Examination of Witnesses (Question Numbers
Lord Mawhinney and Henry McLeish
8 March 2011
Q225 Chair: First of
all, I thank Lord Mawhinney and Henry McLeish for having sat patiently
through the first part of this morning's proceedings. I welcome
Lord Mawhinney, a former Chairman of the Football League, and
Henry McLeish, obviously a former First Minister but also the
author of a recent review of Scottish Football. Could I start
by asking Lord Mawhinney whether he thinks the introduction of
the Premier League weakened or strengthened what is known as the
It strengthened it, but I will come on to the present in a moment.
It is a phenomenal success. I have sat in Beijing and watched
Premier League games. I have sat in Boston and watched Premier
League games. The future income of the Premier League is more
and more shifting towards overseas media rights and whenever they
launch their own television channel that will have another additional
effect. It is a great success.
I think the difficulty is that it has created a problem
about the handling and distribution of money. It has generated
so much money that it has skewed, or is in danger of skewing,
the system. The Premier League is one of the country's great advocates
for a free market and I pay tribute to it. The problem is that
the Premier League is not a free market; it operates in a closed
market. What happens at the Premier League affects the finances
of not just other Premier League clubs but clubs right down through
the Football League, and what happens in the Football League affects
what happens in the Conference.
Going back to the earlier questioning, every time
Mr Rooney or Mr Torres gets a salary settlement, that cranks up
the whole system. Agents note it and they add a little bit to
the value of their player. Other clubs note it. Whether that is
good for the medium-term football pyramid I think is very debatable.
Q226 David Cairns: Henry
McLeish, you have written this football review. It is a big review;
it has 89 pages and makes lots of recommendations. Can you just
encapsulate what you think are the key one or two recommendations
that you would really like to see implemented from this review?
The position in Scotland is in some respects very, very different,
especially in terms of scale and the financing of the Premier
League in Scotland, and in terms the fact that we have 5 million
people rather than 60 million. In that sense, I would, first of
all, say that the context is very different. That said, as someone
who has a passion for the game and who has played the game, I
found that the football authorities in Scotland were really not
fit for purposeand I will be as sweeping as that at the
startbecause in a sense in both England and Scotland we
are looking at two of the oldest associations. We are talking
about history and about legacy, about a preciousness and exceptionalism
that I think you only find in football, and about an insularity
that is safeguarded in some respects from the outside world. In
that sense, they were not fit for purposethis is the SFA.
Then you take the Scottish Premier League and the
Scottish Football League, as the two other institutions. I could
find no good reason, for example, why they had been separated,
because our SPL operates at a very modest level compared with
England. That said, we had a fragmented game, there was lack of
trust; there was a whole series of problems that had clearly accumulated
over decades without anyone from the outside suggesting that things
should be changed and without any momentum from the inside suggesting
things should be changed.
After the review, and after speaking to an enormous
number of people, the first thing I wanted to do was to improve
significantly the governance of the game as exhibited by the Scottish
Football Association. This involved a major overhaul of its committee
structure, which was fine for the start of the last century, but
not fine for the start of this century. They had too many people
on the boards and a whole breakdown and fragmentation of their
approach. Of course, there was also a severe lack of confidence
in their ability to oversee the game and regulate the game. I
suspect that, in terms of the FA in England, part of this is going
What I recommended was, first, sweeping changes to
the structure, composition and modus operandi of the Scottish
Football Association; secondly, the reintegration of the Scottish
Premier League and the Scottish Football League, in no way stepping
on the toes of either but bringing them together to collectively
take the game forward; and then, thirdly, an acknowledgementI
think this is one of the issues that I think is interesting in
Englandthat the game is bigger than the Premier League.
Now, we can say that in Scotland because I think it is a more
modest Premier League. That said, it was to talk about the fact
that, in terms of the gap between national aspiration and national
achievement, the gap was enormous. We were asked: should we reduce
our national aspiration? Now, in Scotland that would have been
heresy because we are a passionate country, although not always
successful. We wanted to keep the aspiration alive, so what we
had to do was to raise the expectation.
What I think has now come forward is a growing embrace
of change and a growing of confidence that the game needs to move
forward together, which means that football as a sport has to
be resurrected as a game. Therefore, the whole emphasis should
not be on the Premier League in Scotland and what it wishes to
do. That can be accommodated and, of course, within our Premier
League structure we have two clubsmaybe they do not need
to be mentioned todaywhich are certainly the subject of
much debate in Scotland in terms of dominating the Premier League.
All in all, there was a recognition that the game is enormous
and that the SPL has a part to play. As in England, however,
you may have the best Premier League in the world, as we have
heard this morning, but your national side does not reflect that
in any particular way. Our effort in Scotland was to look at this
in a more integrated way from the very grassroots talent elite
development right through to make sure that we have the best Premier
League that we can muster at the present time.
Q227 David Cairns: Talking
of Celtic and Rangers, then, isn't the problem that we are trying
to organise a league in Scotland that has two great behemoths,
two massive world cups, a few teams in the middle that are perfectly
respectable, well-run clubs that have intermittently done quite
well in Europe, and then this very long tail of amateur clubs
or part-time clubs that we do not see in England, but we are still
trying to keep the whole panoply of a structure as though we were
in the same scale as England? This is not one of your recommendations,
but wouldn't it just be better for everyoneand it is not
going to happenif the Old Firm were playing in the English
Premier League? You would have a much more rational structure
than Scotland and the Old Firm wouldn't be as constrained as they
feel they are by the pitiful amounts of TV revenue that they are
getting compared to what is happening in England.
I suppose the simple answer is no, and that is why it was not
a recommendation. The realities are that Rangers and Celtic will
continue to play in the Scottish Premier League. I think you are
right to suggest that we have great difficulty now supporting
the four divisions involving 42 clubs. That said, part of the
recommendation was to acknowledge that, in terms of the community
interest and community development, some of our clubs would be
looking more at that than they would be in terms of a normal business
model for development.
Secondly, within the structure of the SPL with the
12 clubs, which may go to 10, Rangers and Celtic are accommodated,
although they are huge. 65% of all the attendances over the last
10 years in Scotland have come from Rangers and Celtic. We are
aware of that, but on the other hand, even if you wanted to think
that Rangers and Celtic could be involved down south, I think
you are up against UEFA rules because it would allow you, for
example, as a separate association to have the people from the
German Bundesleague or others seeking to join your Premier League
I think it is impractical. The politics and the possibilities
are certainly to see Rangers and Celtic as a major asset in Scottish
football but to ensure that some of the excesses we have seen
recently are curbed. But that said, we have a very particular
set of problems that in some respects, Chairman, do not really
reflect what is happening down south.
Q228 David Cairns: Your
key recommendation, then, is to merge the SPL and the Scottish
Football League and to tackle the labyrinthine committee structure
of the SFA and the blazer brigade there. How have these recommendations
been received and how confident are you that they will be taken
They are being taken forward and the board of the SFA has accepted
most of the recommendations and, in fact, they have been approved
by the board. One of the problems is trying to make sure that
change does take place in other areas of the game. For example,
we are keen to make sure that we work with other sports; with
a bit of modesty acknowledge that while it may be the top game
in Scotland we have a lot to learn from others. I was interested
by the submission the FA made to you that because of their uniqueness
it was very difficult for them to learn from others. That is flatly
not the position because one of the problems your FA has compared
with the Scottish FA is that you have very, very similar problems,
which are a product of legacy, a product of history and a product
of being inward looking.
Change and specific recommendations, I think, are
going forward. But what we are up against in Scotland is a huge
financial problem; not some of the issues that were raised earlier
in the evidence session, but in terms of broadcasting, fan base
and sponsorship. These are the three key issues in which we are
trying to keep involved to generate more cash.
Q229 Dr Coffey: Just
to each of you, how important are the solidarity payments coming
from the top division down to the lower divisions, Premier League
to Football League in a particular case, and, in particular in
England, how important are the parachute payments and do they
end up distorting competition in the Championship?
The help that the Premier League gives in a variety of ways to
the Football League is significant and, up until recently at least,
has been much appreciated. The parachute payments were instigated
because the salary levels in Premier League clubs were so much
greater than in Championship clubs that, without some transitional
funding, Premier League clubs that got relegated would simply
just head straight into administration or just tumble down the
Football League and that did not seem to be fair. There was an
agreement, which we supported, that a certain amount of money
should be made available by the Premier League to Premier League
clubs that were going to be relegated.
Chairman, can I just, if you will forgive me, make
it clear that Mr Clarke and Mr Williamson spoke on behalf of the
Football League? I am expressing my own view, albeit as Honorary
President of the league. In my view, the present level of parachute
payments are going to undermine the integrity of competition in
the Football League. They are going to do that because the amount
of money£16 million, £16 million, £8 million
and £8 million over four yearsbears very little relationship
to the salary issue that was the original case. I tried to persuade
the Premier League at one point to link the parachute payments
to the specific salaries of players that came down and as that
player got sold or moved on, so that bit of the money could drop
out. That seemed to me to be coherent with the original philosophy.
That was totally rejected. We now have a set of circumstances
where the Premier League will tell you that they are being very
generous to the Football League and at one level they are being
very generous, but the strings attached and the effect on the
integrity of competition are both issues that cause me concern.
Q230 Dr Coffey: Roughly
how much does the Football League now get from the Premier League?
Well, that is really quite a complicated question, if you do not
mind me saying so.
Q231 Dr Coffey: Ballpark
figure, is it £50 million?
We get solidarity payments. If the Premier League were here they
would include all of the parachute payments that go to their clubs
Dr Coffey: Just the solidarity
No, I am trying to be helpful. The figures here are very easily
misunderstood because the Premier League, up until the time I
left, were saying they gave about £120 million a year to
the Football League; but two thirds of that were parachute payments
to their own clubs, they were not to us. About £25 million
is what is sort of estimated comes to the Football League through
the involvement of Premier League clubs in the Carling Cup, for
which we are enormously grateful. There is some generation of
money to Football League clubs from Premier League clubs in the
context of transfers, though that has dropped off as the Premier
League has shifted its gaze more toward Europe and the rest of
the world than to the league below it. It is really quite hard
to answer that question and I do not want to mislead you. You
might want to ask each of the two leagues, add it together and
work out an average.
Q232 Dr Coffey:
The only reason I ask is that surely the Football League had come
to its own arrangement by not including the parachute clubs in
certain other redistribution of income within the League. I understand
Middlesbrough is about to restructure because it has come to the
end of its parachute, but is there an ongoing implication for
viability of clubs leaving the Football League?
Dr Coffey, that is exactly the point that I was making about integrity
of competition. If, in the Championship, you have two clubs each
season going in with £16 million extra against the amount
of money that goes partly from solidarity payments from the Premier
League of about £2 million and the Football League allocation
to a Championship club, which is about £2 million, you have
two clubs with £16 million and the rest with £4 million.
Next season there will be four with £16 million and 20 with
£2 million and, if you believe what you have been hearing,
money is what makes a football club successful. Personally, I
think fans want sustainability as well as success but there is
no doubt that the football industry mentality links money with
success and that raises questions about integrity of competition.
Q233 Ms Bagshawe:
This is a question that applies both to England and Scotland respectively.
On the distribution among the individual Premier League clubs,
and down to clubs below them, do you think that the situation
is fair and equitable in terms of transfer payments and youth
development payments? Do you think those individual payments have
been handled properly, respectively?
On the last question, there are problems with parachute payments,
as they are not sufficient. There is a different scale of costs,
a different series of financial problems, so in Scotland the current
reconstruction proposals are about creating an SPL2 or a kind
of Championship type of league. That is going to involve more
money coming from the SPL into that. Also they are seriously looking
at a significant increase in parachute payments.
Overall, because of the lack of broadcasting income
and the difficulties of sponsorship, we are dealing with more
meagre budgets. So in that sense there isn't really a dispute
between the Scottish Football League and the Scottish Premier
League about distributional aspects. It is more a joint league
or a joint effort to try and get more money coming into the game
But what we have done in my recent report is make
some suggestions about the elite talent/youth development side,
because in many senses we do not have the young players coming
through. It is quite clear that within the SPL and within the
SFL, the SPL in particular, the investment of young people is
not bearing fruit to the extent it should. What we are looking
at then is a wider pooling of both responsibility and resource
across all the authorities, including the SFA, to try and tackle
that particular problem. In that area, we are also seeking further
investment from the Government as one of the leverage points,
the very few leverage points they have, to do something for elite,
talented young people, which would be in the national interests
as a justification for involvement as well as to the benefit of
As far as England is concerned, frankly you pay your money and
you take your choice. The Premier League have a ladder system
but their clubs voted for it. So I guess those who are toward
the bottom end of the league don't feel that the differential
is so big as to create a problem. In the Football League there
is equality of distribution within the division. Within the Premier
League the effect of money generated through playing in the Champions
League has a significantly more distorting effect in the context
of your question than the ladder arrangement.
Q234 Mr Sanders:
On these parachute payments, given the sort of scale that you
have set out, the number of clubs that would be in the Championship
with that financial backing, it occurs to me that if you are a
League 1 club and you get promoted you are automatically at a
disadvantage within that new league that you have entered and
that there is then an incentive to overreach yourself if you are
in the Championship, having come up rather than having come down.
I am wondering if there isn't a direct link between those parachute
payments and the situation of Plymouth Argyle, at the moment in
administration, who possibly overreached themselves, having gone
up into the Championship and unable to compete with clubs that
have those parachute payments.
You will forgive me if I don't comment about a specific club.
There are probably management and governance issues and all sorts
of other things, so forgive me if I don't do that. But as to the
core question that you raise, it is a good one but, Mr Sanders,
it is not just when a League 1 club goes up to the Championship.
As part of the latest what is called solidarity package, I told
you about the parachute payments and the just over £2 million
a year to the Championship clubs, the other part of that package
is that the League 1 clubs get £300,000 and the League 2
clubs get £200,000, give or take a few bob.
The very solidarity packet enhances the differential
even before you get into the position of what happens to the promoted
clubs. It is a real problem. If I had to identify one thing that
I learned about football, I would talk about two things: I learned
it was sometimes quite tricky to get all 72 chairmen pointing
in the same direction at the same time, but the main lesson I
learned was that if the Football League doesn't defend the integrity
of competition, absolutely nobody else will. The integrity of
competition is, for me, easily the most important issue. It relates
to sustainable debt; it relates to the behaviour of agents; it
refers to transfer windows. There is a whole range of things that
fall under the broad heading of "integrity of competition"
and I very much hope, Chairman, that this is an issue that will
commend itself to the Committee in fairly robust terms when you
produce your report.
Can I just add a postscript? I think Lord Mawhinney is right in
describing it as a closed market. You can take the clubs that
occupy the Premier League in Scotland and say they are businesses,
they are in a marketplace, but the operation of the League is
not in a marketplace. I think that whether you call it solidarity
or protectionism then you do find that there is a lot of problems
peculiar to football that have developed over decades into the
situation we have got. I don't think, certainly in Scotland, they
are anti-competitive in that regard. On the other hand, the precarious
nature of relegation and promotion is such that there is no great
outcry in Scotland about some of the excesses or perceived excesses
of that process. As I said, more of a concern that if we can generate
more cash from a better product on the pitch that would be the
biggest objective to be pursued.
Q235 Mr Sanders:
Can I ask you for a quick answer to this? You mentioned Celtic
and Rangers, and that one of the reasons for not coming into the
Premiership was the impact on the Scottish international position.
But how does that work when you have Welsh teams playing in English
leaguespossibly one of them going into the Premiership
this yearand yet there is still a Welsh professional, semi-professional
league, and a Welsh national team?
We have Berwick Rangers playing in the Scottish leagues as well,
so we are quite friendly with our English colleagues on that.
I raised it in reply to David Cairns' point merely by saying that
if two clubs of sufficient stature were to seek to move between
international associations then I think it might ruffle a few
feathers and, quite frankly you don't have to do a great deal
to ruffle the feathers of either UEFA and, in this case, it would
be FIFA. I think there is a more serious point, which is that
while David Cairns has quite rightly outlined the issue for Rangers
and Celtic in a small league where attendances are not good, their
competition is not sharpened every week. This is just the historical
reality we find ourselves in. In terms of not agonising in a report
or in discussions and dialogue about where Rangers and Celtic
are going, they are part of Scottish football and I think that
is how we want to deal with the problem.
Q236 Mr Sanders:
Lord Mawhinney, can I ask about the Football League and whether
it ought to be doing more to support and reward youth development
programmes run by Conference clubs?
I have to be honest and say I don't understand what the basis
of the question would be. Most of the clubs that I had the privilege
to represent think that they have a major task getting their own
youth development programmes up and effective and defending, as
is now commonly and widely reported in the media, the increasingly
good youth development programme in the Football League against
the sort of comments that you heard from the representatives of
the Premier League who gave evidence earlier. On the whole, I
think it would be reasonable to say that most of the Football
League chairmen think that those two things constitute enough
of a challenge on youth development without taking on the job
of trying to handle youth development for the Conference.
Q237 Mr Sanders:
So you think it ought to just be something for the league clubs
to do? I mean league clubs have, as you hint, a difficult enough
job maintaining a youth development programme. It is the first
thing they tend to cut back when they are in money trouble. But
shouldn't it be something that League ought to look at right throughout
the pyramid, that every club that is professional or semi-professional
ought to be encouraged to have some form of youth development?
The answer to that question is undoubtedly yes. Thirteen of the
England team who played recently against Denmark received most
of their youth training in the Football League. We have, as Mr
Clark and Mr Williamson, particularly, told you, a good and burgeoning
system in the Football League for youth development. It is now
under challenge by the Premier Leaguethat will be a matter
for the two leagues to sort out among themselvesbut I am
proud of the strides that have been made over the last seven years
as far as youth development is concerned and that is not a bad
Q238 Paul Farrelly:
I want to just come on briefly to finances, but just on that strand
on youth development. One of the things that has struck when I
went to Germany was not so much the 50 plus one rule, because
that can obviously be negotiated around, but it was a sense that
they had an ethos in Germany that seems to be missing here, particularly
vis-à-vis, the Premier League and the FA and the Football
League. They said that when they lost very badly in Euro 2000
they decided collectively to do something about it and, in particular,
youth development was strong. They put a strong emphasis on youth
development. You have seen the results now with the young German
team and their performance in the World Cup. Is there any sense
that we can learn from Germany in youth development and developing
that ethos, sharing some money in the game but making it in the
national interest as well as the game's interest and home-grown
players? Is this a fruitful line of inquiry for us?
Yes, I think it probably is; perhaps in the context of whatever
you may choose to say about the future of the FA. It is a matter
of record that Trevor Brooking and I didn't see eye to eye over
youth development for years and we didn't see eye to eye because
our clubs were putting £40 million into youth development,
the FA was putting in a minimal amount and they simply wanted
us to hand over our £40 million and our young players and
they would decide what to do with them. That never struck me as
an attractive option but, in an attempt to be helpful, a few years
ago I had Sir Trevor here for lunch and I invited him to take
a clean piece of paper and write down what he would like from
the Football League and I would do my very best to persuade the
Board to deliver. I am guessing that was three years ago, maybe
four years ago, and I was promised a reply within a week and it
still hasn't come.
Paul Farrelly: Maybe we
can follow that up.
Can I just make a postscript, because I think this is one of the
most important issues facing certainly Scotland and I have no
reason to doubt that within the FA structures it is the same problem
in England. We had listened to the SPL talking about youth development.
We were clearly talking a good game but the delivery element was
missing. What I think we had to rationalise there was that if
we're looking for young Scots to be nurtured, the talent they
have, so they can appear with the clubs or internationally or
with the Scottish team, we virtually had to remodel what we were
doing. One of the things that we tried to do in this report was
ask, if you look at everyone concerned in the game, what is the
purpose of football in 2011? What is the national mission? Why
should a Committee of the House of Commons want to be involved?
I think that the Chairman said when he launched this
inquiry that he wanted some strategic involvement and to strengthen
self-regulation, and essentially I thought that he was talking
about the FA. If there is one broad area where there should be
a growing consensus it is that we are not doing enough. If you
look at some of the figures on coaching, and qualifications for
coaching in either country, and then look at Portugal or Spain,
you can see why at international level we are not doing well.
At least you guys qualify; we rarely qualify these days. But,
on the other hand, as to youth development, Germany is the classic
example; they took it upon themselves to say this mustn't happen
again. So, therefore, in terms of procedures, finance, co-ordination
and an integrated approach to youth and talent development, that
is where we are now heading in Scotland, and it seems to me that
that argument might be applicable here.
Our young people should go into proper training at a far younger
age and the FA should shift away from making them play on full-size
pitches and make them play on much smaller pitches, so that they
can develop their skill base.
Q239 Jim Sheridan:
Can I just ask a supplementary about youth development, particularly
in Scotland? You did say earlier that the youth development programme
has more or less failed. We are no longer producing the Billy
Bremners of this world. There may be a simple or significant reason
for that, I don't know. One of the issues I have picked up, which
is probably applicable to England as well, is that when youth
clubs play the Old Firm in Scotland and a young boy shines, the
Old Firm then take them away. While such a boy might shine in
a moderate club, in among the Old Firmwith "superstars"
as we call themhe might not shine, so he loses the game,
the game loses him, and he just fades away. I wonder if there
is anything that can be done to stop big clubs in England and,
indeed, Scotland, from poaching these young players away.
I am sure the simple answer to Jim Sheridan's comment would be
no. On the other hand, however, what we have looked at again in
Scotland under the duty of care issue is thatagain looking
to strengthen the capacity of the FA down herewe want to
strengthen the capacity of the Scottish FA to have a duty of care.
Therefore, we understand the competitive nature and if the youngster
is excited by the prospect of going to Rangers or Celtic or Man
United, parents often get involved and it is difficult to stop
the process. On the other hand, the great wastage rate is approximately
95% of young people at the age that Jim Sheridan is talking about
will go to a club and will never make it.
The tragedy about that is you could argue that people
are not picking talent properly but a lot of these young people,
children, youths, are lost to the game. Also, if they had been
dealt with differently and more effectively at the local levels
they may have sustained, developed later and still had a good
career in football. We, again, as a part of the package of the
recommendations on the duty of care issues, want the SPL, the
SFL, the SFA to get together with also the wider youth development
to make sure that opportunities are still available for children
and families but"constrained" is not the right
wordthey are conditioned by a better framework, which means
there is more success and less wastage.
As far as England is concerned, the danger is if it is going in
the opposite direction. If the new youth development proposals
are enacted there will be four categories. The biggest clubs in
the Premier League will be in the top category and they will be
allowed to set up training arrangements in towns and cities all
around the country, sometimes in competition with Premier League
or, more likely, Football League clubs in the same town. So the
direction of travel is being promoted as a new elite structure
for developing kids but the danger is that it is going to go in
exactly the opposite direction, Mr Sheridan, to what you have
Q240 Paul Farrelly:
Let me just cover finance briefly. The figures are stark. In the
last 18 years over half of Football League clubs have been subject
to some form of insolvency and, Lord Mawhinney, under your tutelage,
division 2 introduced some restrictions on wages. Do you think
those have been successful and, if so, is there any prospect with
such differing agendas that these or similar forms of financial
control can be implemented up the pyramid in English football?
The problem with football is not lack of money. It is lack of
cost control. You heard the Premier League chairmen talking about
agents in the Football League a few years ago initiated the publishing
of how much money each of our clubs gives every six months to
agents. That has had an effect. We did the first ever deal, the
only deal so far, with HMRC to ensure that we could work with
HMRC and insist that our clubs pay their National Insurance and
PAYE on time each month and stop using the Treasury as an unofficial
bank. You were given some evidence earlier that I suspect is not
totally right. It was right inasmuch as I think it was Mr Scholes
who said the Premier League have a similar arrangement. They don't.
The clubs have to tell the Premier League but my understanding
is the Premier League have not followed our lead in terms of coming
to an arrangement with HMRC itself.
That was hugely important but there are other cost
control issues. One of them, I guess, would be football creditors.
I hate to say, Chairman, that I inherited a football league policy
very supportive of the football creditor rule and when I left
the football league policy was still very strongly in favour of
the football creditors rule. We did debate it a number of times
and I got outvoted every time in the Board, but my personal view
is that it is not defensible. Mr Collins pursued my successor
on this issue. If you will forgive me, I think you are absolutely
right. I do not know how you defend the local community where
local businesses that you are supposed to be the football club
of don't get paid for services rendered while a football club
hundreds of miles away gets protected.
There is no doubt that the football creditor rule
cranks up expenditure and you are right again to say that it would
make far better due diligence if it didn't exist and you persuaded
my successor, while defending the football creditor rule, to say
that he could see no moral basis for it. I share that view. I
don't think there is any moral basis for it. It may be of interest,
Chairman, for the Committee to know that just before I left the
chairmanship of the Football League made a charity donation to
St John Ambulance of more than £40,000, purely as a charity
donation, which covered all of the administration losses that
the St John Ambulance had on its books that were outstanding as
a result of clubs going into administration.
In Scotland the creditor rule applies, but it is not a major issue
because there have been no particular problems with it at this
Q241 David Cairns:
Just on this issue in relation to Scotland you have a situation
where one of the Old Firm clubs is essentially now controlled
by the bank, not owned by the bank, and found itself in a situation
where, in the transfer window, they had to sell their best playerpossibly
scuppering their chances of winning the league; of course, let's
hope they're still in itessentially because the bank told
them to. If this isn't a sign that there is a fundamental problem
in how we are structuring the game then it's hard to think of
a bigger sign where the oldest, biggest, most successful club
in Scotland is having to sell its best players because the bank
is telling them to do so. If this isn't making a case for fundamental
change, what is?
Jim Sheridan: How bad
is the indebtedness in Scotland?
The problem of indebtedness is significant, but let me put into
context both points. The creditor rule is separate, in a way,
because it's an issue that is more closely linked between HMRC
and the Scottish Premier League, in particular, and to how we
deal with things. There has been a much closer coming together
in dealing with financial issues and SPL itself under its new
chairman has been very active in trying to make much more sense
of the finance. But I have made no effort to try and disguise
the fact today that the financial condition of Scottish football
is not a good thing. In that sense, there are many, many examples
that I could put forward. But what I think I would draw the Committee's
attention to as a piece of evidence is the PricewaterhouseCoopers'
annual report of financing of the Scottish Premier League, which
is published every year, and 2010 was particularly interesting
because I think it celebrated the 21st anniversary of that publication.
So there is a lot of data going back over the period and reinforcing
some of the concerns that have been expressed on both sides of
the Committee room this morning.
Q242 Damien Collins:
Lord Mawhinney, you have anticipated the question I was going
to ask about the football creditor rule, so I won't go to that
ground; your answer to the Committee is very clear. I just wanted
to pick up on what you said earlier about the integrity of competition
with regard to the financial standing of the clubs. Do you think
the Football League requires greater scrutiny of its member clubs,
their financial performance, and maybe even moving to a scheme
similar to what you see in Germany where clubs have to have their
books effectively audited by the League to make sure that they
can meet their obligations for the season ahead?
Mr Collins, the first thing we did was to recognise that when
a club goes into administration, which the law of the land permits,
it wipes out a whole bunch of debt and that gives it a competitive
advantage over the other clubs in the division because, while
they are having to use their resources to pay interest, the club
that has gone into administration doesn't. That is an integrity
of competition issue and we addressed that by introducing the
sporting sanctions and 10 point penalty, which the Premier League
subsequently followed by nine points and the Conference followed
as well. There is always a debate as to whether 10 points is the
right amount or whether it would be better just to relegate a
club; that is an ongoing debate, but we took serious action.
We have also, over the years, strengthened the financial
reporting requirements of our clubs to the centre, and that is
of some significance; as long as you bear in mind that the Football
League, of which I can speak with some authority, is a trade association.
We don't run the clubs. It is the clubs that decide what the regulations
will be and they have so far responded to providing more financial
information, I guess. There may be a point at which they baulk
and say we are going too far, but that hasn't been reached yet.
I think reporting arrangements have been hugely improved in Scotland
over the last three or four years. There was a period 2007/2008and
this is in the PricewaterhouseCoopers reportwhere some
of the ratios, for example, of wages to turnover were just simply
remarkable. A lot of effort has gone into trying to reign that
back in. Reporting arrangements are much, much better and both
the Scottish Football League and the Scottish Premier League have
taken a much more hands-on approach to the individual clubs, especially
if they are facing jeopardy or if there is a suspicion that there
are concerns. The other interesting point in Scotland is that
there is a better rapport between HMRC and the clubs than there
has ever been. Slowly there is a realisation that a number of
the issues that have been raised by yourselves today have been
taken seriously because it is a protected market; but, on the
other hand, you still have to have rules and regulations and parameters
and all of the clubs now have acknowledged that has to happen.
Q243 Damien Collins:
Lord Mawhinney, we have heard from other people, people in the
Premier League, who concur with your observation that the problem
with football is not lack of income but too great a level of expenditure.
Most of that clearly goes on players' salaries and transfer payments.
Has the Football League ever discussed internally the structure
of the competition and whether it would be better in terms of
the financial viability for smaller clubs to go back to the old
structure of a north and south bottom two divisions?
Yes, from time to time; but I have to say that there is no positive
strength of feeling within the Football League to go back to that.
I think partly because that would be perceived to be diminishing
the status of the clubs. That is how the clubs would see it. So
I don't think that is going to happen.
Q244 Damien Collins:
I just wanted to ask a final question relating to the structure
of the FA and, within that, I would like to touch on the youth
development questions that were raised earlier. Lord Mawhinney,
I would be interested in your views on the structural reforms
you think the FA should consider undertaking to make it a more
effective governing body. With regard to youth development, there
is the ongoing debate about the role of youth development. But
some people would see that there was, I think, 2007 the Lewis
report on youth development, which produced a lot of interest
in it and it sort of went nowhere. Was that a failure of the structure
of the FA to take that forward or was it the wrong report?
It was a failure of the structure of the FA. On the broader question,
I think I was the first person in the management hierarchy of
football in this country to say on the public record that I thought
the FA was dysfunctional and that remains my view; though I want
to put a caveat in by saying that I welcome the appointment of
David Bernstein. I think he has the potential to initiate change
across a wider front and I have made it clear to him that, although
I am not actively involved anymore, if I can help him in any way
I would be happy to do so.
But for the last few years the record of the FA is
pretty terrible, to be honest. I know that the new chairmanthere
was an element of common ground in the earlier testimony, although
there was a good deal of hedging going onwould like to
have two non-executive directors appointed to the Board and I
would support that if it was to happen. If Lord Burns had taken
the advice of some of us before he produced his report we wouldn't
be here today, we would be having a different conversation; but
he didn't and he has now told you that he regrets he didn't. I
regret he didn't, but he didn't.
The big problem is that people should not assume
that appointing two non-executive directors to the FA Board is
going to solve the problems of the FA. The FA's problems are much,
much deeper and more radical than that. Lord Triesman was right;
there is a poor relationshipand I use my diplomatic language
because I am testifying before Parliamentbetween the FA
and the Premier League. The council is among the more conservative
bodies with which it has been my privilege to work in the last
30 years. There needs to be change in both of those areas and
the FA needs to reassert its authority as FIFA's representative
in this country. It hasn't for years, and I hope it will, but
none of those three issues are going to be resolved by adding
a couple of non-executive directors and making the board 14 instead
Just on the structure, some of the points I made earlier. Again
I concur with Lord Mawhinney about the structural change but I
think what we also doand this was the Chairman's initial
context about improving self-regulationyou have to give
the confidence and the capacity to the FA to do that. They have
to win it back, in my regard. It is a similar problem in Scotland
because the real question within the SFA was, "Well, what
is our role?" A Premier League that is kind of there and
doing a reasonably good job; an SFL, all the youth. I think they
have grown in capacity, grown in confidence, they want to move
The other issue is that it is from top to bottom.
In Scotland what we have suggested, and hopefully you will read
the report in detail, is to take things from the very council,
on which I agree with the comments made, right through the Board
structure, and we are talking about 12 to seven; we are talking
about nine committees to two. In a sense, that is the structural
issue; that is the armaments that they can use to deploy what
they want to do. But the other thing is just changing the ethos
and to me the confidence issue is absolutely sound because in
Scotland now it is club, it is community and country. For far
too long it seems to be the emphasis has been club, understandably.
That is where the big players are, this is where the issues are.
But in Scotland I think we are trying to say, "Okay, but
there is a country issue," which is the thing we have talked
about in terms of youth, and also to acknowledge that there is
a community issue about getting some of our clubs on to different
business models and different ideas of where we can go. Again,
as Brian Mawhinney says, in relation to geography, they still
want to be part of the heart of football. Therefore any suggestion
of becoming a community club diminishes that; it is something
they frown upon. You have got be careful in that.
Q245 Jim Sheridan:
A major part of this inquiry is about the relationship between
the support roles, the authorities, clubs, and so on, and you
would have heard the Premier League's response to the question
about club ownership and should the fans know or not know who
owns a club. I'd ask if you concur with that. Secondly, still
on the question of supporters, if I can ask Henry, in particular,
I know that the footballing authorities in Scotland are doing
their best to try and improve the game, improve the product. But
the popular press obviously the move to attain a team in a league
is not very popular, so I wonder how the authorities in Scotland
will square that circle if they are to genuinely listen to the
On the latter point, there is this ongoing battle between what
would be the best league structure financially. I mean in the
report that I prepared I said that 10 made sense if you looked
at the financial context, because what that means is 12 goes to
10, 10 take on board what 12 were getting and it is all about
the broadcasting; it is all about the fans tripping down the league.
On the other hand the fans instinctively want bigger
leagues because they are sick and tired of other clubs playing
each other too many times. I am not sure how it is going to work
out in Scotland because the SPL are still debating that particular
issue, but I suspect they will probably end up with the 10. It
still begs the question of what is the best model for Scottish
football. Clearly, in the financial context, I think that may
be the right one but it certainly doesn't solve the fans' problem.
Can I just say before Lord Mawhinney comes in, on
the wider issue of fan base, I think things have improved in Scotland
but for a lot of clubs the fans are welcome because they come
through the turnstiles and they pay and they watch, and that is
the fan base. But there has been a bit of a reluctance to involve
the fans in a much more dramatic way. There are problems with
that, especially if it is about fan takeover in terms of ownership
of the Board. What I see in Scotland is that the Scottish Football
League clubs, the 30 of them, will move to different models, as
some of them are doing with community interest companies and so
on. So there will be a bigger involvement of the fan base. They
will be part and parcel of developing the club and, if they have
access to resources, that might help that out. On the other hand,
the clubs are desperate for resources anyway. So I see there are
prospects there, but currently not a lot of progress has been
Football, in one respect, is quite bizarre. It is very difficult
to keep a secret. I have had business appear on the media while
the board meeting at which it was being discussed is still going.
Jim Sheridan: You've not
a PLP as well?
Listen, tell me about it. Some of the most skilled exponents of
that in the media are taking an interest in these proceedings.
At one level it is very hard to keep a secret and yet there is,
running through football, a huge secrecy non-transparent core.
I remember, Mr Sheridan, when I went to see Geoff Thompson, then
chairman of the FA, to tell him that the Football League was going
to introduce a fit and proper person test, he told me I couldn't
do it because a fit and proper person was the remit of the FA
and it wasn't a league issue, and so I couldn't do it. We had,
what I guess is known even in here, a full and frank exchange
of views and we did it. Then the Premier League followed us and
then the FA did something. But the instinct is not to be open.
For Members of Parliament that is harder to grasp but it is a
You weren't given the name, it is a law firm I believe.
The Football League doesn't use it because it can't afford to,
it doesn't have the money. I was surprised that you weren't simply
told, "We are not going to publicise it because if we do
we would have to publicise the rejections and that would open
everybody to legal challenge and law suits and all the rest of
it". That is a serious issue in the world of football. But
we have been moving to transparency; publishing agents' fees as
I mentioned earlier was an example of transparency. My guess is
that more will come over the years. I think this is unstoppable,
but football is a very, very conservativesmall "c"industry
and it moves slower than the average.
Q246 Dr Coffey:
Building on what Mr Sheridan said, Lord Mawhinney and Mr McLeish,
it is about the supporter and community ownership of football
clubs. There haven't been that many examples of where it has led
to great success in terms of moving up the divisions. Do you think
that the sentence that went in the coalition agreement was just,
"Why is it there?" It is an interesting one and we are
trying to offer something for the Government to respond to, but
did we all just jump on a bandwagon last March, Labour party included,
when they said they were going to arrange for everybody to be
able to buy a stake in their club?
I can't tell you why it is in the coalition agreement. I have
no idea why they put it there and they certainly didn't consult
at least some of us who might have had a constructive thought.
Just as, if you will forgive me saying so, I don't think your
manifesto probably was the result of deep consultation with the
members of your party who might have been able to make a contribution.
I don't know why it is there.
York City was extremely important because the supporters
trust in York City deserve an enormous amount of credit for saving
that club from going out of business. I think that created an
emotional environment and I think I am the first senior administrator
in football who went and spoke at the supporters annual conference.
But, given the present business model where so many clubs depend
on the benevolence of rich people, supporters clubs are probably
not the answer. But if and when football gets itself on a more
sustainable basis without having to depend enormously on the beneficence
of rich people or rich companies, then the supporters trust might
become a more effective modelexcept that as Mr Williamson
pointed out to youand it has been our experiencesupporters
trusts pick a director, put him on the Board and then expect him
to tell them or her to tell them what is going on at the club
and, of course, fiduciary responsibilities stops that happening
and it all ends in tears.
From my point of view, I think I agree with the latter point about
the degree of tokenism that goes on in a very secretive football
arena. That said, if you take Scotland, it seems to me that big
progress will be made with the Scottish Football League clubs.
There are 30 of them and there is a lot of enterprise, a lot of
initiative. There is actually quite a lot of investment by the
chairman in some clubs. But the main thing is they are trying
to take the clubs forward in the sporting context.
I went to see the Sporting Club Lisbon just as a
visit and what we are trying to get football to do, especially
in those leagues, is to make sure they are interfacing with other
sports as a community focus, as a community hub, as a sporting
hub; again watching that they don't feel they are being squeezed
out of football, but at the end of the day, the different business
modeland as I said, one of the business models is this
Community Interest Company, the CIC, which allows, because of
the structure and status of the organisation, for them to obtain
finance and possibly obtain some grant funding that they wouldn't
have been able to get in their old classification as a public
liability company. There is a lot on the move, but I think it
needs encouragement. It is happening but it is going to happen
Chair: The Rt Hon Lord
Mawhinney, the Rt Hon Henry McLeish, thank you very much indeed
for your evidence.