Football Governance - Culture, Media and Sport Committee Contents


Examination of Witness (Question Numbers 561-585)

Stewart Regan

29 March 2011

  Chair: Good morning. For the final part of our session, can I welcome Stewart Regan, the chief executive of the Scottish Football Association and also thank you for your patience in waiting to get to this point. It seems appropriate to ask Jim Sheridan to begin.

Q561 Jim Sheridan: Thanks for coming along, Stewart. I think that it is well recognised that this Select Committee inquiry has principally focused on the English League and the Premier League, but it does touch on very important issues relative to Scotland in terms of governance, ownership, the role of supporters et cetera, so we felt it was important that we get a Scottish perspective on just exactly how the game is being played in Scotland. We had the former First Minister, Henry McLeish, down some weeks ago and you know Henry has produced a report. Could you give us an analysis or a perception of how you feel about Henry's report?

Stewart Regan: Henry carried out a report in two parts focusing on five key areas. Those areas were performance, facilities, regional structures, governance and league competitions. There were 103 recommendations in all. The board have considered them. We've prioritised them and we are implementing two key areas as we speak, one relating to governance and one relating to performance.

From a governance perspective, the proposal is primarily to reduce the main board from eleven down to seven; to make it less of a representative board and more of a strategic board, focusing on strategy finance in major game decisions and sitting below the main board to split the game into two, effectively a professional game board and a non-professional game board. That would allow both sides of the game to effectively have delegated powers from the main board which would allow them to run the game and involve the expertise in the areas of the game that best suits the individuals involved.

We had a series of recommendations about Council and the Council, from a structural point of view and a constitutional point of view, does not have any voting powers within the Scottish FA. However, we listened and heard Henry's recommendations as far as how Council could be used, and our proposal is to create Council into almost a House of Lords model for inclusion of football writers, supporters, referees associations, players, managers, disabled, and women's game and so on, so we have a much more all-embracing, inclusive view of football in Scotland. That will allow us to have a debating forum that would give us a voice from the total Scottish football landscape and decide whether that voice, particularly if it is positive, requires issues to be converted into policy. Two weeks ago, the board approved our governance proposals. They are being converted into resolutions as we speak and will go before our AGM in Scotland on 7 June.

Q562 Jim Sheridan: Did I hear that they are talking about reducing the board from eleven to seven? How will you achieve that? What are the criteria for that?

Stewart Regan: At the moment, the board consists of representatives from the game rather than elected individuals, so we have a number of individuals around the board table who are there because of their involvement or expertise in particular side of the game, whether it is schools, football or youth football. Our view is that a main board needs to be competence-based and able to deal with strategic and financial matters.

The main board will involve the senior officials of the Scottish FA. The terminology for these in Scotland is "president", and then there is a first and second vice president. They are people who effectively come through Scottish Football, through the Council; they have held senior positions in the game, either at club level or association level. There would be the Chief Executive, i.e. myself. There will be four automatic places on the board. There would then be one seat for the professional game board and one seat for the non-professional game board. Those two individuals would be elected by their respective boards, and then one independent non-executive director, whom would be selected based on competence criteria, i.e. if we feel we need a legal input, we would appoint a legal individual; it may be HR; it may be strategy. That depends on the competence of the board at the time we need to make that decision.

In four years' time, we will remove, subject to our member clubs' agreement at the AGM, the second vice president position and replace that with a second independent non-executive director, thus making the board much more in tune with normal blue chip companies and normal corporate codes of governance.

Q563 Jim Sheridan: Apart from the two elected people, will the rest of the board be appointed?

Stewart Regan: That is correct.

Q564 Jim Sheridan: One of the recommendations that Henry McLeish suggested was the reintegration of the Premier League and the Football League. Would you agree with that?

Stewart Regan: I think that is a matter for the Premier League and the Football League in terms of what the structure looks like. We have discussed the matter and we feel that having one league to deal with in Scotland makes much sense. Scotland is a country of only 5 million people; it is the same size as Yorkshire, where I was chief executive previously at Yorkshire County Cricket Club. With 5 million people and all the professional football clubs that exist, it is very complex and complicated in terms of getting things done. It would be much simpler to have one league, and equally, from a performance point of view, the relationship between the governing body and the league, we feel, would be much smoother and progress could be much swifter.

Q565 Jim Sheridan: Are you also aware of the discussions that are going on about the size of the league?

Stewart Regan: That is correct.

Q566 Jim Sheridan: Certainly, if newspaper reports are to be believed and various surveys have been carried out, the supporting fans really do not want a 10-team league but the authorities seem intent on imposing a 10-team league. Is that the case?

Stewart Regan: I think the league reconstruction, as I said before, is a matter for the leagues themselves. They are in discussion as we speak. It is not as simple as simply looking at one stakeholder view, i.e. the fans' view, if you like. We have certainly, from what I gather, taken fans' views into account, but the principle of a 10-team league is built on the long-term survival of Scottish football.

In comparison to football in England, there is not the same amount of money flowing through the game and, as you know, football in Scotland is dominated by Celtic and Rangers, particularly in the Premier League, just in terms of fan base and resources. Money needs to flow down through the game so that the landing is softened if a team is relegated from the Premier League to the First Division, because the drop in income is potentially cataclysmic for a club that falls out of the Premier League. Therefore, the intention is to try to provide some funding that can flow down through the game from the Premier League into the First Division, and in order to do that, you need to create that income from somewhere. The proposal is on the table to reduce the size of the Premier League from 12 teams down to 10, which would create two shares of income that could be divided across the Football League and thus have a much more attractive First Division in Scotland.

There are also performance criteria to be put in place. Following Henry McLeish's report, we have recently commissioned a performance strategy using Alistair Gray from a company called Renaissance, who have done a lot of work with sport right across the world and right across a number of different sports. The performance strategy is built on four guiding principles. One is to create 10,000 hours of contact time with the ball for younger league players coming up through the system, which actually links to the provision of sport in schools, which we probably will not have time to get into, but it is something we feel particularly strongly about at the Scottish FA. The second principle is around providing "best versus best": the opportunity for the best players to play against the best players. The third principle is around coaching, and the fourth is around something called The New Scotland Way, which is our performance system and the infrastructure that we put in place.

I was interested earlier to hear one of the comments about preventing foreign players coming in and dominating the national team. In Scotland, we are also concerned about that, and we are looking at putting in place performance-related fee permits for our clubs to incentivise them to actually play young Scottish-qualified players in the first team, to actually bring them through and provide the "best versus best" opportunities. So, to address your question as far as the restructure of the League, yes, on the face of it, it does mean a reduction in the number of teams, but both from a financial and a performance point of view, we believe it is absolutely the right thing to do. Clearly, there are differences of opinion even within our own board, but it is one of those matters that are very subjective. People either agree with it or they do not, but when you look at it from different perspectives, there is a lot of common sense to the proposal.

Jim Sheridan: So finance has been the dominant factor, then, in making the decision or the proposals.

Stewart Regan: No, that is not what I said. What I said was that finance and performance have been looked at. Performance, and in particular the development of Scottish-qualified, home-grown talent, is a key criteria. If you look at recent articles from Craig Levein, the national team manager, you will see that he personally is very supportive of that restructure because it gives the young players the chance to play against the best players in a very much stronger 10-team, top tier of football in Scotland.

Q567 Jim Sheridan: If it goes to a 10-team Premier League, how many times will Celtic and Rangers play each other?

Stewart Regan: That is clearly for the Scottish Premier League to decide. This season already they are playing each other seven times because of the nature of the cups that they have been drawn against each other and the progress that they have made. The number of times Celtic and Rangers play each other is actually a key factor in the broadcasting contract in Scotland. Obviously, any structure that is put forward has to look at that particular clash as a key contributor. I don't know where that will end up, but it will certainly feature strongly in any proposal.

Q568 Jim Sheridan: Have there been any discussions about, putting Cup games aside, how many times in the league Celtic and Rangers will play?

Stewart Regan: Yes, there will have been discussions. As I said, it is the League—

Q569 Jim Sheridan: Do you have any idea how many times it will be?

Stewart Regan: I could not say off hand, because I have not been involved in the detail of fixture planning. What would need to be discussed, particularly with the Leagues themselves, is any fixture scheduling that they have put in place.

Jim Sheridan: There is a distinct danger there of becoming repetitive and boring, and the end result will be that fans will not come and watch it.

Stewart Regan: I think, if you talk to the fans of Celtic and Rangers, they would probably disagree. They are the biggest-attended matches in Scotland; they are the matches that grab the public interest and television interest around the world. When Celtic and Rangers play fans of other Scottish Premier League clubs and also in Cup matches against Scottish Football League clubs, they are particularly attractive and generate revenue for the clubs and provide economic impact for the local communities where the teams play.

Q570 Jim Sheridan: Henry also suggested the regionalisation of the lower leagues. How do you think that will work out? How will it help the lower leagues?

Stewart Regan: It has been discussed with the Scottish Football League. The principle really comes down to looking at whether or not a pyramid system can be put into Scotland. At the moment, at the bottom of the Football League, there is no opportunity for any team to come up from amateur football or non-professional football into the Football League. If you look at the performance strategy, which provides the opportunity for clubs to play against the very best clubs, we feel at the Scottish FA that there needs to be an incentive for clubs that want to invest in their infrastructure and want to develop their standards to aspire to become professional and, therefore, we feel that the door needs to be opened up for clubs to come through the ranks.

However, because of the size of Scotland, to create another division and have clubs travelling from Wick or Elgin right the way down to Dumfries or Berwick just doesn't make commercial sense, so there are a number of options, one of which is regionalisation. When you look at it purely from a financial or commercial perspective, there is a lot of sense in it. The clubs themselves, however, see that as potentially challenging what they have currently, which is to be part of the national League, to be a national, professional team, and any suggesting of regionalising is met with the view that it would be a step backwards. That one is still very much a work in progress. That one, again, is for the Scottish Football League at look at the way forward.

Q571 Jim Sheridan: In terms of the revenue from, particularly, television, how will that flow down to the lower League clubs?

Stewart Regan: There are two aspects, really. There is the television revenue that comes in through the Leagues themselves, and the Leagues make a distribution to their clubs based on a particular formula. Obviously, that would be something for you to discuss with the Leagues, if you feel it appropriate. I can only talk for the television deal for the Scottish FA.

We provide a number of distributions based on things like the Scottish Cup, based on a distribution award at the end of every year to clubs, and what we are looking at doing as part of the governance review is refocusing how we reward money. What we are keen to do is reward clubs for delivering behaviours or initiatives that are going to contribute to the achievement of our strategy. We want to move from being seen as a grant-giving governing body to a body that actually measures outcomes, and measures outcomes that contribute to the strategy, particularly the performance strategy and the participation strategy, which are the two key pillars that we are working on. We are looking at the sort of outcomes that we can reward, for example, playing young Scottish-qualified players in the first team, developing a number of coaches in order to provide the necessary coaching support for young kids, and also to encourage participation, which means having a volunteer strategy and having an officials and coaches strategy. At the moment, we are probably not as good as we could be or should be in how we distribute the money, but we have recognised that and we are looking to change how we reward clubs in the future.

Q572 Jim Sheridan: Regardless of the attractions of the Old Firm, there is no way they are going to compete financially with Manchester United or Liverpool, et cetera, so given the limited resources in terms of Scottish football, do you think that salary capping would be an appropriate way to go forward?

Stewart Regan: I think it is an interesting debate, and it is one that I was involved in when I was at the Football League. I think you have to look at the market in which clubs play. If you are in the top tier of football, you actually view yourself as playing on a world market, and if you have restrictions imposed upon you, you then see yourself as being unable to compete at the highest levels. To put a cap on a team, which then has to compete against the Barcelonas, Real Madrids and Inter Milans, which do not have caps, it is potentially restrictive, and that is why I think that at the top end of football, it is not something that is easy to achieve. However, at the lower ends of the game, I do feel that it is possible, and certainly, I was part of the team that looked at implementing this in the Football League, particularly in League One and League Two, when I was on the management team at the Football League then. I think it depends on which team you are talking about and how you view the market in which you compete.

Q573 Jim Sheridan: Obviously, there is a competitive imbalance in the Scottish game, and it is very predictable. It is either Rangers or Celtic, or Celtic or Rangers that is going to win the League. Does that affect the game in Scotland?

Stewart Regan: I think that has been in place for many, many years and I would argue that, if you look at most categories of business, you will find a consolidation taking place to two or three major players in every category, whether it is petrol stations, banks or supermarkets. Football is no different. It is consolidation down to a small number of big brands that have the global power and presence in order to dominate their particular market. I think what is really healthy in England is how the Premier League has seen a widening at the top now to maybe four or five clubs, and I think it is important for Scottish football that we seek ways of making the top tier more competitive. Certainly, Hearts this season have given the top two a good run for their money and it would be very healthy for the game to see stronger clubs. That is why I think the reconstruction of the League and the distribution of income could help that and potentially develop stronger teams for the future.

Q574 Jim Sheridan: There were expectations upon your good self, when you were appointed, that you would try to change things so that there would not be this predictability and there would be some sort of effect of competition, but you seem to be suggesting is that it has been like that for years, so we need to keep it that way.

Stewart Regan: No, I think you missed the point. I think what I said was that it is not a good thing for the game, but Rome wasn't built in a day. I have been in the post for six months. That has been in place for 100 years. I think it will take a little longer than this financial year for me to change it. What we are looking at doing is putting in place initiatives to provide income flowing down through the game so that we can have stronger teams at the top end of the Premier League.

Q575 Jim Sheridan: Can I ask you just to consider the current financial regulations? This morning, you will know that Rangers are now effectively being run by the bank, and there are all sorts of speculation about who should own the club or who is buying the club and so forth. Do you have any views on these things and how the financial regulation should be operating in Scotland?

Stewart Regan: It is not for me to comment on Rangers' individual circumstances. That is a matter for the club and the Scottish Premier League. We at the Scottish FA have no direct involvement in the day-to-day running and the day-to-day financial matters. We are very keen to make sure that we have a strong League or Leagues and that we have clubs that can survive financially, and anything we can do to help that, we would support. The idea of things like fit and proper persons tests is something that we have within our current articles. We have introduced club licensing and we audit all clubs regularly to make sure that we feel that they are being run efficiently and effectively and have standards in place that satisfy supporters, the league and the association.

In terms of other financial regulations, there is nothing at the moment that I am aware of that we are doing or putting in place to change it. It is working reasonably well at the moment. There are always things we could do differently and better, but at the moment, there are no immediate plans to change that.

Q576 Jim Sheridan: Do you think that there should be a role for the FA in terms of looking at clubs' finances, or scrutinising them or monitoring them?

Stewart Regan: The Scottish FA is the ultimate governing body in Scotland and we have almost an overarching responsibility to protect the long term good of the game so, yes, I think that we should take an interest in these matters, but we have delegated responsibility on a day-to-day basis to the leagues to effectively run their own business, and we would only get involved if there were a major appeal or a major issue. For example, we became involved when Dundee recently went into administration and were in financial difficulties, so we are the ultimate right of appeal, but the day-to-day matters are handled by the leagues themselves because they are the bodies of which the clubs are members.

Q577 Damian Collins: I was going to ask about Dundee. It seems a good point to follow up on in terms of questioning. Is Dundee symptomatic of a bigger problem in the Scottish game of clubs simply living beyond their means?

Stewart Regan: I think there is an issue with rising levels of debt in Scotland and across the game generally. I think my colleague from the FA down here, Alex Horne, made the point earlier that there is only a small number of clubs making a profit. In Scotland, we have exactly the same issue. The way that clubs tend to deal with it in Scotland is to try to operate to a much tighter budget. What you have to understand is that in Scotland, the financial numbers that you are talking about are substantially less. Even at the top end of the game, the clubs are not getting anywhere near the money that clubs in England get, and that is largely because of the size of the television deals.

We have some very good examples in Scotland where clubs run to a tight budget, where they have salary controls in place, and where they operate within a budget and stick to that. We have other examples where clubs come in and potentially spend more money than they should be spending, particularly on things like player wages, but I do not think Scotland is unique in that. If you look across the world of football, and perhaps other sports as well—cricket, as an example from where I was before, is facing a similar issue—and as television money flows into the game, there is a desire to have more of it and to chase the dream and potentially get into European and world competitions. I think you are always going to have that, and it comes down to governance. It comes down to having good management and strong leadership on the boards, so I think there is a problem in Scotland at certain club levels, but it is no different to anywhere else and we are trying to encourage clubs to live within their means.

Q578 Damian Collins: Just taking what happened with Dundee, do you think there should be a review of the audit? You said that you audit the clubs. Do you think that the criteria that the clubs are audited against should be reviewed in light of the problems that Dundee has had?

Stewart Regan: It is a difficult one, because at what point do you step in and decide that there is a problem? Clubs can change their performance and shape very quickly if a new director or a new chairman or whatever comes in and has a different policy. You can move from operating within your means to operating outside your means very quickly and it is at what point you step in. We have to differentiate the rules of the league bodies from the rules of the governing body that effectively is running the game, as opposed to the league, which is overseeing the performance and the management of the clubs. Our view is that it is the league's responsibility to police and manage their own clubs, and there are numerous ways of doing that, whether it is fit and proper persons tests, salary caps and effectively taking a much keener interest in things like profit-loss accounts and logging audited accounts at the end of the year. The governing body, the Scottish FA, effectively sits over the top of all of those, and we would only get involved at the last resort.

Q579 Damian Collins: Just to follow, lastly, Jim's questions about Celtic and Rangers, do you think, at the other end of the scale, that Celtic and Rangers struggle to compete consistently at the high level in competitions like the Champions League because there is not enough money for them to draw from the Scottish Premier League?

Stewart Regan: I think if you asked the clubs, fans and a number of the stakeholders in Scotland, they would probably agree with the comment that the gap is widening between the top end of the Scottish Premier League and the top end of the English Premier League, but again, that is happening all across Europe in particular, simply because down in England they have a very good television deal that has been expertly negotiated and money has come into the game. They have created a very strong brand and they have grown it around the world, so naturally that money has come in and clubs have taken advantage of that and built their own club brands.

In Scotland, we have not had that luxury. We have a much smaller League with fewer clubs competing at the top end, so I do feel the gap has widened. That said, particularly the Old Firm have competed very well in the competitions that they have participated in, and clearly, this season, Rangers have made progress in the Europa League until recently, despite having limited resources.

Q580 Damian Collins: To adapt a question I asked Martin O'Neill last week, do you think you will ever see a club like Aberdeen winning major European honours again?

Stewart Regan: That is a difficult one, because I do not have a crystal ball and I would not like to predict or otherwise. I think the challenge is much greater now for a club, particularly a club that has not won anything recently and does not have the resources or the infrastructure to risk up through the ranks, but I think football is about being able to offer the opportunity to live that dream and the opportunity to go from, as I said, parkland to professional stadium, which is why we think the pyramid system is important. We have to open up football and have a pathway that goes right the way through so that clubs can aspire to be successful. If you had a club like Aberdeen or Kilmarnock or whatever that is taken over by a Roman Abramovich character, then who knows where that club may get to in the future? We have seen what has happened to the success of the likes of Manchester City and Chelsea in England in recent times, when they have had huge investments and financial backing. That could happen in Scotland, and it would be great for the game if it did.

Q581 Dr Coffey: Just turning away from football for a while, and going on your previous experience as chief executive of York Country Cricket Club, are there any good examples of governance that the SFA and FA could learn from the ECB, whether that is actual governance in decision-making or youth development?

Stewart Regan: Absolutely, and we are already starting to see examples of that with some of the initiatives we are putting in place in Scotland. A great example of that is the principle of performance-related fee payments, as I referred to earlier. This is something that the England and Wales Cricket Board have been pushing now for several years, and that is setting out a series of criteria that are important to the game of cricket in England and Wales, asking clubs to either opt in or opt out of delivering those criteria. If you opt in and deliver them, you get paid. If you don't deliver them, you don't get paid, and it is almost creating incentives rather than punishments.

On how we manage the handout of cash and the distribution of cash through the game, I for one am in favour of distributing it based on the achievement of performance targets. One good example of that, as I said before, is playing Scottish-qualified players in club first teams to give them first-team opportunities rather than signing foreigners or journeyman players that can come in and perhaps do a job for a short period of time. I think that makes opportunities open for all clubs to benefit and not a just a small number of clubs at the top end of the game.

I also think that cricket has managed the independent non-executive director route very well. The England and Wales Cricket Board has a strong diversity agenda. They have representation on the main board from a number of minority groups, and I feel that is something we can learn from and something that we would like to develop over time in Scotland.

Q582 Jim Sheridan: In the short period of time that you have been there, you have probably seen the poison of sectarianism in the Scottish game and, to be fair to both clubs, they have tried their hardest—and in some ways, succeeded in trying—to end sectarianism, but that poison, that sickness, is still there. It would be one half of the city supporting the SFA and the other half supporting the city against the SFA. How do you see things developing in the future? What is your relationship, for instance, with the Scottish Premier League these days?

Stewart Regan: My relationship with the Premier League is excellent and, having listened to the debate this morning, what is interesting is that there is a very strong relationship and a willingness to work together between the Scottish Premier League, the Scottish Football League and my own body, the Scottish Football Association. I think Henry McLeish's report, in many ways, has acted as a catalyst for change and we are all working together to put the various changes through this year.

You are right; there are some challenges in Scotland that are pretty unique and I think I have faced most of them in my first six months. The whole sectarian issue is one that reared its head again over the last couple of weeks. Tomorrow we are actually meeting with the Old Firm, the police and members of the Scottish Government to discuss what can be done. It is pretty unique to the west of Scotland, although I know the issue is wider than that. It cannot rely on one body to address it; I think it needs a whole concerted effort on behalf of everybody and I think it requires the need to start at school level and look at education. Going back to this lady's point about learning from other sports, the other thing that cricket did really well was the link with bodies like health and education and government to use sport to address a number of key issues. On sectarianism, racism in football and some of those kinds of areas, I am really keen to look at what we can do in Scotland, but it is a big issue. It is one that has been around, again, for 100 years or more, and we are not going to solve it overnight, I don't think.

Q583 Jim Sheridan: Yes, I think most people accept that. During this inquiry, we have emphasised the importance of grassroots football, and you mentioned schools as well. For me, there is nothing more exciting, from a schoolboy's or schoolgirl's perspective, than playing football at their national stadium, whether it is at school level or amateur level. Yet, the SFA—I think it is the SFA—for some reason have refused permission for the Scottish schools to play their cup final there, and likewise for the Scottish Amateur League. Could you explain why that is the case?

Stewart Regan: Absolutely: the decision was taken by the Hampden Park Stadium Board, which I sit on. What many of you will not realise is that Hampden Park is also the home for Queen's Park Football Club, and they play on it and play a full season of fixtures there. In addition to that, we stage cup finals, cup semi-finals, international matches, and we also have a series of concerts there during the course of the year.

We take criticism regularly on the condition of the pitch because of the amount of fixtures and amount of use that the pitch is getting. Equally, the Hampden Park board has commercial targets that it has to achieve in order to operate as a profit-making body, so the board decided that playing a match for a few hundred people in a 56,000-capacity stadium was not viable any longer both from a usage and financial point of view. That decision was relayed to both the Scottish schools and the Scottish amateurs, and alternative dates were sought for this year, the last year, to try to offer support and find alternative venues, but the decisions have been communicated and we are still in dialogue with both bodies on that.

Q584 Jim Sheridan: Correct me if I am wrong, but grassroots football is not there for viability. It is there to encourage people to participate in the game. And while you make provisions for international games, cup finals and professional games—and taxpayers' money has been used to build Hampden in the first place—here the people at the bottom of the pile are saying, "We would like an opportunity to play at our national stadium two games: schoolboys and Scottish amateurs", and they are the only ones who have been punished while the professional game put their money in there and get their own way.

Stewart Regan: I do not think it is about punishing anybody. As I said before, it is about looking at what goes on at Hampden Park and how many fixtures are actually playing there during the course of a season with a club team using it as their home ground. That is very different to a national stadium like Wembley or a stadium like the Millennium Stadium where there is no club team playing there week in, week out. We have to look at the quality of the surface, which is key for the professional competitions and the international team. We have offered to support the schools and amateurs by trying to find alternative routes, but if I were a schoolboy footballer coming through, I would be really excited about playing at any professional stadium, irrespective of the national stadium. The chance to play at a major ground is equally attractive, and that is why we feel that there are viable alternatives to playing at a stadium that is getting an awful lot of hammering from people using the pitch.

Jim Sheridan: Just for the record, the last time I was in Wembley was watching the Scottish v. England schoolboys international, played at Wembley, so I would hope you would reconsider your position.

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


 
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