meeting-we encountered this in the Labour Party not too long ago-but still there were six. So are you saying that the representatives of the national game are all too easily cowed into not standing their ground?

Lord Triesman: On issues which are regarded as absolutely critical to the professional game, they may not vote with them but they will not vote against them.

Q41 Paul Farrelly: You mentioned the chairman of the Premier League, Sir David Richards. Can you just give us a flavour of how, following these pre-meetings where the line is decided, he conducts himself at FA board meetings when issues of vital interest such as this come up?

Lord Triesman: Let me preface this by saying that I believe the problem is systemic rather than the personalities. It is to do with the balances and the interests and the conflicts of interest. My experience is that he will put his point politely in a board meeting but discussions outside, across football generally but certainly with some people, are extremely aggressive discussions, really aggressive discussions. The points are made in a very colourful way.

Q42 Paul Farrelly: How colourful?

Lord Triesman: Very colourful. I would not-

Dr Coffey: So it would be unparliamentary language, would it?

Lord Triesman: I wouldn’t use that language.

Q43 Paul Farrelly: One of the things that we hear from time to time is that the premiership represented by its chairman occasionally might threaten to withdraw its clubs if the FA did not toe the line. Can I quote from The Beautiful Game by David Conn, who is a Guardian journalist, "I have it from three members of the FA’s main board that Dave Richards was constantly threatening to withdraw the premiership clubs from the FA Cup, or saying the clubs would withdraw if he didn’t get his way on an issue, usually over money. The sources complained that they could not debate with Richards in any detail. He would fly off, be dismissive or issue a threat." On the following page, 365, the book also quotes Dave Richards’ response to that as, "Bollocks". Do you recognise that sort of behaviour?

Lord Triesman: That has a terrible ring of authenticity.

Q44 Paul Farrelly: Is it right that the chairman of the Premier League, who does not represent a Premier League club, although I think he was involved in Sheffield Wednesday many years ago-and we wish Sheffield Wednesday the best of success in the future-should be on the FA board, and certainly after 10 or more years should still be on the FA board?

Lord Triesman: I think there is a good principle in trying to get a circulation of people on the boards of any enterprise. It is inevitable, and I am not making this as a comment about anybody in particular, that you get a little stale if you are doing the same thing year after year after year. Of course you bring growing experience but you do not necessarily bring new ideas. So circulation would be a good thing. The structure of the FA board puts the chairman of the Premier League on the FA board. That is a structural decision; whoever it was would be there. The reason I am so supportive of Lord Burns’ view is that we could have done with probably even more independents than appeared in his report is because it is extremely hard for anybody who comes in representing the Premier League to do other than represent the Premier League. It is not the FA that is being represented at that stage. There will be a great deal of courtesy about its history and why it is so important, but that is not what is being represented and that is the problem.

Q45 Paul Farrelly: Is it the case that if you have been around for a long time and you have a certain way of behaving and a certain track record in getting your way, you might lack some of the self-awareness where other people independently might say that you don’t recognise that your behaviour might be a problem and also for the reputation of the Premier League itself as well?

Lord Triesman: The reality is this is a very, very macho sport and I think some people have cultivated what they think is the language of the dressing room as being appropriate everywhere.

Q46 Paul Farrelly: After a decade or more, do you think it is right for the Premier League to question who it has as chairman and who it chooses to represent it on the FA board and whether, indeed, Sir Dave Richards, with that description of authenticity about the behaviour-some bullying behaviour as many people would categorise it as-has really had his day?

Lord Triesman: Whoever the Premier League decides it wants as its chairman or therefore wants on the FA board under its current arrangements must be a matter for the Premier League. It has a board of two people with, I think, a third person attending. I think that is right. It may be three but I think it is just two with one other person attending. It comes to its decisions and it must be for the shareholders in, I suppose I should give it its proper title, the FA Premier League. It is still its actual title. We held a golden share; I could never find out to use it. But the decisions are taken by that board of two people and I guess with the support of the clubs. I’m not trying to avoid your question. I do think, though, that bodies that are constituted properly in their own right need to take those decisions. I would like to think that they looked at things afresh from time to time, because it is in the interest of the sport to do so.

Q47 Paul Farrelly: I would like to put a couple of questions to the other panel members but, Lord Triesman, you mentioned you have heard also that the board of the FA and perhaps the FA itself-you tell us-could be categorised as white, middle-aged and male. I do not have a bone of political correctness in my body, but you said that there were certain interests that should potentially be more widely represented throughout the FA. Did you try yourself, when you were the chairman, to bring more people through and, if so, what was the response at the board?

Lord Triesman: There was no appetite for change. I think that sums it up pretty much. When Ian Watmore was the CEO-in my view, an exceptionally talented person––and stayed for just nine months, he also made real efforts to see if change could be achieved. You may well be seeing him and you can ask him the questions for yourselves, but he did not believe that change was going to be achieved. He had, as an alternative, come up with a proposition, which I supported because I thought it might at least make some progress, to get a group of people in who would be advisers who were drawn from the game, who were more diverse, both in ethnic and gender senses. That idea was dismissed. I do not know that it took much more than the two minutes either. That idea was dismissed on the grounds that the talent that was needed was in the room and so there were a small but very significant number of people who, in my judgment, would have been very valuable advisors to us, but that was not possible either.

Q48 Paul Farrelly: I hope we will get a chance to ask him. What do you understand was the straw that broke Ian Watmore’s back?

Lord Triesman: I think you need to ask him that. He was managing director of Accenture. That is a post I believe you get by being elected by your partners. It is probably not the easiest job to win in the world. He had vast experience in business way before he came into senior positions in the civil service. If I were on your Committee, I would ask him whether he believed, based on all of his experience, he thought that he could contribute to getting any change at all.

Q49 Paul Farrelly: Lord Burns and Graham Kelly, can I finish my questions by asking two linked questions? Who would be responsible for appointing independent directors so that they are not creatures of one constituency or another? In appointing an independent chairman and independent directors, what is the problem that we are trying to fix?

Lord Burns: The problem that we are trying to fix, and we have been through in some detail already, is the fact that the board is dominated by people whose main interests lie on one side of the game or the other. If the board is going to carry out a regulatory role then it needs some rebalancing, and for the reasons also that Lord Triesman has explained, independent directors do bring a different perspective on life. They are usually working elsewhere, they are seeing how other boards work, they see standards and practices and the way that things are done, and they are able to help in terms of the whole culture of the way in which a board operates. I have spent the last 13 or 14 years on a whole variety of company boards and the independent directors really do bring a very different perspective. They ask the questions that very often are not being asked by the executive team or the people who are not independent.

Indeed, following my report, I notice that there has been an introduction of independent directors on to the national game board. I think there have been independent people brought on to the regulatory body that has now been established. So the principle does not seem to be lacking in the FA. It is just that when it comes to the FA board itself, the vested interests of the people who are on that board are making it very difficult to get any real breakthrough on this. Having one person who is independent-and all credit to Lord Triesman for seeking to carry out that role-it’s an enormously lonely role to be the only independent director. Frankly to be chairman and the only independent director I think is even more lonely.

Q50 Paul Farrelly: Who should do the appointing to make sure they are truly independent?

Lord Burns: In the end that has to be a process of nominations by the board itself, but the council then should have a role in terms of approving them. The council are effectively the shareholders or, in a sense, the parliament of football. I think they are the people who are best placed to do that. I can’t quite see what other body would do it. I do not think there would be any great shortage of candidates. I think there would be a lot of really very good people, as we see from lots of regulatory bodies, who are able to do those jobs.

I should also say that there has been some shift, too, since my report,in the make-up of the council itself. Some of the bodies that Lord Triesman mentioned are being represented: the referees, the professional footballers themselves and various minority groups, women’s football and so on. So there has been a bit of opening up of that but it is still very much dominated by the same groups and the same methods of working their way through the national game. It is a structure that makes change enormously difficult to bring about because of the positions. There are one or two people who were on the council, who were representing positions, which it is very difficult to see how in this day and age they should have been representated. I will not name any but you just have to go down the list to see some of the anomalous positions that are there. They came to me and protested about the suggestion that some of them should no longer have seats on the council. It was clear to me that one of the overriding concerns they had was that they would be seen as the last person who had been a representative of this particular organisation and they would go down in history as the person who had lost their seat on the FA Council. This was something that they were not quite prepared to live with. So you have these enormous forces for no change that are built into it all.

Graham Kelly: No, I can’t add to that, Mr Farrelly, It’s just too entrenched. The structure of the council at the moment is just too entrenched. It needs opening up to support the independent chairman. I do not know how Mr Bernstein is going to approach it. They have made the appointment of a different independent chairman now, but he needs the support to make progress.

Q51 Jim Sheridan: The turkeys at the Scottish Football Association have some difficulty in agreeing with Christmas as well because they want to cut the numbers but see it as somebody else’s job that they want to cut. On this bullying, harassment and threats of the Premier League, if I was a supporter of a lower league club hearing that this sort of behaviour is going on and that the FA, the body that is supposedly looking after my interests, is being bullied and threatened, that would give me some concern. I would be looking for the current board of the FA, or if necessary the Government, to take some sort of action to stop this behaviour. What help or advice could you give the current board to stop this?

Lord Burns: I believe that the board has to be the agent of change for itself and it then has to carry on the process of changing the constitution of the council itself in terms of opening it up to other groups. I fear that I share a view that I heard expressed in the earlier session today: it is not easy to see where Government has any real purchase on this. I think you have to ask the question whether there are any built-in advantages that football has, which in a sense have been provided by Government, either in relation to tax or the way that it deals with administration or whatever. To simply have Government march in and try to exercise a role would be quite difficult. I think it has been mentioned again earlier that one of the requirements of FIFA and of the international bodies is that the Football Association should be independent of Government. So Government has to be very careful about how it sets about this.

I worked with John Major back in 1991 in terms of putting together the proposals that eventually led to the all-seater stadiums. If I remember, we channelled some of the pools betting duty into the Football Trust to support the all-seater stadiums on the basis that the clubs were themselves going to also put in money. This provided Government with a certain amount of leverage because it was doing something itself. But without that leverage, and without something that Government is putting in or has some role or where there are some special privileges that football is having as a result of Government action, I think Government has to tread very, very carefully.

Q52 Jim Sheridan: The status quo is not an option, is it, if you are a supporter of a lower league club?

Lord Burns: There is one route that is proving to be quite important in bringing about change. As I mentioned earlier, that is coming, through UEFA which has done a lot of work on fair play, particularly with regard to financial matters. It has its leverage because it has to agree that the teams that may be in the Champions League, or the other competitions, are licensed to do so. It then passes on the job of doing that licensing, I think, to the FA. That in turns gives the FA a certain amount of power. The process has to be one of persuasion. I think that Government simply stepping into this area and seeking to impose solutions will run up against considerable obstacles.

Lord Triesman: Obviously, I have thought about that issue at some length. It seems to me that there are three ways in which you can potentially get people to change what they do. The first is that you persuade them and if there is a process of persuasion and authority that is fine, that will always be the best, but I think that is pretty hard. UEFA will help in that, I suspect, but it would not necessarily have an impact on the clubs going right the way down though the system.

The second is finance and finance has been used for leverage purposes. I do not mean debt leverage but leverage on the FA. For example, there was a lot of reluctance to accept the new anti-doping regulations of WADA and we were put under considerable pressure to do that. The paradox, of course, was that we would lose Government money if we didn’t do it but the money we lost was essentially money that was going to the amateur game; the issue about doping testing was in the professional game. There was a mismatch and it was very hard to make that work. I hope that it now potentially can work.

The third is, and I think this is an interesting debate to be had, is that it is certainly true that FIFA does not want the intervention of Government in football but there are a number of countries that have a basic sports law. It covers all sorts of things like mounting Olympics and world cups and so on, so you can then do with secondary legislation what we trawl our way through dealing with primary legislation. You can use it for all sorts of purposes but it can also, and it does in some countries, allocate the key responsibility for the regulation of sport to the sports governing bodies so that they must do it and they must be accountable for it. After that the Government stands back. I have not known FIFA withdraw its authority or threaten to exclude any one of those countries from its full role in running the sport. It would be a great pity to have to consider legislation as a means of doing it but it would not be right to rule it out. It certainly would not be right to rule it out on the ground that FIFA would automatically object to it if the consequence was that that sports governing body-in this case the FA or the SFA-had the absolute clear responsibility for the regulation of the sport.

Q53 Alan Keen: If I could make three quick points. First of all, did we not get a timely reminder last week of leverage being available with the woman who was buying TV coverage of football from Greece? I went to Brussels as part of a small team of people to lobby the European Union when there were threats to the ability to negotiate the Premier League games as a total rather than let it go to individual clubs. That is a very big issue if European law was brought to bear. I think Damian was a little bit unfair on Peter Ridsdale; he was sort of saying he is a bad man. I think there is no comparison between Peter Ridsdale who did what the Leeds supporters wanted him to do-it was bad financial and technical football decisions that he made and it failed-but you contrast that with the Glazers who have no interest in Manchester United or their supporters. There is no comparison. I think we did Peter a disservice.

Secondly, David, you gave Michel Platini the credit for the fair play rules. The all-party parliamentary group plan in 2009 recommended that. My sparring partner and friend, Richard Scudamore, straightaway said it was impossible to define. It was not impossible to do because they have found ways to define it, so it is going to happen.

I wanted to ask about FIFA. Is it true that the FA has not really over the years made proper efforts to engage with the international game through FIFA? We complained when we did not get the 2018 bid-I was as disappointed as anybody-but really we, as part of the international game, should be looking to spread the World Cup around the world. Maybe one time it should be a well-established nation like us and the next four years it should be a developing nation. But the main question is has the FA failed to engage with FIFA. Going right back in history, we felt so important that we didn’t even join. Is that right?

Lord Triesman: Over a long period, apart from the process of bidding for the 2018 World Cup, the only real link with FIFA has been Geoff Thompson who is one of the vice-presidents. Aside from that and efforts made in special circumstances, I don’t think there has been any real engagement at all.

There is one area in which we do engage, along with the Scottish, Welsh and Northern Ireland FAs, and that is in the International Football Association Board where those four FAs and FIFA are responsible for the on-the-field laws of the game. That is a fantastically nice piece of history to still have in place. But it is certainly true that to have a great sense of the internal councils of FIFA you have to have vastly more engagement than we have had. Sometimes we have backed out and had none.

Q54 Chair: Lord Triesman, I can’t resist: Alan mentioned FIFA and the World Cup bid. Do you have any observations on the outcome?

Lord Triesman: Very, very acute disappointment. I think there will be a time, Mr Chairman, when the contacts that I and others had with members of the FIFA executive should be described in detail, because some of the processes I don’t think really stand up to proper scrutiny.

Q55 Chair: When should that time be?

Lord Triesman: I think it would be a long part of a session here. I am not averse to doing that, but it would probably be rather longer than you intend for this morning’s session, given where we are at this moment in time. When we set off on the bid, there was a huge amount of encouragement from FIFA who said that they weren’t certain about how the finances of South Africa would work out or how the finances of Brazil would work out. There were risks. Their risk registers on whether these tournaments would return a substantial income to FIFA were very high. There was, for those reasons, a lot of encouragement for England to go for it, because we could do it, we could produce tremendous returns, we can organise events of that kind and complexity and handle security and all the other things that you have to do. Had they said at the time that the aim was to break into new territories, I would have advised the FA board not to start in the first place. We started on what turned out to be a completely false prospectus.

Chair: Tempting though it is to go on for some time, I think we should probably draw a line there. I thank the three of you very much.