Football Governance - Culture, Media and Sport Committee Contents

Examination of Witnesses (Question Numbers 586-688)

Sir Dave Richards and Richard Scudamore

5 April 2011

Chair: Good morning. This is a further session of the Committee's inquiry into football governance. I welcome for the first part of this morning's session the Chairman of the Premier League, Sir Dave Richards, and the Chief Executive, Richard Scudamore. Adrian Sanders will begin.

Q586 Mr Sanders: Good morning.

Sir Dave Richards: Good morning.

Richard Scudamore: Good morning.

  Mr Sanders: Do you accept that the Football Association is the governing body of the English game?

Sir Dave Richards: Yes.

Q587 Mr Sanders: Unquestionably?

Sir Dave Richards: It is the governance of the game.

Q588 Mr Sanders: Would English football benefit from having a stronger Football Association as well as a strong Premier League, and will you support FA Chairman David Bernstein's efforts to achieve this?

Sir Dave Richards: We have always supported the FA in every way we could. The FA is an association of people, but it needs to keep the balance among those people who are associated with it. As regards supporting David Bernstein, yes, we will support David Bernstein in what he is trying to do.

Richard Scudamore: Can I maybe add some detail to what Sir Dave has said? The FA is the governing body of football in this country. Under the FIFA statutes, that is the way it must be and has to be. We are a league and therefore we come under the auspices of the FA and the FA sanctions our rulebook every year. That rulebook is effectively the contract between our member clubs and therefore we do support that. We have a history, certainly in our time at the Premier League, of supporting the reforms of the FA whenever they have come along. Sir Dave was instrumental in moving the board to six and six—national game/professional game—in 1999. That was four representatives from the Premier League, two from the Football League and six from the national game. Those reforms were brought in around then.

We also were and are on record as being the only people who came out and unconditionally accepted the Burns report. When Lord Terry Burns did his report on the governance of the FA, out it came and we supported it. Even though there were elements of it that we would not have, perhaps, as individual items have supported, we absolutely supported it. So we have a history of progressive modernisation of governance and we would be more than happy, as I say, to support proportionate proposals.

But Dave does hit upon the fundamental point that the Football Association is an association of interests, and that is its genesis. Its genesis goes way, way back to the mid-19th century: J.S. Mill—I am sure you are all familiar with him—freedom of conscience and opinion, freedom of association, freedom of getting involved in pastimes and interests that interest you. So, 1859. The FA itself was being formed around about 1863 and this is what we are—we are an association of interests. It might be difficult, it might be tough, but that is what we are. That is where we are today and I would defend the FA. No matter what other issues we may discuss today or at any point, I would absolutely defend the FA's right to associate as an interested group—those who are interested in football and those who actually run football to form as an association.

Q589 Mr Sanders: That is an encouraging answer, because the FA has told us that it wants to rethink the architecture at the top of the game. Do you therefore agree that the respective roles of the FA and the Premier League need to be looked at and, if so, how should the division of responsibilities change?

Richard Scudamore: Well, there is a concept of constant improvement. We have never, ever rested on our laurels and therefore, in a sense, we are looking at all things all the time. We have strategic reviews; we have regular dialogue. I think people misunderstand a lot of the relationship between us. We have such regular dialogue. Every two weeks the executives of all three football bodies—Football League, Premier League and FA—get together. We exchange and work together on most initiatives. Yes, if there is ever a discussion around moving the game on—progressing the game—we want to be active participants in that because we think we have a role to play, but we are not resistant to change, as I said. Any review that comes along we will take our full part in. I go back to Burns. Burns, as I say, was absolutely endorsed by us. We were the first to do that and I think we were the only body to do it.

Q590 Damian Collins: Sir Dave Richards, do you think, thinking purely of the England national team, there will be an advantage to having a winter break in the season or fewer premiership games played in the season as part of a reduction in the number of domestic matches?

Sir Dave Richards: It goes a lot deeper than that. Obviously we want to do the very best we can for the English game, being the England team. We want to do the best. We have been discussing ways forward on how we could introduce a winter break by possibly looking at the FA Cup, looking at the league, and Richard and the executives of the FA have been looking at that to try to find a proper synergy where it actually works.

Richard Scudamore: Damian, your question hits upon a number of things—helping the England team and, effectively, fixture congestion. I have to say that in my time here we have had four goes at this, looking at the fixture calendar. It is very difficult because if you go back, from the formation of the Premier League, remember English football was historically 22 teams in the top division and each team playing 42 matches. That is not now the situation. We are now down to 20. If you remember in the season prior to the Premier League's formation the FA Cup was open-ended and, therefore, the replays went on ad infinitum or ad nauseam, depending on your particular view of each particular match. Now, winning the FA Cup is six matches plus replays, but at least only one replay and it doesn't go on for ever. The Football League Cup used to be eight rounds plus replays to win it, and that has been reduced to seven finite rounds with every game played to a finish.

When you are looking at fixture congestion, which really is your question, I think, I am afraid we have to look at our friends at UEFA and FIFA as more the culprits than ourselves. UEFA used to have—in the season we started in, 1992-93—13 match dates they required. Now they need 21 match dates to fulfil their fixtures. FIFA traditionally were about nine or 10 international dates, which is now averaging 12. The difficulty is somebody has to give something up. We put on 380 events and those events are watched around the world. They are extremely popular. Those 380, if you took two teams out, don't go down by a few; you go down to 306 events. There is no way that you would do that in terms of public interest, in terms of fan interest, in terms of the expense of other competitions.

If you want me to talk about other competitions—the Football League Cup, for example, or the FA Cup—we have never advocated the radical altering of those competitions because they are hugely, hugely important to the solidarity of football in this country. The FA Cup is worth about £100 million value. Basically, if you mess with that competition, that reduces. Of that £100 million, £75 million is for the benefit of the FA and redistribution. The calendar is extremely difficult. We have always said if it could be practically done we would advocate some sort of winter break, but we have failed because it is just hard to come up with a practical suggestion.

Q591 Damian Collins: Thank you for a very full answer, and you are right, the general congestion of the calendar was part of my question. I did mention the English national team and neither of you mentioned the English national team in the answer to the question. Sir Dave, do you think all this complexity and all this work that might be undertaken in reducing congestion in the fixture list, if that could be achieved, would be to the benefit of the English national team?

Sir Dave Richards: I think it is an old answer to give you. The winter break would help providing we didn't put extra games in on friendlies. That is always the danger, but more and more, our Chief Executive and the executives of the Football League and the FA are looking at these scenarios all the time, and looking at not just what is best for the Premier League, but how we can develop better youngsters and better playing of the England team.

Richard Scudamore: Can I go back to the winter break—

Q592 Damian Collins: If I may, Mr Scudamore, I would like to follow up on the question before you come in. In what you are saying in your answer, do you accept that there is an issue that people in football have to address, which is that England players are tired at the end of the season because they play too much football and we should look at how they can prepare for major championships by easing some of that burden on them?

Sir Dave Richards: You say, how can we prepare for major championships? I can tell you the preparation for the World Cup was incredible. The training, the high altitude training, the training in South Africa—you couldn't have done any more. It is not about just saying, "We want to find a little bit more space for the English team to play." It is about how we can bring the whole game to a higher level to win competitions.

Richard Scudamore: Can I just answer specifically about the winter break? We have no body of absolute evidence that a break around about December/January time, whenever you might choose to do it, would make a physical difference come May/June. That is one of the problems. We have opinion. There is a body of opinion on this subject, but there is no empirical evidence that says take your break then—clearly, any break any time. Then there are some doctors who talk about having to get back to match fitness after that short a space of time. It is all quite difficult and we certainly don't yet have a body of evidence that says, "A break now leads to success in June and July." There are many other factors, which I am sure you will want to ask us about.

Q593 Damian Collins: Of course. There is another part to my question. The reason I am particularly directing it to you, Sir Dave, and the reason I am particularly asking about the England national team, is whether you think you are conflicted as Chairman of the Premier League and sitting on the FA board, because the FA is responsible for the national team and you have responsibility both to the Premier League and to the national game. Certainly, your answer betrays the complexity and the torment that you might find within yourself, but I am not sure whether the England national team is uppermost in your thoughts.

Sir Dave Richards: I can tell you that when I go on any tournaments or help in organising any tournaments, my uppermost thought is how we can do it best. Not the team, but how we can deliver the facilities, the training time, the transport, the hotel, the food, because that was part of my job. My job was not to decide how the team trained, when it trained, what the tactics were. That is the manager's job, but it is our job to give him the time to facilitate all those things. People talk about conflict. I don't really understand how you get to that because it is an association of people. People say, "Well, you were Chairman of Team England during the World Cup." It is just a name of a person who had the responsibility if anything went wrong. Whether a player got injured, whether it was the medical staff, whether it was part of the staff that had to be flown home, they were responsibilities that I had, but not the team and the way it played and the way it trained. That was the manager's job.

Q594 Damian Collins: But if the England team manager said to you, "I think the players are too tired. We need to reduce congestion in the game," and the FA board agreed, there was consensus among FA people that was the right thing to do and we should look at that, would your first reaction be, "Let us go away and see how the Premier League can make a contribution to that along with other competitions."?

Sir Dave Richards: No, it wouldn't.

Q595 Damian Collins: Do you not think that does slightly conflict you? You said no, it wouldn't; that is not how you would respond. Do you not think that gives you a slight conflict being Chairman of the Premier League and being on the FA?

Sir Dave Richards: If you just give me some time to answer you, I will try and answer you the best way I can. If you say that fixture congestion is too much, we have to go right back and start looking at how fixtures are made at UEFA, FIFA, the FA and the Premier League. The Premier League has tried over many years to make the calendar fit to suit everybody's purpose. It has tried extremely hard. The manager has never, in all my years—I have been on the FA since 1994—said to me, "The players are too tired, they have over-trained," because it is his job to decide that. The board and everyone else do not have any input into that. It is purely what the manager decides.

Richard Scudamore: In a sense, Mr Collins, the issue has moved on because I think you would admit, Dave, you were the reluctant sole representative with that title during South Africa, because Lord Triesman had left the organisation, and the minute David Bernstein arrived you handed over that title or that pass had gone. Some may call it a hospital pass, who knows? But it has been handed on to David Bernstein and that is right in some ways. In some ways we are talking about an issue that has passed.

Q596 Damian Collins: I am not doubting these are very difficult issues or saying that there are easy solutions to them. A lot of our inquiries have looked at the FA board and the way it is made up, the people who are on it, the way they make their decisions. Is there an inherent conflict of interest in your role, Sir Dave, and would it be better, as has been recommended to us by Ian Watmore, that the FA has a wholly independent board and, therefore, these conflicts don't arise?

Sir Dave Richards: We would like to discuss that further, but can I say to you the FA needs the whole of the balance from the Premier League, the Football League, the national game, the Conference. It needs that because each person brings something a bit special to it, where we have accountants, club chairmen, club chief executives, professional game chairmen, professional game representatives and secretaries from the national game, because it creates that balance inside the FA of what is really needed. What we are not saying is that it doesn't need some independence.

Q597 Damian Collins: But you would not go so far as having a wholly independent board or a majority independent board?

Sir Dave Richards: I think it would be a retrograde step if you did that.

Q598 Damian Collins: One final question: given you think there should be a role for independents on the FA board, should there be a role for independent directors on your board, like most successful companies have independent directors?

Sir Dave Richards: We are governed by shareholders.

Richard Scudamore: That is the point. You cannot conflate our board with anything like a business board. Effectively, if you go back to Cadbury or you go to the Combined Code, it quite clearly says that independents are there to represent the shareholders' interests. All our shareholders get to make every material decision that goes on. All our 20 shareholders meet at least five times a year, usually six, and we have ad hoc meetings if an issue arises. I think the maximum we have had is 12 meetings in a year during certain times when the European Commission issue was around. Basically, our constitution, deliberately written by Rick Parry and our forefathers, enabled the shareholders to vote on every material issue. Anything that exposes the shareholders to either a £200,000 liability or an income, a contract that generates £200,000 or we spend £200,000—we had one only last week—all the shareholders have to approve that. Therefore, effectively, our shareholder meetings are the board meetings. Once a year we agree on a rulebook and then, yes, we have summary ability to apply that rulebook during the year where we use extensive external legal advice, so you can't conflate it.

When I came back to the Football Association, though, the reality is that since the mid-19th century, as I said before, these associations have been formed and it is an association of interests. On the idea that you would have a wholly independent board, independent of whom? Representing whom? The whole point is with the FA, it might make it more difficult, but the essence of the FA has to be a representative body where representatives of the game come together in an association to try and do what is in the best interests of the whole game. I would defend the FA to the ends of the earth, really, to make sure that it was allowed to associate as an association of interests.

Q599 Damian Collins: You both are in favour of having independent representation on the FA board, but you wouldn't countenance it for the Premier League, even if that might bring an outside view, some other expertise?

Richard Scudamore: Just so as we are clear, a personal view: I don't think independents necessarily are necessary on the FA board because it is an association of interests. However, if that is what Mr Bernstein, as the FA Chairman, wishes to promote, I think we would support that, as we did with Burns. I did say we didn't like everything in Burns, but Burns basically said, "We think you should have independents here." It said an awful lot of other things as well, which I said to you. In the round, we think Burns, therefore, was worth adopting.

Q600 Paul Farrelly: Mr Scudamore, have you not just said of the FA, "We are an association of interests."? In 2008, responding to a speech given by the now departed Lord Triesman, you said, "We are like competitors. We compete for sponsorship and for television rights and we are in the same space." How do representatives of the Premier League manage those competitive interests while at the same time, as you say, recognising the FA as the authority and the governing body of the game?

Richard Scudamore: Of course, in one sense I can't deny we do compete, but there is a difference between competing and it necessarily being conflicting. Of course, when it comes to our broadcasting rights, for example, we don't compete directly in the sense of we are out to market together and we are out to market at the same time and we are taking each other's revenues. In fact, we Chinese wall that entire discussion. We are regulated—heavily regulated—in that sense.

But, yes, there is an element on the commercial side where there are properties that we each have, but it is not a zero-sum game here. When you go back to the way the game has grown, the game has grown immeasurably in interest. If you look at all the data since the Premier League was formed, 1992-93 to today, our revenues have grown; I can't deny that. Our television viewing has grown; can't deny that. But so have attendances grown. Attendances have grown at the Football League; attendances have grown certainly at England matches; television rights have grown at the Football League; television rights have grown at the FA. The whole economic interest in English football has all grown. It is not a zero-sum game. The game has generated huge amounts of interest and we have not just become of national interest. As you know, we have become of global interest.

You raise an interesting point, though, as to where the properties of the FA sit in terms of the governance structure because, in effect, like us they are competition owners, just like UEFA are competition owners. That is a very separate issue from the governance in terms of disciplinary matters and regulatory matters, and it is also a very different issue in terms of running the England team. It is a different issue in terms of running Wembley. Of course, that has always been the situation where these interests come together and it is perfectly possible. We, even within our Premier League environment, have to manage and reconcile individual clubs' commercial aspirations with our own collective Premier League aspirations. The clubs to date, over the 20 years since the Premier League has been in existence, have had this interesting dynamic where they have stayed very solid with the collective on television rights; on other commercial matters, they are out there looking for the same sponsors and competing. It doesn't mean to say you can't reconcile that, you can't manage that. There is space for all of us and I don't see it is an inherent difficulty in running the organisation.

Q601 Paul Farrelly: Is it unequivocally a good thing that the likes of Newcastle Town from Newcastle­under­Lyme get the opportunity through the FA Cup to play the Manchester Uniteds?

Richard Scudamore: Absolutely is.

Q602 Paul Farrelly: Is that unequivocally good for the game?

Richard Scudamore: Absolutely unequivocally good, yes.

Q603 Paul Farrelly: Sir Dave, I put a passage in a book to Lord Triesman, so it is only fair I put the same passage to you. This goes back to the time of Adam Crozier, before his resignation. The author of the book, David Conn—it is The Beautiful Game?—said of the events at that time, when you were questioning the potential participation of the clubs and the future of the FA Cup, "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 that clubs would withdraw if he didn't get his way on an issue, usually over money. The sources complained that they would not debate with Richards in any detail. He would fly off, be dismissive or issue a threat. I put this question, whether he threatened that the premiership clubs would withdraw from the FA Cup, to Richards through the Premier League press office because he never talks publicly. He was walking past and I asked him and he said, 'Bollocks'." That was the passage I put to Lord Triesman in the context of the picture he was painting of the behaviour of the professional game. Could I give you a fair opportunity to respond to that in more than one word?

Sir Dave Richards: Yes, certainly.

Richard Scudamore: Be careful which word you use.

Sir Dave Richards: At the FA Cup Committee, we had lots and lots of debates about what was the best way forward. I had a particular friend on the FA Cup Committee in Barry Taylor and we had this rivalry about what is best for English football in the FA Cup. One day we were discussing replays and he said, "No, no"—he has always been a great advocate of having to keep replays, which sometimes we look at and we think, "That's odd," but that is the way it is and we accept that. It got on to, should clubs be seeded? Should clubs be seeded so that they could pick out of the box that club against that club? I said, "If you do that I will take it back to the Premier League and I know some of them will not do that and they won't play." That is the kind of statement that was made. When Mr Conn rang and put that statement to our press officer, Phil French, I did use those words. I did say to him it was that word. Yes, sir, I did.

Q604 Paul Farrelly: That is a lovely response and a lovely anecdote, but it doesn't respond to the central question, which is the portrait that is painted of the behaviour of the professional league representatives on the FA board. Let me give you another instance. If you recognise the FA as the authority in the governing body, why did you not allow the Football Association, either in the same terms as Lord Triesman wanted or in different amended terms, to make any submission to Andy Burnham's questions, rather than simply referring to the submissions made by the Premier League and the Football League?

Sir Dave Richards: Sir, may I give you the actual story? Andy Burnham came out to the FA and asked for a submission on the governance of the game. A dialogue was started with the Premier League, the Football League and the FA. Originally, it was going to be one submission from all parties, but after a lengthy discussion between the three executives they decided the best way was to co-ordinate a reply from all three parties, and they did that. They worked on it for weeks and weeks. There was consultation between the three leagues and between the board, saying, "Do we believe that is right? No, we should take it back and look at it because that doesn't fit with that." Eventually, the submissions were made to the DCMS.

Lord Triesman came to a board meeting after the submissions were made and agreed with the executives of the three different bodies, came to the board with some papers and said, "This is the FA's response to the DCMS." It had already gone in. Nobody had seen those papers. There had been no consultation. The deadline had passed, and not just me, but everybody on the board, was astonished at the way that came about. Lord Triesman started to discuss the changes and the board said, "We have submitted the information that we want. We won't allow that to go forward." Now, that was not just me as one independent person; it was 10 people. It is a matter of record in the minutes, sir.

Richard Scudamore: Can I add some facts to that, because I think it is important? You certainly, in your jobs as Members of Parliament, will recognise the need for proper consultation. When Andy Burnham's letter arrived in the autumn of that year, we went on an extensive consultation. We held club meetings—in small groups, wasn't it? It is hard work when you have to meet every club on every topic, and we met them at every club. We had full club consultation. It was on our shareholders' agenda for two of our meetings. We produced four drafts of our submission, which the clubs fully approved the final draft. We also consulted with our FA executive colleagues and our Football League colleagues. Within the time frame agreed, by 31 March, in went our submissions. It was May before Lord Triesman, without any consultation, wrote his own paper and sprung it on us—remember, we discussed our paper with the FA, because the FA attends our shareholders' meetings and everything else. All of a sudden, Lord Triesman's paper was late and it had no consultation process. As I say, it is a matter of history and conjecture as to whether the individual ideas within that paper had merit; in fact, most of them—I think probably 75% to 80%—were already covered by way of topic in our papers and have subsequently been acted upon by both ourselves and the FA. But it is just no way to run an association of interests, without consultation.

Q605 Paul Farrelly: I want to ask one final question of Sir Dave. This is a curiosity question, but it is asked by quite a number of people. You are the Chairman of the Premier League, but you are not the chairman of a Premier League club. Has the Premier League ever considered having one of its own as Chairman, possibly on a rotation basis?

Sir Dave Richards: I used to be a chairman of a club. When I first was asked to do this job I was a chairman of a club. The Premier League shareholders—Mr Parry will be able to fill you in—decided that they had to have someone independent of a club. I was elected and I left the club.

Richard Scudamore: Our rulebook, our constitution and our articles are very clear that the board is wholly independent of any club interest. From the time the season starts right through to the time the season ends we have to apply that rulebook in a very independent way.

Q606 Paul Farrelly: But that is not good enough for the FA to be independent?

Richard Scudamore: No, we are independent of the shareholders.

Q607 Paul Farrelly: No, but the same model is not good enough for the FA?

Richard Scudamore: Well, it is an association of interests. We are a limited company. They are an association of interests. As I say, we have no pathological objection to independence, but total independence doesn't work.

Q608 Chair: Sir Dave, you have been a member of the FA board for 16 years, I think?

Sir Dave Richards: Yes, sir.

Q609 Chair: It has been suggested that part of the problem is that the FA board is a narrow group of various interests and both the board, and even more so the Council, are hardly representative of either the modern game or modern Britain. Is that something that causes you any concern?

Sir Dave Richards: We have always looked at the representation of the board and every single person is elected. They are elected members of the board. They are elected by councillors, leagues and the Premier League. We have always wondered about inclusion and what it really needs, but we have always followed the Chairman of the FA, who has been the natural leader, and followed his wishes. When Burns came along, we were quite up for all the changes that Lord Burns put in because we thought it became very inclusive and it was good for the game. Unfortunately, it didn't get through in its entirety. It was piecemealed to give the FA what they wanted at that time. So, are we up for inclusion? We are always looking at the way things ought to be brought forward.

Q610 Chair: But you say you always followed the Chairman of the FA, who takes the lead, and yet one of the people who made this point most strongly was Lord Triesman, who was Chairman of the FA. He suggested that he was blocked, principally by you.

Sir Dave Richards: You know, the statement that Lord Triesman made really saddened me and made me feel a little bit dejected, because on the statement that he made that I blocked him, first, I have never blocked anyone. It is a free and democratic board at the FA and to think that the Premier League Chairman could block nine others is ridiculous.

Secondly, Lord Triesman suggested that I bullied people. Well, that really hurt me because for 12 years I have been one of the chairmen at the NSPCC, which raised quarter of a billion pounds for children—for bullied and abused children. Lord David knew that and he knew how passionate I was about protecting all these different styles of things. It makes me wonder why he said such a thing because I thought I was reasonably close to Lord T because we travelled quite extensively together. I helped him very much. When he wanted to be introduced to people and wanted to be taken into different places, I went with him. I was always very supportive to him. Why would he ever think that I blocked him? Sir, there may have been differences of opinion with me and Lord David, but I never brought them into the boardroom.

Richard Scudamore: Chairman, can I just add something? I don't know Lord Triesman as familiarly as Sir Dave does—I certainly wouldn't call him Lord T—but the reality is that Lord Triesman, at no point in his tenure, brought Burns back to the table because had he done that we would have absolutely supported that initiative, and I think that is very important.

I would point you back to Roger Burden's evidence last week. He very eloquently, I think, on behalf of the FA board, talked about his view of how the FA board functioned, his view that he was not bullied or they were not bullied. Ian Watmore also clearly wouldn't recognise that when he was asked. Roger Burden quite articulately talked about how the FA board, in his view, worked. We, the Premier League, now have three representatives on the board and there is no way we have a majority position on that board, as the professional game does not. I think you need to listen to the evidence from others as well, and I know you will do that.

Q611 Chair: Can I just be clear? Sir Dave, you are saying on Lord Triesman's efforts to broaden representation, both on the board and on the FA Council, you were absolutely four square behind him in that?

Sir Dave Richards: Lord Triesman only ever once spoke about it and it was in the original document. He had ample opportunity to bring Lord Burns's proposal back as Chairman and start to work in the FA board to get where he wanted to be. He had ample opportunity, but he never did that.

Q612 Chair: Were you disappointed? Were you encouraging him to do so?

Sir Dave Richards: Look, I never encouraged him; I never discouraged him. The only thing that I did discourage him from doing was becoming Executive Chairman of the FA, which probably was one of the main agreements we couldn't reach. He wanted to be Executive Chairman of the FA and that was a very difficult scenario. We did disagree and we did consult with the other board members about it. But regarding progress at the FA, no, sir, he cannot say that.

Richard Scudamore: I think Sir Dave raises an interesting point that most of this discussion we have been having around Lord Triesman, his submissions and certainly around the Andy Burnham letter was done at a time when, effectively, there was not a Chief Executive of the FA. They had announced Brian Barwick's departure in August of that year, the evening of a friendly against Czechoslovakia and he gave notice that he was leaving. Not wishing to personalise it to Brian, there was an element of lame-duck nature of his tenure at that time, and again I think Lord Triesman did attempt to become Executive Chairman on a number of occasions, but the board resisted that particular move.

Q613 Jim Sheridan: Sir Dave, I can almost feel a lump in my throat when you talk about the sincerity and passion you feel about being hurt by Lord Triesman. Could I just clarify that the only reason that his submission was rejected was because it was time barred?

Sir Dave Richards: No, sir, it wasn't a question of being time barred; it was a question that Lord Triesman brought a document to the board that had never even—

Q614 Jim Sheridan: Too late?

Sir Dave Richards: No, sir, it wasn't a question; it had never been discussed. It had never been discussed at all.

Richard Scudamore: The facts on that particular document are that the entire board—the national game as much as the professional game—said that that was an inappropriate document for the FA to submit. What was submitted was a smaller, shorter letter that did get the approval of the entire FA board, which is good governance.

Q615 Jim Sheridan: But the evidence that Lord Triesman gave us is the document that he brought forward there wasn't a page turned; it wasn't even looked at. I think you said, Richard, that it was time barred. It was too late; the date was passed. Is that the case?

Sir Dave Richards: The submission had been made. The submissions had been made to Government and all agreed.

Q616 Jim Sheridan: No, I am talking about Lord Triesman's submission.

Richard Scudamore: Let us get the facts absolutely right. The Football League's and the Premier League's submission had been made within the time that Andy Burnham had set. We had promised him 31 March. I think it was May before Lord Triesman's paper was produced, almost with literally no warning. It was professional game board one day, main board the next. The main board of the FA at that time said, "There is no consultation on this paper. We don't wish you to submit this paper." So, a letter was written, as I understand it, to Andy Burnham, which was for Andy Burnham either to accept or not accept into his evidence. That was up to him. He can write a letter to the Secretary of State if he chooses, but on this issue of time barring, I was making the point that it was late in terms of the deadline we were all set. The Football League and the Premier League were working with the FA—with the Executive—on these submissions, and it was a surprise to everyone when this suddenly arrived at the very last minute.

Q617 Jim Sheridan: What I am trying to establish is, did someone tell Lord Triesman that there was a cut-off date at the end of March?

Richard Scudamore: Well, he would have known; he had exactly the same letter from Andy Burnham that we had asking to make submissions. His public policy advisers would have known. They would all have known. We all knew we were working to a 31 March deadline, which is why we spent October and November consulting all the clubs, convening regional club meetings in small groups and going back to two board meetings, because we had to get this done by 31 March, which is the way we, the Premier League, operate. I can only give you by contrast the fact that the genesis of the Lord Triesman paper was a very different genesis.

Q618 Jim Sheridan: Therefore, Lord Triesman must have ignored this letter and carried on regardless?

Richard Scudamore: I think you would have to ask him that.

Q619 Dr Coffey: Could you just confirm how long you had sight of the proposals of Lord Triesman? I have heard from other sources it was about 48 hours before you were asked to approve this. Is that true?

Richard Scudamore: I think it was a professional game board meeting where we suddenly saw it. I think it was a Wednesday before a Thursday. It was somewhere between 24 and 48, depending on where it was, yes. But remember, I have no role in this other than I attend the professional game board, where I think we saw it first, and it was the next day that the main FA board saw it for the first time.

Q620 Dr Coffey: So a very limited amount of time for such a substantial paper?

Richard Scudamore: That is it, and there was no consultation.

Q621 Dr Coffey: I want to revisit something I brought up last week with the FA about what I thought was a terrible example of governance, which was the renegotiation of the contract of the England manager. I think you were Chairman of Club England at the time, Sir Dave?

Sir Dave Richards: No.

Q622 Dr Coffey: Okay, but you were involved on the board. Could you shed a bit more light on your role or on what happened?

Sir Dave Richards: Yes, I certainly can. Fabio Capello's contract had a clause in it and Mr Capello spoke to Lord Triesman, because Lord Triesman was the Chairman of England at the time.

Richard Scudamore: Team England.

Sir Dave Richards: Yes, Team England. It was on 22 April that I was summoned to a meeting with Fabio Capello's son; Adrian Bevington, the company lawyer; Lord Triesman and me to talk about the Capello Index, because Mr Capello had brought out an index on performance of players, which was against his contract and he could not do it. He had to seek permission of the FA and he had been talking to the Chairman prior to that. He requested a meeting and we went to that meeting. During that meeting, Mr Capello's son brought up the question of the clause being taken out of his contract. He said Lord Triesman agreed that the mutual break clause could be deleted in line with his previous assurance to Fabio Capello and that he wanted him to stay until 2012. That was the very first time we had heard of that, but it was pre-agreed with the Chairman and Mr Capello that that would happen. Unfortunately, I had to pick the pieces up with that, and the press being what they are, I took the brunt of it.

Q623 Dr Coffey: I think at the time you may have taken a little bit of the credit for it in securing Fabio.

Sir Dave Richards: No, I didn't take any—

Dr Coffey: But I recognise the brunt of it. Do you think it would have been appropriate for you, Sir Dave, to have said, "We can't make this decision here and now, it needs to go to the whole board."?

Sir Dave Richards: I wouldn't make decisions like that. You can ask all my colleagues on the board. I have always been one to consult: the Premier League board, the Football Foundation board, the European Leagues board, the International. I am a consultative person. I will not make a decision just like that which affects the kind of issues that these involve.

Q624 Ms Bagshawe: Can we talk a little bit about Portsmouth? What more could the Premier League have done to have prevented Portsmouth from going into administration?

Richard Scudamore: On the genesis of the Premier League, if you go back, the rulebook has evolved. The rulebook was 142 rules when it was first crafted; it is now 814 rules. Given the revenues and given the way clubs have been run, and basically the way English football has been since 1888 in many ways, there were things in the rulebook, certainly, that we never envisaged we ought to see at Premier League level. With the income that we were generating centrally, with the way the clubs generally have been run and the professionalisation of the clubs, certainly over 20 years and the time I have been involved, it was hard to see, I have to say, how a club at the highest level could get itself into those particular difficulties.

We slightly foresaw it maybe some five or six years ago when we introduced the sporting sanction rules that basically said it is unacceptable for a football club to go into administration, because clearly there is a not perfect, but an almost perfect, correlation between the amount you spend and your performance. That has been the same since time began. We absolutely put those rules in, as did the Football League, in saying, if you overstretch yourself, if you spend more money than you can afford, if you get yourself into financial difficulty, we are going to impose a sporting sanction because it is not right with your playing peers that you should enjoy the same status as you did before. Ours is a nine-point sanction. So we made that step.

We had also, through the licensing systems and various other systems, improved our financial regulatory position quite considerably, but I have to admit to this group that we didn't foresee a club with that amount of revenue being able to get itself into the sort of difficulties that Portsmouth got into. In fact, we were a train in motion. If you read our submission to Andy Burnham, if you read what we had already embarked upon, we brought forward to the summer meeting of 2009 considerable changes in our financial regulations, the irony being probably that one of the only clubs to vote against some of them were Portsmouth. They were members at the time.

We then went on to strengthen those rules further in September and then we went on to strengthen them still further post the Portsmouth situation. We strengthened them further again at the summer meeting of 2010. Yes, I am admitting we could have done more, but on good governance, you can't have a rulebook that entirely envisages every situation, just like you don't have laws in this country that envisage every unknown situation. Should we have foreseen it? Perhaps yes, but having seen what happened at Portsmouth we acted very quickly, very swiftly, and we think the rulebook now is very robust. Certainly, the experience of this summer with club takeovers and acquisitions, we have been put in a much, much better position in being able to regulate our way through that.

Q625 Ms Bagshawe: On learning the lessons, Portsmouth obviously went through many ownership changes before it went into administration. There has been some speculation in the press, Sir Dave, that you approved successive ownership changes. Do you think that the fit and proper persons test was properly applied? In the case of Mr Ali Al-Faraj there has been some suggestion in the press that not only was he not a fit and proper person, but he wasn't even a person at all and didn't in fact exist. Do you recognise these criticisms?

Richard Scudamore: I recognise that he has been referred to as "Mr Al-Mirage" on more than one occasion. The reality is that we went through all the tests that one would need to go through to get a passport in this country, and we had his passport. We had documentation; we had written documentation. Yes, we didn't meet him face to face, which is why our rules have changed. Now we insist on an absolute meeting. We insist on meeting face to face. The rules have changed. But yes, we did not meet that particular person and that is why that rule has changed. We believe he did exist, though, but I can't say I have seen him.

Sir Dave Richards: Can I make it quite plain I never approved anyone? We have a system within the league. It is very tight. It goes through lawyers and different systems so no one individual could approve it. There was one occasion I was in Rome for a Champions League game and a gentleman asked to see me. He was an Arab gentleman and he asked to see me to explain the fit and proper persons test. He was the gentleman that was trying to buy it. I went to see him. I was there no longer than 20 minutes. I explained to him it was all about documentation and coming to the Premier League and presenting who he was and what his funds were and where the funds were from, and I left. I had never met the gentleman before and I have never met him since.

Richard Scudamore: It is an important topic, a serious topic, and, Chairman, I sent you a letter last week that detailed quite a lot of what happens in our now strengthened owners and directors tests. I think it would also be useful if I sent you separately a supplementary piece of information, which is when anybody wants to look at acquiring a Premier League club or an interest in a Premier League club there is now a very detailed checklist and set of checks that we make and evidence that is required. I think I will send you this as supplementary to the letter I sent you last week, because we don't underestimate how important this topic is.

  Chair: That would be helpful.

Q626 Ms Bagshawe: I take it on board, Mr Scudamore, that you have just said that you recognise there were some failures and you have strengthened your governance on that issue because of those failures. Can I put it to you that you have just said that the Premier League was taken by surprise that a club at Portsmouth's level could get itself into such trouble? Given that the club was failing and being taken over again and again, I take the point that the fit and proper persons test has now been strengthened, but at the time, as these successive changes were going through, and with the Premier League clearly having been caught on the hop, did it not occur to you that, even under the old rules, you should be applying the then existing fit and proper persons tests more rigorously than they seem to have been applied at that time?

Richard Scudamore: Except for the fact that the fit and proper persons tests were about establishing, effectively, criminality and unsuitability because of that criminality. Therefore, we were unable to establish that any criminal act or any breaches of the absolute rule had been undertaken. Remember, it was the same time we were introducing the financial rules, which are about sustainability, and they are different things, but they are wrapped up in the same thing.

Q627 Jim Sheridan: Before I move on to the next question, can I put on record my surprise that in relation to the Andy Burnham submission, as we are now calling it, in the run­up to 31 March there wasn't a submission that came in from the Chairman of the FA yet no one bothered to ask the question why is there not a submission from the Chairman of the FA. However, I think you are quite right—that is a question for Lord T.

  You have a number of jobs in football. I am just reading here that you are Chairman of the Premier League. You are also on the board of the FA, you are Chairman of the European Professional League and you represent English football on UEFA's Strategy Council. That is a very long list of jobs and it would suggest that you are a very influential and powerful person. Do you think that you having all these posts and also the fact that you are paid by the Premier League means that you can ensure that there is no conflict of interest when you apply your director and ownership tests for prospective new owners?

Sir Dave Richards: Can I say to you I have been on the board of the FA for 16 years. In 16 years we have had, to my knowledge, only four votes. One of those votes was concerning the Premier League. We stood up, the three Premier League representatives, and said, "We have a conflict of interest. We can't take part in this. We will leave the room." We were told not to leave the room, but we would abstain from the vote. We didn't influence it; we didn't have anything.

The positions that I hold in UEFA and European Leagues are elected positions. I didn't go looking for them. We are a member of the European Leagues and one might say that the Premier League is a successful vehicle and that people want to be associated with it and they want to know how it works. When they elected me Chairman, it was, "Please work with us to show us how to become as successful as the Premier League." If you look at the progress the European Leagues have made, it has been very substantial, because we have 30 leagues, 980 clubs, some of them very tiny, that are all part of our system. We work with UEFA on solidarity payments bringing more solidarity money into the smaller leagues. That is the way it works. It is not a question of whether I am powerful or not. It is the Premier League. It is the Premier League and its brand that attracts people to want to be associated with it.

Richard Scudamore: Mr Sheridan, the reality is Sir Dave is elected by our clubs to represent us at the FA. He is elected by the European Leagues to be Chairman of that, and it is because he is Chairman of the Premier League that they respect our league, they respect what this league has achieved over the last 20 years. Many of the leagues in Europe wish to emulate and copy elements of what we do and I think, as I say, it is the fact of the position that Sir Dave holds that he gets those elected positions. You will recognise the power of the electorate in returning people to office.

Sir Dave Richards: Can I say I was elected to the Strategy Council of UEFA? Mr Platini I have worked with for a number of years. When you ask him how Sir Dave is, he always says, "Sir Dave has great input and he is good at what he does." He quoted that in the paper and said how well he got on with me.

Q628 Jim Sheridan: As politicians, we know how elections work and we know how you get elected to powerful positions. Indeed, some of our previous witnesses suggested that most of these discussions took place in the corridors, not at the main meetings.

Sir Dave Richards: No, sir, they didn't because the European one—

Q629 Jim Sheridan: You remind me of the election of the Speaker where he is dragged out from the crowd.

Richard Scudamore: By the scruff of the neck.

  Jim Sheridan: "I don't want to do it but—"

Sir Dave Richards: No, I would willingly do what the European Leagues ask. I have a term of three years, and that is the term. On the Strategy Council, I have a term of one year and that is it.

Q630 Jim Sheridan: You have mentioned other European leagues. We recently visited Germany and saw how the licence system works in Germany, quite proficient in terms of looking at clubs' finances in particular. Do you see a role for similar in England?

Sir Dave Richards: That is Mr Scudamore's because it is an executive matter.

Richard Scudamore: Of course, the reality is we have a licensing system. We have a very much more robust licensing system now than we did two or three years ago. Our rulebook is effectively the licensing system for clubs within our league. I go back to those 814 rules. That is a licence; it is a contract between the member clubs as to how they are going to conduct themselves with each other. Unless you meet those rules, effectively you are not licensed.

Then, of course, we have UEFA licensing, which has been introduced and we have been instrumental in the introduction of UEFA licensing, working with our colleagues. It is an extremely good example of how you work with the Football Association. On the brunt of the work, you heard from the Football Association and Alex Horne last week talked about how the executives of the Premier League and the FA work together on UEFA licensing. For example, this year, 19 out of our 20 clubs have applied for a UEFA licence. Therefore, you have a licensing system. You have the law of the land, which you are collectively responsible for delivering to us. You have our own rulebook. You have the Football Association's rulebook, which then requires our rulebook to be sanctioned, and you have a UEFA licensing system for the majority of our clubs. Some of our financial rules are tougher than UEFA's. In effect, you have a licensing system in this country and we recognise that concept.

Q631 Jim Sheridan: Both of you have expressed a desire to work with the new Chairman of the FA. If he comes forward and wants to change the rulebook that you refer to, will you co-operate with him, particularly on the question of licensing, or is the rulebook there for ever?

Richard Scudamore: We will co-operate in any discussion about improving English football. I can't tell you here and now that I will agree with everything that he—

Q632 Jim Sheridan: So you are not ruling out the possibility of a licence system?

Richard Scudamore: We would be foolish—well, we have a licensing system and the licensing system works very well right now. In fact, nobody would argue that the UEFA licensing system, as we have incorporated nearly all of it into our own rulebook to cover every club, isn't actually applied. In fact, the only such element of that UEFA licensing system, which is not even in place yet, is the break-even concept. It is the only bit that isn't covered also in our rulebook. Effectively, we have a licensing system.

Q633 Jim Sheridan: The answer I am trying to get is the Chairman, in his evidence, was open minded about the licensing system similar to the one in Germany, but you seem to have a closed mind about it.

Richard Scudamore: Mr Chairman, we are open minded about anything that improves the governance of our clubs and English football. We will discuss anything.

Q634 Jim Sheridan: Including licensing?

Richard Scudamore: But we have a licensing system. Improving that licensing—

Q635 Jim Sheridan: No, I am talking about a licensing system—

Richard Scudamore: Improving that licensing system, of course we will listen.

Q636 Paul Farrelly: Just very quickly regarding the new rules, transparency and honesty are key to their effectiveness. In June 2009 in your evidence, you cite the rule that you brought in that said that, "Clubs must disclose not only to the Premier League but also publicly who owns interests of 10% or more in the club." Does that mean beneficial interests?

Richard Scudamore: Yes. It does, yes.

Q637 Paul Farrelly: It has to mean beneficial interests?

Richard Scudamore: Yes, it does.

Sir Dave Richards: Yes.

Q638 Paul Farrelly: When does that bite? Let us take Leeds. Leeds may get into the top two in the Championship or they may very well be involved in the play-offs. At what point do you tell Leeds, "If you wish to be a member of the Premier League you must comply with this rule."?

Richard Scudamore: 9 or 10 June, whenever our AGM bites.

Q639 Paul Farrelly: 9 or 10 June?

Richard Scudamore: Yes. Our AGM is yet to be fixed. It will be on 9 June or 10 June. From that point they will be given their share certificate in the Premier League. At that point the Premier League rulebook bites. From my understanding of the way our rules are written, we absolutely will require disclosure from Leeds United that is over and beyond that which the Football League requires.

Q640 Paul Farrelly: Why didn't your rules bite beforehand?

Richard Scudamore: Because they are not our member club.

Q641 Paul Farrelly: No, but they are in a position where they want to be a candidate member.

Richard Scudamore: No, because they are not bound by our rules until the annual general meeting when they become a shareholder.

Q642 Paul Farrelly: So it is quite possible that if they were one of the top three and, say, came to the play-offs, if they didn't abide by that rule for it to be publicly seen, it might be the loser of the play-off final that might become a member of the Premier League?

Richard Scudamore: I think you are, as a lot of people do, leaping to the end of our disciplinary process. What would happen is obviously if we deemed them to be in breach of rule, a commission would have to be formed and that commission would independently decide on what the appropriate sanction would be to Leeds United. You are already rather leaping to the expulsion sanction, which again I would caution you against doing. Certainly, in our view, as drafted, our rules would require better disclosure of Leeds United's ownership situation than is currently the case.

Q643 Mr Sanders: Can you see any benefits in the governing body of the English game assuming responsibility, or at least a stronger supervisory role, for the financial regulation of Premier League clubs and also their ownership?

Richard Scudamore: I think you have to judge us by our journey and the evidence before you. We have moved our rulebook appropriately. We have moved our rulebook proportionately and at a speed that can be done only when you are able to gain consensus from what is sometimes quite a difficult group to gain consensus from. That comes from an awful lot of hard work, an awful lot of consultation.

I think we will live by our track record of having evolved the rulebook from those 142 rules to 814. The rulebook, can it be improved? Of course. We are always improving it. We are sitting down now on the next cycle of rule improvements to discuss what can be done to improve it. But as I say, we are working with the Football Association, and I think David Bernstein last week was very clear when he said the best point of regulation is down at the league level where the members are. Whether we like it or not, the members of the Premier League will take being moved along the regulatory curve more readily from their own executive and their own board than they will necessarily from people one stage removed. Therefore, if self-regulation is the right way to go, it is much more powerful when our 14 clubs have put their hands up round the table to say yes to regulatory change.

I would ask you to look at the evidence of the evolution of our rulebook. We have a track record of moving the rulebook on and I think the best people to do that are us. Are we resistant to other people coming up with ideas, other people coming up with suggestions, whether it be media pressure or public pressure? Of course, as with you, opinions are formed from many different sources. We have to sit here and try and act as custodians of this game. We have a conservative constitution quite deliberately. You can't have a small minority interest group come along and set us off course, but when you get that 14-club majority it is a very strong majority and it is a very strong method of governance and I would commend it to you. As I say, we at operating level have a very good relationship with the Football Association. We are always prepared to discuss things and I think the way it works now is good. The idea that somehow we need somebody external to come along and suddenly impose things upon us is not necessarily the way forward to make progress.

Q644 Mr Sanders: But there is a problem here, isn't there? In answer to Paul Farrelly's question in relation to Leeds, if you have at the moment a rulebook that says you have to have a proper test and obviously full disclosure of who owns a club, you ought to be able to say at this juncture that that club would not be accepted in the Premier League unless it was prepared to disclose.

Richard Scudamore: Let's be very candid. There is an issue here because our rules are the same as the Football League rules on this topic. The Football League brought their rules into alignment with ours last summer, but this is the first time the rules have been introduced. As I say, there is an issue in one sense between the Premier League rules and the Football League rules. I can only give you my honest evidence that says the Football League may have one view of how to interpret that rule and what that rule means. We have, I think, a more stern or harsh view of what that rule means. Let's go back to the essence of the rule. The essence of the rule was our clubs absolutely agreed unanimously that we should tell the public who owns a club. That is the essence of the rule and, therefore, anything that falls short of that we think is inadequate. I think my point, Mr Sanders, is in all that we had to get done last summer the Football League took a view about Leeds United that it is entitled to take because it is their rulebook they are applying. The fact that we might have taken a different view is an issue that needs to be resolved if Leeds get in.

Q645 Mr Sanders: Presumably this must be a real warning to Crawley Town that they should not be allowed into the Football League because their ownership has not been declared.

Richard Scudamore: Again, I ask that you address those issues to the Football League.

Q646 Mr Sanders: Yes, indeed, but to be consistent, that would have to apply.

Richard Scudamore: I can't disagree.

Q647 Mr Sanders: I think the problem here is that there is a bit of inconsistency in not being able to state your rulebook in relation to Leeds at this point.

Richard Scudamore: Except that the people in both leagues—I commend these people to you, both Andy Williamson at the Football League, who has been there almost since time began, and Mike Foster, my General Secretary, who has been there since the very start and did 17 years at the Football League before that—are the people who have more knowledge, and more intimate knowledge, of the rules and the way these rules apply. It is about applying these rules at the point of most knowledge. I think it has worked pretty well up until now.

Q648 Mr Sanders: I think the public view is they want to see consistency, and in sport fair play is everything and, therefore, if it is seen as one rule for one club, it hurts the whole game.

  Richard Scudamore: I can't disagree with you, and what is also interesting is last summer we had some discussions with the Football League making exactly this point. Many of those clubs are ex-Premier League clubs. They are of a size, nature and infrastructure that they look like Premier League clubs; it is just their league status that says they are not. Therefore, we said, "Wouldn't it be a good idea if there was a rule alignment exercise?", which is when all these rules—the financial rules, the disclosure rules and ownership rules—are all aligned. Leagues One and Two, to their credit, said, "Well, hold on a minute. We don't want to be left out of this, because why should we, even though in infrastructure we might be smaller. We aspire to be Championship clubs one day." The Football League voted in those rules of alignment. Therefore, I think what we are seeing is just a very early ironing out that needs to be done. I agree with the point.

Q649 Paul Farrelly: Very briefly, Mr Scudamore, in your answer to me about Leeds, I don't think anybody listening to this Committee will go away without the question as to whether your rule on disclosure will really bite or whether, at the end of the day, it will be as effective as a chocolate fireguard.

  Richard Scudamore: Well, in fairness, we can only deal with that at the point when Leeds United are promoted. They may not be. We can only deal with that at the time of our annual general meeting, when they come under our jurisdiction. We will have to stand the test of time on that.

Q650 Dr Coffey: Sir Dave, you are elected by the Premier League to be on the FA board, but that doesn't mean you only speak for the Premier League; you speak for all clubs. Is there a reason why you don't make the suggestion that this applies to every single football club in the land?

  Sir Dave Richards: We do speak for every football club. You have a gentleman on after us, and he will be able to tell you how much we have spoken for the Conference and the way we have tried to assist and the way we are trying to assist to bring them into the pyramid in a proper way. I do speak up for those things.

  Richard Scudamore: But I think there's an irony in this line of questioning—

Q651 Dr Coffey: What I am trying to say is we don't have that many opportunities to speak to individual board members. Has this ever been discussed—the fact of the excellent rule that you have in the Premier League of making sure ownership is disclosed? Why have you not perhaps suggested that for every single football club?

  Sir Dave Richards: We have tried. We have been talking to the FA in the last year about aligning all the rules.

  Richard Scudamore: Just so that you are clear, we think we all have the same rule; it is just that the Football League has chosen to apply the rule in the chaos that is the summer between one season ending and one season starting, when all the rules get changed. In the chaos of that, the Football League, for its own reasons, has chosen not to apply the rule as robustly as we think we will be applying it. But the irony of this conversation, where you might be suggesting that the Premier League should be imposing its power in telling other leagues what rules they should have and how they should apply them, is not lost. The reality is the Football League has some different rules that are more appropriate for that level of football, which is absolutely right. In the subsidiarity, the Football League must be in some cases able to do that. On issues such as this, of course there is merit in having common rules, because if it is a rule that is good for football, it should be in rulebooks.

Q652 Damian Collins: I would like to begin another topic, but just to finish on this, it seems to me you may have clarity on what your rules say, but it is not necessarily clear on how they are enforced, and on something like this we have a very specific example in Leeds United, who may be promoted. They may be in a situation that, following your independent commission in the summer, they are told that they can't compete in the Premier League. You have not ruled that out; you urged us not to go down that path, but you said that remains a sanction that you may enforce. That would be enforced maybe days before the start of the Premiership season. Would it not be possible for you to give some sort of ruling based on the situation that Leeds is in at the moment?

  Richard Scudamore: No, because at the end of the day—well, clearly, the headline will be generated from this session about Leeds' inability to play in the Premier League next season. As with all miscreant behaviour, everybody assumes the ultimate sanction will apply and that expulsion and points deduction and all these other things will fly. The reality is that such is the attraction of playing in the Premier League, it is not unknown for people to relent in order to comply with our rules. Therefore, the most likely thing to happen when clubs get promoted—we have rules about press facilities, we have rules about the match, we have rules because of our international nature and the access that is required to our grounds, we have lots of rules that clubs have to comply with—is that we start to talk to clubs, send them formal documentation.

In January, we write to the top 12 teams in the Championship, talking about a whole raft of rules that they have to comply with in an operational sense when they get promoted. I am not going to get dragged into—you will understand why—the "what ifs". We will be doing whatever we can, as we always do in any situation. We would much rather our clubs, our member clubs, stayed within the rules than stepped outside them so they have to go to sanction. We will be putting on whatever pressure. If it arises that Leeds United, on sporting merit, deserve to be in our league, we will be doing all we can to persuade them to stay within the rules.

Q653 Damian Collins: I appreciate that. What I was asking—I think probably colleagues have been asking it—is whether you could say, "This rule is so serious that if breached it could lead to a club being excluded from the league," or whether it is more of an age where it is more likely there will be some sort of sporting or financial sanction applied.

  Richard Scudamore: Again, we are not involved in the sanctioning. I think, without rehearsing this, we would deem it more serious than could be dealt with under our summary powers. We only have summary powers to fine a club up to £25,000. After that, it goes to an independent commission; that independent commission will decide. That independent commission has the range of sanctions available to it, from a small fine up to expulsion. It will be for that commission to decide.

Q654 Damian Collins: A different area of rules: financial fair play. You will be familiar, I am sure, with the fact that this is an issue that we have discussed, and I suppose it goes back to the spirit of what the rules are and how they are enforced. You said UEFA's financial fair play rules are an area of UEFA practice that has not been incorporated into what you referred to as the Premier League's licensing system. David Bernstein said in our previous session, "I would like to see financial fair play potentially extended across the Premier League and into the Football League as well." When we discussed with some of the Premier League chief executives and chairmen a few weeks ago, they also said they would look favourably towards that. What is your view?

  Richard Scudamore: We have had full consultation on this. Prior to the rule changes of last year, we went again round the houses on a full club discussion. We went round again last autumn—September, October, November, individual club discussions. In the main, they are supportive. In fact, we are entirely supportive of this break-even concept, but given that 19 of our clubs have applied for the licence anyway this year, they all have to comply with it if they wish to continue to do that. The only thing the clubs have said is, "Yes, it is a good idea, but before we decide to change our rules for it to apply to everybody, can we not see a little bit how it might work, and is it not sensible just to see if it actually works?" There are some doubts still about what it will achieve, because one of the things it may achieve is that you lock in the natural order where only those that have extremely big revenues, of course, can have extremely big expenses.

  The one thing about our league this season is the joy of seeing everybody who has come up competing. In fact, at no point has a team who has been promoted ended up being in the bottom three this season, so you have a situation where, looking at our league this season, the competitiveness within it is because teams have come up and had a go. One of our issues is, is it so wrong that Mr Al-Fayed or Steve Gibson at Middlesbrough, when he was with us, or Ellis Short at Sunderland or Dave Whelan at Wigan—these people who have benefactor funding—should come along and try and get their club into the next level, into the next echelon, which will bring itself bigger revenues, which will then enable them to stay within the fair play boundaries a bit more? So, we have shaped UEFA financial fair play criteria. The leeway that clubs have with the €45 million losses—the way the rules are now implemented—is, we think, proportionate for those who are in the European competition.

  I think our clubs are not objecting to it. They think it might be a good idea and they agree with break-even, but to launch full scale into applying it everywhere at every level to stop the local businessman made good investing in his local team really affects the essence of English football. If you go back to 1888, that is how we started, what it is about, and I would caution against us suddenly saying, "Yes, that's a great idea. Let's put it in everywhere," because I think the further you go down the pyramid, it gets harder. Having said that, cost control, cost containment, break-even—can't argue, and would never argue, that that is not a good concept.

Q655 Damian Collins: Are you not concerned that you could end up with a league where half the teams in the league are voluntarily complying with it, because they want to compete in UEFA competitions, and the other half aren't?

  Richard Scudamore: But if that means that the other half are able to get themselves into the European qualifying positions by way of improving their sporting position, they will have to comply with it. So there is no team. Look at now: all 19 have applied, even those that aren't anywhere near the qualifying positions. There are a number of clubs who could win a UEFA Cup place on the basis of fair play. There is no club in our league that has ruled itself out from European competition, and I can't imagine a club qualifying for Europe and not wishing to play in European competition, because that is essentially what our league is, and every club is out there striving to deliver for its fan base in European competition.

Q656 Damian Collins: But it sounds like it is going to come in by the back door, so why don't you find a way of implementing it properly?

  Richard Scudamore: It is just a question of what. I keep saying, on balance I think it will come in. It is just, why would you straitjacket some of your clubs? This is not going to bite or affect many of clubs who have huge revenues, such as the Manchester Uniteds of this world. The idea that they can't live within their means—they have £300 million in income, can spend £300 million and still stay within the rules. When you have smaller clubs that are aspirational—coming up from the Championship, for example—why shouldn't those clubs, if they have the owners who have those funds available, be able to invest them to make their club slightly better to get them into that thing? Our nervousness about it—we are not objecting to it. I don't want it to sound like I am. We think it is a good concept, but there is just one, if you like, caution or cautionary note that we are expounding, which is why would you stop those clubs breaking into that group?

Q657 Damian Collins: I fully understand that, but you said you think on balance it probably will come in. Do you think that will because the weight of clubs seeking to comply with it will be such that they will endeavour to?

  Richard Scudamore: Well, effectively, when you have 19 applying for the licence, we will have it. It works the other way, doesn't it? We don't see any need to extend it right the way down through the system, because we want other clubs to be able to break into that group.

  

Q658 Damian Collins: I wanted to touch on something that was in your written submission that relates to some of the financial sanctions you already have in regards to HMRC payments. You said that, "Where the board reasonably believes that a club is behind in its HMRC liabilities, it may impose a transfer embargo and/or require the club to adhere to an agreed budget." Have you ever been in a dialogue with a club that means you might be required to enforce those rules?

  Richard Scudamore: No. This was a post-Portsmouth rule and, quite frankly, we don't see why in the first instance HMRC should treat clubs any more tolerantly than they do small businesses that they expect to pay straightaway. We would expect them to do that in the first instance. We now have a reporting mechanism where, effectively, no clubs are allowed to have any HMRC debt. Since the rule has been in, we have never seen it, no.

  

Q659 Damian Collins: There was a press report that suggested, following a parliamentary question, that about £14 million was owed by Premier League clubs to the taxman. Have you discussed that with any of the clubs?

  Richard Scudamore: No. Well, it is not that at all. That is nearly all Portsmouth from the Portsmouth creditors.

  Damian Collins: So it is not new liability, you say?

  Richard Scudamore: No.

Q660 Damian Collins: In terms of the sanctions that are imposed, the idea struck me of a transfer embargo on clubs—if clubs have HMRC debt they are probably in quite a bad financial state anyway. Do you think those sorts of financial sanction are effective? Should you consider using sporting sanctions against clubs that are clearly in quite serious financial breach?

  Richard Scudamore: Well, there is what the rulebook says, and there is also what our ability as the board to get clubs to behave in a certain way also does. Of course, we have significant funding that we give to the clubs in two main tranches—once in August, once in January—then we have a monthly stabilised cash flow, which again is not insignificant. I am absolutely sure that before we would need to go to the rulebook, we would use our good offices to use some of those funds that are not legally the clubs' until they have fulfilled our rulebook. But we would certainly, I would think, look to be using those funds to make sure HMRC is—

  

Q661 Damian Collins: Do you mean you would give HMRC the money that would otherwise go to the club at each point?

  Richard Scudamore: Well, certainly we would encourage the clubs to allow us to do that, yes, to avoid them getting into that situation.

Q662 Damian Collins: Is that something you have discussed?

  Richard Scudamore: That is exactly how we have applied the rules in the past, yes—the ability to deduct.

Q663 Damian Collins: Yes. Obviously you have oversight to a club's ability to meet their football obligations and liabilities, and we have discussed—as I am sure you will be aware—at great length the football creditors rule. When we discussed that with David Gill and the other club representatives, they felt that the football creditors rule had served its purpose. In previous sessions, Lord Mawhinney explained how he had tried to get the Football League to get rid of it, and the current Chairman of the League said that he couldn't find a moral argument for keeping it, but was going to keep it anyway. What is your view?

  Richard Scudamore: This is a very interesting one, and it is interesting that the people who run the FA, Mr Bernstein and Mr Horne, the current Chairman of the Football League, and his Chief Operating Officer, Andy Williamson—those of us who run competitions—will defend it, and we will defend it on the basis of the chaos that ensues if you don't have it. We are a closed system. We trade on a closed basis between each other. If a business fails, the real sanction should be expulsion.

The problem with expulsion is it damages far more than the club involved. For example, had Portsmouth gone straight into expulsion in the January/February of last year, every single point that they had gained would have been taken off the clubs that had already beaten them. More importantly, anybody they had beaten would suddenly, effectively, have a three-point advantage. So it is absolutely essential that the clubs are forced to play each other and to play out their fixture list, and therefore it is essential that football creditors are paid. Another thing on this: there is no moral basis for saying that the St John's ambulancemen or the local businesses shouldn't be paid. Of course they should, and that is our starting position—there should be no bad debt.

  You have more say in the insolvency laws in this country than I have and if you wish to change the insolvency laws to allow charities or small business with a certain turnover threshold to become preferred creditors or preferential creditors, I would certainly support that. But on balance, it is the best of a bad situation. Because we are a closed system, chaos would ensue if people's playing records were eradicated. If expulsion is the only option, we think it is a bad option. Therefore, the football administrators, to protect the integrity of the league, would support the football creditors rule. I understand that the integrity of our league takes precedence over the small business creditor, which is unfortunate, but I am not ever excusing people not paying their debts.

  

Q664 Damian Collins: I think there is another element to this, and this was a point that David Gill made when he gave evidence to us. He agreed with the idea that if the football creditors rule did not exist clubs would have to be more open and transparent in their financial dealings with each other, because there would be greater risk, and transfers and payments between clubs, which are a very big part of clubs' expenditure in putting their teams together, may have a helpful and deflationary impact. I think Lord Mawhinney also talked about the integrity of the competition and whether you can protect the integrity of the competition if clubs are using their liabilities to other suppliers to fund their football activities.

  Richard Scudamore: David Gill is probably the best chief executive in football. He runs a club, but he is in a fortunate position where he runs a club with the ability to trade almost on a cash basis with others. There is the idea that across professional football all 92 clubs should go into a full due diligence situation in terms of this. Given we have this system, remember in our particular case we generate significant central revenues. Those contracts are entered into only with the Premier League, not individual member clubs. We have significant funds such that when this situation comes along, as it did in Portsmouth, we are able to keep, for example, Watford in business, effectively. Watford were owed money by Portsmouth. We were able to satisfy other foreign clubs that were owed money by Portsmouth, which has given us great standing across European football, because I think we are the only league that has ever done that, and has satisfied club debts. So I think it is easy for Manchester United to say, "Everybody should do due diligence," because they are in a situation where not many people are buying players from them, and when they are buying players themselves it is a very different position. As I say, he comes at it from a club perspective. I sit in front of you as a league organiser with a slightly different view.

  

Q665 Damian Collins: What you seem to be saying is it is all right for clubs that do not have big cash flows to engage in financial transactions with other clubs knowing that they may not be able to meet those liabilities, but if they can't they have their VAT account or other unpaid bills they could pay it from.

  Richard Scudamore: You go to what is the essence of the game. I would advise caution—steering clear of over-regulating or over-prescribing something that might circumvent the essence of the game. The essence of the game since it started—the thing that gets fans most interested—is the buying and selling of players, the trading of players, on the transfer deadline. You have seen the media hype around transfer deadline. We know more about what is going on from the media hype sometimes than we do from the contract registration documents that are coming into our office. The essence of the game throughout my 14 years in the executive capacity of professional football, whenever you get to a room or the pre-meeting coffee discussions, is players and player movements: who is buying whom, who is selling whom, what is happening? The idea that you would somehow put this administrative blockage of a due diligence process in front of every single trade, club to club on transfer deadline and everything else, is a place we wouldn't want to go.

Q666 Ms Bagshawe: Surely greater transparency would prevent that. You just gave the example of Watford being protected. Watford wouldn't have allowed Portsmouth to run up such debts with it if it had clear sight of its balance sheet, and without the football creditors rule that would have been the case.

  Richard Scudamore: Okay. We have transparency, don't we? You have seen the Deloitte report. There is no other country that can produce the Deloitte annual report of football finance on the same basis, because certainly in US sports you won't see that level of transparency. We are all required by regulation. We are UK-registered companies. That means that everything has to be filed with Companies House. Of course, it would be good practice for a club to establish with another club whether they can pay, and that is why a lot of deals do and don't go through. That is done now. I don't think, though, it is the solution to obfuscating the football creditors rule. As I say, I am not here defending many aspects of the consequences of the football creditors rule, but on balance I think the Football League, the FA and I agree that, of the options available, it is better to have the rule than not have the rule.

  Damian Collins: It does seem a pretty sad state of affairs if the—

  Chair: We need to move on.

  Jim Sheridan: In my experience, and in the experience of other elected colleagues in this place, abiding by the rules is not always the best form of defence.

Q667 Paul Farrelly: I will be brief on this section, which leads nicely on from your discussion of how important it is to have integrity and stability when you are running competitions. When we talked about local benefactors buying into clubs, would you prefer them to put in equity rather than take on debt?

  Richard Scudamore: I think in a hierarchical situation, yes. That is, you would prefer them just to put in equity, yes, as opposed to debt.

Q668 Paul Farrelly: The oft-mentioned Lord Triesman made a contribution in a speech on debt. Why did you and the Premier League take such exception to what he had to say?

  Richard Scudamore: Again, you have to put it in the context of the timing. We were having what we thought was a very good dialogue with Lord Triesman and with Andy Burnham, the Secretary of State, all through that summer. We started the dialogue in July; we continued it in August. We were all entitled to a holiday and off we went. We came back and that dialogue stopped, and almost the next thing we had was these unilateral speeches—both by Andy Burnham and by Lord Triesman—about the state of English football. If there was any affrontedness, and I don't deny there was some, it was a sort of break with the discussions that we were having. Having said that—

Q669 Paul Farrelly: So your reaction, you were described as "tired and emotional".

  Richard Scudamore: No, I don't think it was tired and emotional at all. We were rather sanguine about it. It was others. Clearly, the media enjoyed the theatre of Lord Triesman at a speech called Leaders in Football—interestingly named—and the issue is around the fact that clearly we are proud of English football. I think this comes through. We are proud of what the Premier League has achieved. We are very proud of what the Football League has achieved. We are proud of where the FA sits in relation to other football associations around the world, where the England team sits. It is the one team—probably England and Brazil—that attracts more international interest than any other team, so when you are very proud of something, my view in terms of when you are trying to move the agenda on is that you should perhaps not criticise it quite as directly. On good leaders, I think there is an art of leadership. The first art is to get people to follow. Therefore, if you are going to display real leadership—you will have seen this in your world—you have to get people either to follow, vote for you or at least engender some support, and I think it is interesting tactics people have deployed in trying to get that support, but it is not one of the ways we would have chosen to do it.

Q670 Paul Farrelly: From your answer about preferring equity to debt, who wouldn't?

  Richard Scudamore: Yes, exactly.

  Paul Farrelly: I take it you would agree with Sir Martin Broughton, nobody's fool as we have seen over many years, the Liverpool Chairman, when he said, "If you are leveraged"—by which he means highly leveraged—"that's bad for a football club." Is that a statement of fact that you would agree with?

  Richard Scudamore: Let me take it one stage further. If it was too highly leveraged, yes; if it was leveraged, not as good; if there was no leverage at all, obviously better. Therefore, we are into the proportionality of debt, and I think that is something that our new rules will bite on, because when you have to put your future financial information in, when you have to put your business plans in—we didn't have these rules four years ago—but now our rules are tighter on this than the UEFA licensing and the UEFA rules, because the UEFA rules don't per se deal with debt, but ours will deal with debt, and the appropriateness and level of debt. So, yes, clearly it goes without saying it is about the amount of debt and the question, is the club at risk? Our role is to make sure that clubs are sustainable, that they stay in business, and we don't have a role that says each club must be able to win the Champions League. That is beyond our power, beyond our reasonable control, but certainly in terms of sustainability that is the issue, and, yes, clearly there is a number at which proportionately debt has to be a risk and that would be covered, I think, by our new rules.

Q671 Paul Farrelly: The final question, as time is moving on, relates to your position when it comes to any financial regulation UEFA is involved with. You have made strides with your own rulebook, so is there no role for the Football Association in any financial regulation?

  Richard Scudamore: Of course there is a role for the Football Association, because they have an overarching role in the way it works. But UEFA themselves are only competition owners; that is what they are. They organise their own competitions and they say to the clubs that want to play in those competitions, "If you want to play, these are the rules." It is the same for us. If there is a lacuna in the rules or if there is a gap in the rules, yes, we would be open to that dialogue. We would also be open to the dialogue as to who applies those rules. We are not against that at all.

  

Q672 Paul Farrelly: Very quickly: has the Football Association any greater role in financial regulation beyond what you are already doing than just approving the rules of the FA Premier League?

  Sir Dave Richards: The executives of the Premier League and the Football Association meet every second Friday to discuss all the implications of this, and they come up with scenarios—whether it is financial or about players. They discuss this every second week. They bring it back to their bodies. Their bodies then agree the formula and it goes to the board. So if the FA wants to talk more about finance, it has ample opportunity to do it at the Friday FMT with the senior executives.

  Richard Scudamore: Just so you are all clear, though, and maybe I have not made it clear, the FA are the people who are ultimately the licensor of the UEFA licence, so the work, much of the data gathering and much of the evidence is gathered by the Premier League Executive. That is all presented to FA, but the ultimate people who decide on the UEFA licences are the FA. They have an integral role in the financial regulation of football.

Q673 Ms Bagshawe: I know there are pressures on time, so would you comment on two questions at once. This is related to debt in the English model of football. Obviously, there is a growing differential between the revenue gap between the Premier League and the Football League. First, do you think this encourages clubs to overspend, to gamble on success, whether that be staying up in the Premier League or joining the Premier League and entering the Champions League? As a corollary question, we have heard evidence to the Committee that the parachute payments if you are relegated, which now last for four years, are distorting competition in the Championship. Do you think that the Premier League has a role to play in cost control?

  Richard Scudamore: Clearly, that is why we are advocates of the concept of break-even, and repeating the financial fair play concept of break-even is unarguable. In terms of a gamble, of course football is an optimistic, upwardly mobile, aspirational business.

  Ms Bagshawe: Nothing wrong with that.

  Richard Scudamore: There is nothing wrong with that. It is entrepreneurial, and Mr Cameron would be proud, and would have been in all his speeches in the last three weeks, including in Cardiff at your spring conference. That is exactly what football is. It is about the aspirational, the entrepreneurial, and saying, "We think we can invest our money and we think we can improve our lot." So yes, of course, the best thing and worst thing about the Premier League is how successful it has been. It has been a success in terms of its attendance growth—60% since we started—our viewing and our audience growth, as well as our revenue growth. That success has meant more and more clubs want to be part of us. The Championship clubs all want to be in it, despite the fact that when they are not in it they like to criticise us, but they all want to be in it, and that is the reality of English football.

Clearly, we are not sitting here advocating that people overstretch themselves to the point of putting them at risk, which is why we have talked probably more than we should about all the rules that are now in place to stop that happening. When it comes to the parachute payments, they are, again, in a sense a necessary mechanism. They have been in it since the start, because when clubs get promoted we want them to compete. We don't want clubs to come up, bag the money, take it as profits and just go back down again, because it is a sporting competition.

  We can talk about money and finances and everything else, but the integrity of the league this season is more in evidence than ever. The clubs who have come up have competed: Newcastle have competed. Blackpool have had a fantastic run, considering the economics mean they shouldn't have won anything like the number of points that they have, if you believe the pre-season pundits. West Brom have suddenly got themselves into not a comfortable position, but a decent position this weekend. So you want your clubs to come up and compete. That means you want them to spend money, invest. We require them to invest heavily in infrastructure. No matter what happens to Blackpool this season, they will have a better infrastructure as a club, a better stadium and better facilities, because they have invested that money in making their club better; they have community schemes. Every aspect of Blackpool Football Club has been enriched by being in the Premier League, irrespective of whether they retain their league status.

  Now, the consequence of that is to de-risk some of that when they get relegated; they need a softer landing. What we have done is the parachute payments, which have always been there. On the extension to four years, it is only half what they would have got, so the positive side of this is that 12 of the 24 clubs in the Football League—half of them—enjoy the benefits of the parachute, which is good for the sustainability of those clubs. Basically, if you want them to compete when they come up, you have to protect them when they go down. Interestingly, it has not distorted the competition, if you look at the Championship this season. I haven't checked the league table after last night, but I don't think there was a team that was relegated. No, there isn't. Neither Burnley, Hull nor Portsmouth is in a play-off position to come back up, so you can't believe it has given them a huge competitive advantage over the others.

  

Q674 Chair: On the recent European Court of Justice case, or rather, the opinion of the Advocate-General, that may lead to an ECJ judgment on the sale of exclusive territorial rights, have you done an assessment of how damaging that will be if it is upheld?

  Richard Scudamore: We haven't done an assessment of how damaging it can be, because I don't think the opinion is clear enough as to what the outcomes will be. The opinion is difficult; it is convoluted. It suggests certain things that might happen. As you will be aware, the process of this is that the opinion gets put towards the ECJ, the judges. The judges have to answer, I think, 18 questions set by Justice Kitchin here in the UK. Then the answers to those questions come back and he has to weave them into his ultimate decision. What is very hard to see at the moment is how we get all this to add up—even the copyright issues that have been explained, even this concept where it might be possible to make a legal distinction in the UK between a domestic card not being allowed to be used in a commercial premises in the UK. So, a UK domestic card might not be allowed to be used in a pub or commercial premises, but somehow a foreign domestic card could—under some interpretation of the freedom of movement—be allowed to be used in a pub or commercial premises in the UK. It is difficult; it is complicated.

  What I do know is this. You questioned the Secretary of State last week on this particular topic, and we are very grateful for his support on this and UK Government support, where it is essential for content owners to be able to sell their rights in a way that works for consumers as opposed to some ideology of some pan-European market. We don't sell the same Premier League product across Europe. We sell our rights—the components to a Premier League product—across Europe. It is then for the people in each territory and each country to create a product that they in that market require.

With your other hats on as Culture and Media, you will understand the territoriality and the essential nature of territoriality in that regard. So the French, when they produce Premier League coverage in France, concentrate often on French players, French clubs. It is scheduled to avoid the French league. Similarly in Italy, in Spain, in other countries, when they show our rights, they not only concentrate on an element of the Premier League that is more relevant to their audience, but schedule it around what is a unique part of each country's culture.

  It is the same in this country, which is the reason why we will fight strongly, for example, against if Mr Platini and others come along with a summer calendar for football, because we believe it is pretty difficult to play cricket in this country in the winter—rain stopped play would be rather more prevalent. Therefore, it is things like that, where you have to protect the sporting culture of a country and you have to support media being available on a territorial basis, because that is the way you create cultural diversity and protect the culture of each individual territory. It is an important case, John—

  Chair: It is an extremely important case.

  Richard Scudamore: And I think you should concentrate some of your minds and efforts on it.

  

Q675 Chair: Indeed. That may be your view, it may be our view, it may be the Secretary of State's view, but at the end of the day if it is not the European Court of Justice's view, there is not a lot we can do about it.

  Richard Scudamore: No, except, as I say, the problem with this case is that it is possible to sit down and work out theoretically what we might do about it, but unfortunately every solution is not as good for the consumer, not as good for the broadcasters in each country as what currently happens. The idea, for example, that we might have to sell our rights on a pan-European basis does rather make a nonsense of having broken our rights down into packages, with our other European Commission challenge, with Ofcom ensuring that we encourage plurality in the media world to make sure that more than one broadcaster has our rights. All this kind of stuff contradicts all the things we have been discussing in a regulatory sense with these people up until now.

  

Q676 Chair: I entirely understand that, but is that a case that you think you are capable of persuading the European Court of?

  Richard Scudamore: Unfortunately, we don't have any chance now in front of the European Court, do we? That is the way the process works. They will be crafting their opinion. If there is anything that the Government can do, whether this Government or whether other Governments across Europe, to weigh in with their views, I think that is important, because we need to—and that is what my lobby people will do.

  

Q677 Chair: But you will have begun to think about what will be the impact if this opinion is upheld?

  Richard Scudamore: It leads you to thinking about, unfortunately, the UK as just one element of Europe and where you would have to do whatever you do on a pan-European basis, which is a bit odd because clearly the UK has more interest in our Premier League rights than any other country in Europe, and you would expect that, wouldn't you? So the idea that we suddenly think of Europe as one market, when it is effectively 53 markets, is possible; it is doable. It doesn't hold any fear to us, but it is just a very convoluted, complicated way of going about doing something when the current system works perfectly well.

  

Q678 Chair: But it is also likely to result in a drop in income.

  Richard Scudamore: Again, you just can't make that stretch. In some ways, the other challenge that we have in terms of the Ofcom pay TV review and our appeal to that is important, because it hits right to the heart of a plural media rights market, where, as you know from that particular case we are arguing, if all these other media companies have a wholesale offer situation with Sky, which has to wholesale all this sport content to them, their incentive to bid for our rights will be vastly reduced. In a sense, that has more potential threat to the income of the Premier League than perhaps the ECJ case.

  

Q679 Chair: On the issue of broadcasting income, you get about over £1 billion in broadcasting income. It was suggested, I think by the Sports and Recreation Alliance, that you had signed up to a target of investing 30% of net broadcasting income into sport—£300 million. Are you meeting that target?

  Richard Scudamore: We are more than meeting it. There is one word you have missed out, if I may correct you. It was net broadcasting income.

  Chair: Yes.

  Richard Scudamore: What the code absolutely envisages is the cost of putting on that competition must be able to be deducted from your gross income. While we can sit and talk about our £1.2 billion worth of revenue, of course we have a huge cost of sale, and that cost of sale is the 20 clubs' aggregated costs, player costs, stadium costs in staging the competition. Any other governing body—for example, the FA—is allowed to deduct the cost of running the FA, the cost of putting on the England matches and the cost of everything else, so to be treated like any other sports governing body we have to be allowed to look at net revenue, which is when you have basically extracted your cost of sale of putting on the show. We stand up very well indeed. Our £162 million we gave away by way of solidarity—13.4% of our revenue. There is no other sporting body in the world—no other business in the world, I don't think—gives away 13.5% of its revenue. Not of its profit, of its revenue. So we stand up extremely well to anybody else, whether in a sporting context or in a business context.

  

Q680 Chair: So what is your estimate of net broadcasting income?

  Richard Scudamore: Well, it is a net loss, to be absolutely honest, so goodness knows what that means our percentage to contribute is; it must be infinite.

  

Q681 Chair: So it is a pretty meaningless commitment to say you are going to give away 30% of what is a net loss.

  Richard Scudamore: I would ask you to concentrate on our submission: £162 million given away. If you can show me another sporting body or another company that gives away 13.5% of its gross revenue it will be very interesting.

Q682 Dr Coffey: I wonder if Mr Scudamore could just clarify where that kind of money goes? Is that referees or is it pitches or—

  Richard Scudamore: What, the £162 million?

  Dr Coffey: Yes, or is the parachute payments?

  Richard Scudamore: No, the £162 million effectively goes—let me check the detail of it. I wouldn't want to mislead you. Yes, £162 million of it goes into solidarity and good causes. That is roughly broken down as £60 million in parachute payments, about £62 million in solidarity payments—that is both for the Football League and for the Football Conference, who you will be speaking to later—and the rest to charitable causes, charities.

  

Q683 Dr Coffey: So about £10 million outside, if you like, the professional clubs?

  Richard Scudamore: No, about £42 million, I think, goes to good causes in the community. That is in our submission.

  Dr Coffey: Oh sorry, £162 million. I wrote down the figure wrong.

  Richard Scudamore: Yes, £162 million, with £40 million-odd to charity and good causes, yes.

Q684 Dr Coffey: Supporters. At the end of the day, the game exists for players, but supporters pay for the success, whether through Sky subscriptions, ticket prices or similar, but they get terribly frustrated—probably the cause of this whole inquiry—because they feel they have no say in the governance of their clubs. What additional measures can the Premier League take to increase that say?

  Richard Scudamore: Well, again, we would absolutely commend any club having a dialogue, and our rulebook envisages a supporter liaison person at each club; we would encourage all clubs to have a decent and open dialogue with their fan base. You will also see—you can do this another time—the appendices that we put into our submission. There is no other sporting body, I think, that does the extensive nature of the research that we do, among our fans and our non-fans. We are absolutely in touch, I think, with what all fans feel, and that is difficult because there are very vastly different opinions. I think in a practical sense we fund now Supporters Direct, and we have done for some time.

  

Q685 Dr Coffey: Will you continue to do that at the current level?

  Richard Scudamore: We will continue to make available, as you know via the Fans Fund—This is an ongoing debate as to whether we, the Premier League, should be funding these organisations. We took up the Supporters Direct funding when Government decided it didn't meet the Government's criteria of participation only. It is the same in all the organisations, such as the Football Supporters Federation and the National Disabled Supporters Federation: for the central bodies that currently exist—associations formed by those like-minded people who wish to share common views—we will continue to make funding available to them to achieve some of their aims. They admit by their own efforts that they would rather find more sustainable sources of funding, because they find it awfully odd being paid for by the Premier League, but we were certainly always open in that dialogue. I have personal dialogue with the leaders of all those organisations, as do my team.

  Ultimately, you cannot argue against having decent fan liaison and decent fan communication, but, as you have heard in evidence before this Committee, not every supporters' trust thinks it is right that they should have a seat on the board, because they wish to remain more removed from the fiduciary duties that that would bring. There is a raging debate about this. I would put you back to the evidence. Our evidence is that since the Premier League was formed, 67% more people are coming through the turnstiles and attending our matches. English football was at its worst throughout the 1980s in terms of violence, of hooliganism, stadium disasters and no television deal. On taking the game back from that position—more fans are more interested in our surveys, very independently done by Populus, and again I offer up to the Committee access to all those Populus surveys—the reality is there are more people interested in our league and what we do now than there were before.

Q686 Dr Coffey: You mentioned that you are a bit of a closed board; there is no other entrance in and out, which was the justification for the creditors rule. I recognise you are all football supporters, but given that you are a closed board, how do you get new, fresh blood in? I suggest to you that one way, Sir Dave and Richard, would be to say that there is a fixed-term limit on how long people can be on the Premier League board to encourage new blood in, and perhaps a role for supporters on that board as well.

  Richard Scudamore: If you go back to my original description of what the Premier League board really is, the Premier League board is effectively the clubs, and Mr Parry will be able to advise you exactly on the intentions when the shareholders set the thing up. We have new blood all the time. In fact, we have new blood, we have old blood. We take by rule three new clubs every year, but then the clubs themselves turn over and, effectively, the clubs come along as shareholders and that is the new blood. We are for ever being challenged by new blood on what is effectively our board, which is our clubs.

Q687 Dr Coffey: With respect, Sir Dave—who I think has been a distinguished Chairman, and has certainly seen the Premier League grow—has not been, if you like, replaced. Is there a view that the chairmanship should be not quite such a long-term election?

  Richard Scudamore: I think that is entirely a decision for the 20 shareholders. We turn up and say to each other before every shareholder meeting that it is like reapplying for your job at every single meeting, and our predecessors sometimes went to those meetings and left without their jobs.

Q688 Dr Coffey: I would be really interested to hear Sir Dave's view.

  Sir Dave Richards: No, it is absolutely true what Richard tells you; you are as good as the last meeting. You could turn up at a meeting and find out it is your very last. On terms, you get elected every year. If you have a bad year you don't get re-elected. There comes a time when you think to yourself, "Well, perhaps we're okay," but the Premier League is so fluid, and Mr Parry can tell you the times that we have had—the way it has changed.

  But we are governed in such a way that the 20 clubs are the governance of the Premier League. The board has a set of rules and it is a set of rules that we can work to, so the board is not like you believe it to be, like a PLC, because the PLC part is the shareholders and they are the board. We are very limited in how we can make decisions as the two members of the board. Mr Parry will tell you that he helped write the rules, so he will tell you how difficult it is that you must work within those parameters. If I break those parameters, I can tell you I will be out overnight.

  Chair: We have to stop there. I thank the two of you very much.

---

---

Prepared 29 July 2011