Football Governance - Culture, Media and Sport Committee Contents

Examination of Witness (Question Numbers 713-759)

William Gaillard

26 April 2011

Q713 Chair: Good morning. This is a further session of the Committee's inquiry into football governance, and for the first part of our evidence this morning I would like to welcome William Gaillard who is the adviser to the President of UEFA. Can I invite Thérèse Coffey to begin?

Dr Coffey: Welcome, Monsieur Gaillard. Why is it important for UEFA to introduce Financial Fair Play Regulations at this time for its competitions?

William Gaillard: Thank you. Certainly, it is not too early to introduce Financial Fair Play measures. It may be a bit late but I think the financial crisis has induced us to probably quicken the pace of the financial reforms that we were contemplating for the past two or three years. We felt, in particular, that the growing inflation of wages and transfers, the large number of clubs facing an unsustainable debt burden and the fact that a number of clubs Europe-wide were going into administration, meant that the system needed some reform. We felt that the countries where a strong licensing system had been in place were not facing the same problem as the ones where licensing was weak or nonexistent and, therefore, we felt that, through our licensing mechanism for our own competitions, we could introduce some order and more rationality into professional football.

Q714 Dr Coffey: So what would you suggest UEFA is doing to avoid unintended consequences, like increased ticket prices? UEFA has already come under criticism for the high cost of Champions League tickets that are open for purchase. What about the clubs?

William Gaillard: In terms of the Champions League final tickets, our President has already said in London that he is quite aware that we made a mistake. We got it wrong while getting it right. That is, we got it right in terms of fighting ticket touting but we got it wrong in terms of the prices that supporters would have to pay, albeit only the 10,000 that are not getting tickets through their clubs.

We have said that in future years we will be looking at, say, like a fourth tier of tickets that would be accessible to families. We have spoken quite a bit on this and we apologise for the mistake we made. It is always very difficult to get the right balance between ticket prices and what will be a disincentive to the black market and ticket touting. In the past we have had lots of problems with that, with tickets that were offered at convenient prices for families being sold 10 times more expensive or 15 times more expensive, and that again does not solve the problem.

Now for clubs, high ticket prices are not always a recipe for sustainability and the German Bundesliga—the German First Division League—proves that you can keep ticket prices at a fair level that are accessible to most people in society while at the same time breaking even or better, as far as the clubs are concerned. So we believe that there may be some good influence of Financial Fair Play on ticket prices, although there is no direct link to ticket prices. We feel that financial licensing will introduce more rationality in the way clubs are being administered.

It is basically a question of incentives. There are incentives to behave in a more rational financial way through Financial Fair Play, and if the clubs heed our advice they will find themselves in a better overall financial position.

Q715 Dr Coffey: So what will UEFA do to ensure clubs are not circumventing the rules? I give you the example of a team—I can't remember off the top of my head—who we discussed in Germany where instead of, if you like, ownership money they received sponsorship money of a very large amount.

Damian Collins: It was Schalke.

Dr Coffey: It was Schalke. Okay, that is highly relevant for tonight. So Gazprom I think gave them €100 million. How will you end up ensuring clubs don't circumvent the rules?

William Gaillard: Yes, there is another example that is always given in Germany, where the control authorities intervened. It was the case of Wolfsburg and Volkswagen. The person in charge of Financial Fair Play at UEFA had answered a question at the Soccerex conference. He said, "Look, like with any rules there will be loopholes. We will just have to be very quick at plugging them."

Dr Coffey: Quick at plugging the rules. You are starting to sound like a tax lawyer now; it is quite interesting.

William Gaillard: Exactly.

Q716 Dr Coffey: How transparent will the monitoring for the regulations be?

William Gaillard: It should be fully transparent. That is our intention. That is what we want to do. The figures will be published. This is one of the challenges because, as you know, Europe is a single market but it is not a single taxation area. We have lots of countries that do not belong, for example, to the European Union that may have less than transparent tax systems. So for us this is one of the big challenges to get accounts that are readable, transparent and clear to everyone. We have a multi-national panel of financial experts that will be looking at this data, and our experience over licensing tells us that we can get to the bottom rather efficiently.

By the way, the chairman of this independent committee that will be supervising Financial Fair Play is a colleague of yours. He is a Member of Parliament, from the European Parliament, Jean-Luc Dehaene, who was—

Dr Coffey: The former Prime Minister of Belgium?

William Gaillard: Yes, five times Prime Minister of Belgium.

Q717 Dr Coffey: At the moment UEFA will be the sole people policing this; you will not be asking the FA, as the governing body of football in this country, to do that on your behalf, you will be doing that directly?

William Gaillard: The FA is already responsible for delivering licences to English clubs participating in our competitions, so this will go on. That is there will still be the licensing process for the clubs that are competing in Europe, at the same time we will have an overseeing process far more complex and thorough than it has been in the past through the Financial Fair Play mechanisms. There is no licensing as such for clubs in England. Of course, if licensing is introduced in the way it exists, for example, in Germany, the Netherlands, Switzerland, France and many other countries, it is obvious that it will make our task a lot easier.

Q718 Dr Coffey: I think the FA and the Premier League do suggest that they do effectively have a licensing system. Could you explain why you see—

William Gaillard: They have bits and pieces of licensing. They don't have a licensing system over the whole professional game. It is divided. It is not streamlined as such. There is nothing like what exists in the Netherlands or in Germany. Some other countries are in the same situation but very few.

Q719 Dr Coffey: One final question on this: clearly, one of the motivations is it seems to be to try—how can I put it?—to stop, say, Roman Abramovich coming in and pouring money into a team. What is wrong with somebody—in my view it is a different kind of philanthropy—saying, "I want to get this team from here to here". What is wrong with that?

William Gaillard: There is nothing wrong with that if it has no consequences on the overall picture for professional football. What we have seen is that whenever you get an investor who invests his own money at a loss, it drives transfer prices up; it drives wages up; it pushes other clubs that probably could not afford it to try to match that club that has become suddenly rich, and it creates a lot of imbalances and a lot of danger in the system.

We have seen over the last 10 years more than 80 clubs in Europe going into administration, which is a large number. We also feel that there is great danger—

Q720 Dr Coffey: Is that 80 clubs who compete in UEFA competitions or generally?

William Gaillard: Generally in Europe, yes. We feel also that if the person brings equity it is of course a much better situation than if he only brings debt, which we have seen a lot. We have seen these leverage buyouts that have been rather disastrous for European football, especially English football. We also feel that even if a person brings equity if he suddenly loses interest, either in the club or in football, and finds it more attractive to invest in baseball in the US, for example, the club will be left with a wage bill that it will never be able to pay, even a couple of months after the sugar daddy is gone. We feel that a model based on sugar daddies is not sustainable in the current financial situation. The model has to be based on clubs at least breaking even.

Now we have introduced flexibility. For the first three years there will be a €45 million flexible line that clubs may not break even and be in deficit for €45 million. The three years after will be €30 million and then lower as we go on with the process. We feel that it gives enough flexibility for someone who would like to, for example, support his own local club with a large influx of money once and for all. He or she could do that under the system.

Also, we have left the door wide open for capital investments. We know that one of the great features of English professional football is that most of the clubs own their own grounds. That is a major source of income. You can always build new grounds, modernise them and make them more profitable. For capital investments there is an exception to the Financial Fair Play Rule. That is anyone who wants to give a stadium or a training facility to a club will be able to do so.

Q721 Damian Collins: Do you think there is a legitimate concern that UEFA has greatly extended its remit by introducing these rules?

William Gaillard: By whose standards?

Damian Collins: Given that UEFA exists to organise international competitions between European countries, and what you are effectively doing now is enforcing financial regulations on clubs right across Europe, effectively through the backdoor, and you are doing that because of the financial lure of playing in the Champions League.

William Gaillard: The system that prevails in football is a pyramidal system with at the bottom the 53 national associations, which of course rest on another pyramidal system that springs from the counties, the departments, the provinces, depending on the country. Above that you have UEFA as the European governing body and above that, of course, you have FIFA as the world governing body.

Q722 Dr Coffey: Can you clarify that, please, because I thought UEFA only governed its own competitions rather than—

William Gaillard: We run our own competitions, but we are—

Dr Coffey: Yes, you don't oversee the FA do you, or the Scottish FA?

William Gaillard: Well, we do not contemplate overseeing national associations although we do regulate them in terms of their statutes; their statutes have to be in line with our statutes and our statutes have to be in line with FIFA statutes. So from a statutory point of view we do oversee them, but we believe in subsidarity.

We could impose simple financial rules through our Congress and so could FIFA, and that would extend to the 208 national associations that they control, for example. They have not done that. We have not done that because we believe in the subsidarity principle.

Q723 Damian Collins: So, on that basis, would the rules be interpreted differently in different domestic associations because, as you have said in your evidence so far, the traditions and the financial models of clubs vary greatly in different European countries?

William Gaillard: You are absolutely right on this. What we will do—and we said it very clearly—is that Financial Fair Play Rules will apply to clubs that want to compete in our competitions, which is not only the Champions League but also the European League. That means that over three years in a country or an association like England you probably have 15 clubs that would be involved out of the 20 of the Premier League.

We will look into the peculiarities of the international system. We have to do that because, as I said, the tax laws are not the same from country-to-country. The financial regulations are not the same. They all operate in the same market but they are not regulated in the same way, including by Government regulation. So we are well aware of that. We have a long experience in licensing already. The European Commission has praised our licensing system and has approved the Financial Fair Play mechanisms in its recent communication, so we feel we are on solid ground from a legal point of view.

Q724 Damian Collins: Would you expand that and have a rule on the distribution of television rights? Because major European clubs might say that they have competed in recent years against the inflationary practices of Real Madrid and Barcelona who negotiate their own TV fees and, therefore, have a much, much larger slice of income from that than British clubs would have.

William Gaillard: The whole issue of TV rights is a very complex one. It is creating a rather unsustainable situation for many leagues in smaller associations that basically don't have the critical mass of audiences in order to finance their football. If you compare the income of a league like the Belgium League, which let us say in the 1950s and 1960s was certainly a very competitive league with clubs doing extremely well in Europe, their income is about 30 times smaller than the Premier League. What you are pointing to is the issue of Spain, which is kind of a standalone these days in Europe, where clubs sell their own rights. The European Commission has clearly stated, in the same communication I mentioned before, that the best way to sell rights is to sell them collectively. We strongly believe that too.

Again, under the principle of subsidarity, we have not intervened on the Spanish scene although we have always made it very clear that we felt it was not a very efficient way of distributing the money coming from TV rights. At the same time, for example, we still have a situation that may change with the possible ruling by the Court of Justice in the next few months. For example, English clubs tend to get proportionately a higher return from the Champions League because the English TV pool is richer. This could change under European law.

Q725 Damian Collins: I appreciate this is a complex area and we couldn't explore all of it in this session. We will probably try, but let us go back to my original question, which is: the unintended consequences of what—or maybe they were intended—you are effectively doing is introducing financial regulation of the European leagues through the backdoor. The Chief Executive of the Premier League said that, because most of the clubs will want to apply for UEFA, effectively they are going to be complying with it even though it is not required by the Premier League, and that once you go down this road you have a system that has been designed to deal with certain issues—largely debt issues that you have raised—but you inevitably are getting drawn into all sorts of other variances and differences that may distort competition between football clubs.

William Gaillard: That is not our primary aim because there is all kinds of debt: there is debt that is there to finance future sustainability, like investing into infrastructure like a stadium or a football academy; and there is debt that is basically there to support free spending on wages or transfers, and that is—I would call it—rather negative debt. There is also debt that may be legitimate but not serviceable because of the financial situation of the club. So if we wanted to deal with debt we could have made a rule that focused on debt. We chose not to do so, not even to introduce a ratio that would be acceptable based on debt or even a ratio that would be based on the share of transfers and wages on total expenditure or on turnover. We wanted to give flexibility, understanding that clubs operate in very different environments in Europe and, as I said, especially the fiscal environment.

The Italian clubs complained to us. They said, "Well, it is very difficult for us to own our own stadiums because municipal governments won't let us do that and our Olympic Committee won't let us do that, so English clubs have a tremendous advantage" and they say, "We cannot sell beer and they can". Whenever you talk to clubs from different countries they always find what puts them at a disadvantage. They never tell you, "Well, there is this great loophole that puts us to a great advantage". So what we will be doing is making sure that we are fair and that we take into account some peculiarities that may exist in one country and not in another. Then experience will tell whether we succeed or not.

Q726 Damian Collins: Yes, two more questions: my concern is you are becoming, effectively, a European financial regulator for football. I am not entirely certain that is what UEFA was set up to do and I think it is sort of "mission creep" on your part, but do you think—

William Gaillard: Well, no, in 1955 most clubs were paying television to show their games. The world has changed.

Damian Collins: Yes, indeed, but Michel Platini has implied that the debt financing models of English clubs, like Chelsea and Manchester United—who, despite the iniquities of their leverage buyout, are about to play in the semi finals of the Champions League tonight— that these models of financing are effectively cheating. Is that UEFA's view?

William Gaillard: No, I think our view is a lot more sophisticated then just what could be summarised with a three word headline.

Damian Collins: I can read you what he said. He says, "Look at Chelsea and Manchester United's debt. FIFA and UEFA have to do something to combat that, because today the ones that cheat are going on to win". He said that just after—

William Gaillard: Four years ago.

Damian Collins:—Manchester United played Chelsea in the Champions League final. So it is a pretty direct reference to them.

William Gaillard: Yes, we looked at this issue of debt and certainly you won't find that in our regulations. What we are saying is that the leverage buyouts ended up for many clubs in a disaster. Just take Liverpool. You have owners who came, contracted debt—both of the previous owners—and saddled the club with the debt. The club has been rescued, thank God, because of the tremendous heritage that Liverpool actually represents, but it was a close call.

Q727 Damian Collins: If I may, one of the things we discussed is where this pressure for competition comes from. Do you accept that it could be said that it is the Champions League that has been the major distorting influence on European football? Because the money you get from playing in the Champions League regularly is so great and the competition in National Leagues is now not to be champions but is to primarily finish in England in the top four so you are playing Champions League football. That is where the real money comes. That is why clubs take all the big gambles and that in time—and your new regulations may lock this in place—you are creating an elite league of the top clubs that regularly play in Champions League football and pulling the drawbridge up to stop anyone else breaking into that group, or making it harder for people to break into that group.

William Gaillard: According to our calculations the Champions League is not the big prize for the club season. In England, for example, it represents less than 10% of major club income.

Damian Collins: But you know there is a lot more that goes to that: there is the international exploitation of that, and the marketing and benefits that come from that is worth a lot more than that.

William Gaillard: In terms of image I think it is extremely important, but in the present system you can have a club that basically has never participated in the Champions League and still can be a very rich club; take Manchester City, for example.

Q728 Damian Collins: So you are saying that you don't think Manchester City would have taken on the debt they have taken on if it wasn't for the prize of qualifying for the Champions League?

William Gaillard: I don't know what the motivation is on the part of the owners of Manchester City.

Damian Collins: Most people do.

William Gaillard: The fact is—look at Liverpool they said very clearly that for this year maybe the Champions League is not the objective, consolidation, getting the club back on its feet—

Damian Collins: But the problems they have had, most problems, have stemmed from the failure to qualify for Champions League and that is why they had a crisis in finance that they did.

William Gaillard: Look, they have qualified I think 10 times in the last 11 years, so this is not what brought them down. What brought them down is that they suddenly found themselves being owned by two failed banks that had been nationalised. You had this extraordinary situation of an English club being owned by the British and the American Governments, because Wachovia was taken over by the US Government and RBS was taken over by the British Government and they were the main owners of Liverpool debt.

Q729 Damian Collins: You could say it is not exclusively a British problem, look at Borussia Dortmund and Schalke in Germany. Those clubs that have taken on debt; in the case of Schalke, have taken on a very big sponsorship deal from Gazprom to help finance them to get them into the Champions League, and that is the commercial focus of most major European clubs.

William Gaillard: I would think that this focus would be stronger in leagues that are less rich than the English Premier League. I would imagine that for a Belgium club—and I know for a Belgium club—participating in the group stage of the Champions League is tremendously meaningful, or for a Norwegian club, just because the income from their own national football is so low. In England it is not an issue. As I said it is less than 10% of the turnover of a major English club. I think in terms of prestige, yes, it is important. After all, people should be in football not in order to make money but to win trophies. That is what supporters expect.

Q730 Damian Collins: Finally, Monsieur Gaillard, this has taken some time, but there is a real danger—and this may not be the motivation behind the Financial Fair Play Regulations but it may be a consequence of them—that the Champions League is perpetuating the dominance of Bayern Munich, Real Madrid, Barcelona, Manchester United and other clubs that regularly qualify, and making it harder for other clubs to break through into those top tiers in a meaningful way because they simply don't get the extra revenue that comes from playing in the Champions League. The options of securing a UEFA licence and financing the expansion and investment in their clubs through debt or other mechanisms are now going to be much more restricted.

William Gaillard: Unfortunately, unlike in the US, European football has always been unbalanced. Even if you look at the 1920s and the 1950s you always had dominant clubs even before the Champions League existed or before it was a meaningful source of revenue. Real Madrid won the Champions League five times in a row; Bayern Munich, Ajax, Manchester United won it at a time where Champions League revenue was tiny.

Q731 Damian Collins: We asked Martin O'Neill would a club like Nottingham Forest ever win the Champions League again and there is a strong view that they wouldn't, and probably a club like Celtic would never win the Champions League again.

William Gaillard: I completely agree with you. I am just as worried as you are that our system can no longer deliver the kind of champions that we had, like Celtic and Nottingham Forest, or even Aston Villa. Certainly, we will never see Anderlecht win an European competition probably ever again if it stays all the same; I mean if there are no changes that come in to change the picture, especially in the national leagues because today practically you have six or seven national leagues that financially support their clubs and all the others—40 or so in Europe—are struggling. I can think of Sweden, for example, that Malmö was in the final against Nottingham Forest. I cannot see any circumstance that, under the current system, could see Malmö in the final of a European competition ever again, and that is quite sad.

Damian Collins: Yes. I could go on but I must hand over.

Q732 Mr Sanders: There are conflicting messages there because on one hand you are saying that the money in the Champions League is only worth 10% to the Manchester Uniteds of this world, but in reality it isn't the money that is attracting the Manchester Cities and Manchester Uniteds, it is actually the worldwide reach that comes from being the champions of Europe. That is where the American buyers seem to be coming in because in America if you own a sporting enterprise, whether it is American soccer or baseball, it is pretty restricted as to how you can expand your market, whereas with football it is the truly global sporting game. That is why Manchester United have expanded into the far east and India. Throughout Africa, you will find Manchester United shirts, Chelsea shirts and nowadays Manchester City shirts. I don't think we have seen any Ajax shirts or Boston Red Sox shirts. The leveraged buyout seems to have been a consequence of that attraction and you don't seem to be doing anything to stop leverage buyouts. I wonder if UEFA said, "We would not allow a club that was the subject of a leverage buyout to enter a European competition" you would actually end leverage buyouts at a stroke. Have you ever considered that?

William Gaillard: We felt that under the subsidarity principle this kind of interdiction should come nationally. Our system as it is would deal with that because if a club doesn't break even, that is because of servicing a large amount of debt, it will end up on the wrong side of the Financial Fair Play Rules.

In terms of the interest by prospective American owners, it is quite interesting that both John Henry and Tom DiBenedetto—John Henry just bought the consortium that bought Liverpool FC and Tom DiBenedetto recently bought AS Roma—said that the reason they were investing in European football was because of the new Financial Fair Play Rules. It is a much more predictable environment; more similar to what they are used to in American sports. It is a more regulated, safer environment than the kind of, let's say, crazy environment—as they perceived it—that existed before.

Q733 Dr Coffey: So, Monsieur Gaillard, when the crunch comes, Man U might have made a loss, you are very confident UEFA will say, "We appreciate that but you are staying at home and you are not competing in our competition"? I am just thinking if you have a politician running the monitoring system, I think he was Prime Minister of Belgium when—how can I say?—the rules were flexed to allow Belgium and other countries to join the euro, are you saying that Man U—

William Gaillard: Not Belgium.

Dr Coffey: —if they continue as they are with their financial position they will not be playing in the Champions League?

William Gaillard: I think the litmus test of whether we are serious or not in implementing the rules of Financial Fair Play will come on the day when a major European club will fall foul of the rules. If that day we do not sanction them with what is in the book, we will have failed. If we sanction them it will mean that the rules have worked. A better way for the rules to work is for the club suddenly to be unsanctionable and complying with the rules and this is our dearest wish. We don't wish to have to sanction clubs, especially not by excluding them from our competitions. We wish that they will understand exactly what they have to do over the next five years in order to comply with the rules.

Q734 Chair: So you will apply them with a degree of flexibility? If a club is heading in the right direction and is giving you assurances that it is addressing the problem, the fact that they have breached the rules will not necessarily mean that they will be excluded?

William Gaillard: You are absolutely right. Our rules are looking at every single situation. We already have for the first three years the €45 million flexibility point but we also have different gradations in sanctions, some may be withdrawal of cash from the Champions League or Europa League profits, ending for really serious cases with exclusion from competition. So we have, let's say, a slope that leads to hell, which is exclusion from competition, but our wish is never to have to go that far and we will make sure that the sanctions are appropriate to the kind of violations that we discover.

Q735 Chair: You say your wish is never to go that far. You said earlier that people will only see that you are completely serious about this when a major club is excluded. So in order to demonstrate your seriousness you are going to have to exclude somebody.

William Gaillard: We may get into a situation when unfortunately one or two clubs don't believe that we will apply the rules, and this is when we will have to make one or two examples. Right now our dialogue with the clubs tells us that they all understand the kind of situation that they are facing, that the Financial Fair Play Rules are a big help in managing their expectations and the expectations of their fans.

Q736 Chair: But you expect that there may well be a situation where you are going to have to exclude a club at some point?

William Gaillard: Yes, we have to be ready for that.

Q737 Chair: In relation to a question from Adrian you have talked about debt, that essentially UEFA accepts the subsidarity principle. You have also indicated that you are not very happy about the number of clubs being bought by overseas owners. Is that something again, while you may not like it very much, where you don't feel there is anything you can do about it?

William Gaillard: I think our President stated it clearly. He said, as far as he was personally concerned, he didn't like very much the idea of a club having a foreign owner, a foreign coach and foreign players, but he knew that he could do nothing about it and this was the situation, the way football has evolved, and so be it. We are absolutely neutral, in terms of our regulations, as far as who owns the club, who manages it, who plays for it. Let's say we are agnostic on the matter.

Q738 Damian Collins: But didn't he play for Italy himself?

William Gaillard: Yes, he did, but he said, "Always I left when I was 27", so—

Q739 Chair: But if one looked at the German model, the 50 plus one rule that essentially prevents it, you wouldn't suggest that that was a better model or that kind of restriction might be implemented elsewhere?

William Gaillard: We feel that what is good in the German model, and some other models, is supporters' participation, because in the end the identity of a club is its own fans. When you have a foreign owner, a foreign coach and mostly foreign players, what is left that is local? The history, the spirit of the club is based on its supporters and the identity of its supporters. Therefore, we feel that what is really positive about the German models, and other models, is the fact that supporters are involved in club management and in many cases own club equity.

Chair: Since we are on the question of supporters, I might go to Adrian who wants to continue that.

Q740 Mr Sanders: What role if any should supporters' trusts play in the governance arrangements of their club?

William Gaillard: We have taken steps at UEFA to financially support an organisation that is British based to Supporters Direct, and they are implementing for us a project in 14 different European countries where they are encouraging, helping and teaching supporters the virtues of supporters' trusts and participation in the ownership of their clubs and in the management of their clubs. We think that Supporters Direct in England and Scotland have done a fantastic job at rescuing clubs, but also at injecting a lot of rationality and positive supervision, thanks to their participation in club boards.

We are also a little bit worried that the financial future of Supporters Direct is not safe. I think they have received around £4.5 million over the years in terms of direct funding from public sources, Premier League and the FA. That has generated over £60 million of funds for clubs through supporters' trusts. Our experience with them is that they are highly qualified and determined people with an excellent track record in managing projects, and we feel that if the experiment is to succeed it cannot be left to just a bunch of volunteers who would basically give some of their time to the cause. We need a core organisation—a small one albeit—to run Supporters Direct. We do our part with the European side and I think it would be a tremendous loss for English football if this great experiment, which has already given so much to this country's football, was discontinued or was less efficient than it has been just because of a lack of funding.

Q741 Mr Sanders: Are there any examples of successful supporter ownership in Europe that—

William Gaillard: FC Barcelona is not a bad example.

Mr Sanders: It is a fairly exceptional one, though.

William Gaillard: Real Madrid is also a supporters' trust. Many German clubs include supporters' ownership. There are other examples is in Spain of supporters' trusts, but I think what, for example—

Q742 Mr Sanders: How are their umbrella organisations funded?

William Gaillard: In the case of the Spanish they are co-operatives, so they are completely independent. They have a long tradition of it. They always were—

Q743 Mr Sanders: They are not supporters' trusts, though, are they?

William Gaillard: They are different. Yes, they are co-operatives.

Mr Sanders: They have membership.

William Gaillard: Yes, exactly, but the way it has developed in England and the way we feel we can help it develop in a place like Italy, for example, which is very interested in the model, is through the supporters' trusts model. It is a lot easier than starting another Real Madrid or FC Barcelona in a different country, just because the idiosyncrasies of the Spanish situation are not easy to reproduce elsewhere.

Q744 Mr Sanders: Is there a Supporters Direct in Italy and, if so, how is that funded compared with the one in the UK?

William Gaillard: Yes, right now through our funding of Supporters Direct Europe, which is really a branch of Supporters Direct UK, we have been able to help a number of Italian clubs set up supporters' trusts and in the next few years we will be intensifying our efforts in order to do so. Also we have created in our licensing the post of Supporters Liaison Officer for clubs in Europe. Clubs that want to compete in European competitions down the line will need to have a Supporters Liaison Officer that will connect the club better to its own fans.

Q745 Mr Sanders: Where is the funding coming from?

William Gaillard: The funding is coming from us.

Q746 Mr Sanders: So not from the public sector in Italy?

William Gaillard: No. Well, in Italy there has been a lot of public sector funding for clubs. For example, most of the stadiums are owned by municipal authorities. So in the past it has been in quite a few European countries, much less now, some public funding for clubs.

Q747 Mr Sanders: You would not want to compare the state of the grounds in Italy with the state of the grounds in the UK—

William Gaillard: Absolutely.

Mr Sanders: —today, would you?

William Gaillard: It is one of the Achilles heels of Italian football, the fact that public authorities no longer have the kind of money that will allow them to even maintain those facilities. This is why we have introduced in our Financial Fair Play Rules the possibility for an owner to invest directly outside of the Financial Fair Play Rules into the renovations or the construction of a football ground, because we think in this English football is far more advanced than in other countries—not all countries but in most countries—in terms of club ownership which is a very positive factor.

Q748 Dr Coffey: Monsieur Gaillard, moving on to sports legislation. I will give you my personal perspective: there is quite a lot of talk, and it is referred to in the evidence, about enabling legislation perhaps would be helpful. England and Wales particularly have kind of a code of law that is different to the rest of Europe, in that you don't have permission to do things in this country. Our law is framed about what you cannot do as opposed to perhaps the other way round with the Napoleonic Code. But you particularly refer to you feel that enabling legislation would reduce pyrrhic turf wars between sports bodies and things like that. Can you tell me a bit about why you feel legislation would help that, because my concern is it could all end up with judicial reviews in the courts?

William Gaillard: This is the downside of legislation obviously. I think the intention of the Government in the UK is to give some time to the football family to sort out its turf wars and come up with reforms from inside. At the same time I understand that if this does not come out as a result of turf wars, then legislation may be enacted in order to help the process. There is a myriad of legislation all over Europe, including in this country. You do legislate in terms of sports or enabling legislation in order to help sports. The Olympics is a great example of that, but sometimes you need legislation.

We feel, for example, that very often in this country you have many different separate initiatives, let's say like in the field of grassroots football and player development and player education, where in most European countries you have one authority, the national association, that basically oversees all these efforts.

Here it is split between the clubs, the leagues, the PFA, the FA, which are probably a lot of overlapping efforts, a lot of redundancy, probably a waste of money, certainly a lack of streamlining in getting the education done, which is part of the reason why England is a bit lagging behind certain countries in football education. I share your doubts about what is the outcome of legislation but there may be cases where it is unfortunately necessary for the public authorities to step in.

Q749 Dr Coffey: Can you think of another example then, perhaps within Europe or wider afield, where legislation has made that difference as opposed to challenging the FA, or whoever, to get their act together?

William Gaillard: For example, there is legislation in my country, which is an example I know well, where it is clearly stated what is the role of the national association, the clubs, the leagues, and so on, and therefore you avoid the turf wars that have been going on in this country. Clearly each institution has its responsibilities and that has been set by legislation decades ago, which avoids conflicts because in a free-for-all everyone is always trying to encroach on the territory of the other, which is the normal situation that you find in the private sector. It is a natural situation, which may not be the most efficient way to fulfil football's social and educational obligations to society.

Q750 Paul Farrelly: I wanted to ask you a few questions about our own football association. To what extent does UEFA believe that England and Wales has a strong football association, in the sense of being effective and setting out a clear direction of the game in these countries?

William Gaillard: It is obvious that the turf wars that the Honourable Member was referring to before, and which is in our written statement, have damaged English football. In particular today, the English FA is probably in a weaker spot than any other FA in Europe. This is probably the result of the overwhelming power of professional football, especially as expressed by the Premier League and also the Football League. In other countries you have a more balanced situation where the status of the governing body that the FA holds is better protected. The FAs in continental countries tend to rule over all aspects of football, from grassroots in educational purposes to professional games going through the national team, and so on and so forth.

There have been attempts at reforming the FA. We are all familiar with Lord Burns' report. We have discussed these matters with the English FA a number of times. I think there is a genuine commitment to improve the efficiency of the organisation and to restore a more independent status, and we are very much in favour of that.

Q751 Paul Farrelly: When you say some of the other associations are better protected, in which ways are they better protected?

William Gaillard: In most of the other associations the place for the professional game is not so overwhelming. In most cases it is a minority position and priority is given to the social and educational role of sports and, therefore, to the grassroots movement and the local associations.

Q752 Paul Farrelly: So it is not necessarily about legislation. It is not necessarily about putting in rules that enforce it. Do we have a problem here of respect? Does the Premier League have a problem of respect for the FA that is not present in—

William Gaillard: I think "respect" may not be the right word. It is a question of the overwhelming financial power of professional football. One must realise that English professional football has been tremendously successful in generating revenues; in projecting itself outside; in building up an image and we have to be very grateful for the efforts that both the Premier League and the Football League have made in this direction.

At the same time it has not resulted in a better situation for English football in general. The performances of the national team have not been outstanding and, again, there are serious deficiencies in football education and in football development in this country. Now I believe that the method that has been chosen by the Government, that is to let the football family try to sort out its problems, and then only legislate if it cannot, is probably the right one in this respect. But again, as I said before, it is obvious that sometimes some kind of enabling legislation that basically limits turf wars between different echelons of the football family may be helpful if nothing comes out of the football family's efforts.

Q753 Paul Farrelly: The Premier League here was very clear in describing the Football Association as an association of interests. In your terminology, that defines a turf war. It is an institutionalised turf war.

William Gaillard: The Premier League represents the interests of its clubs. The FA is supposed to represent the interests of all football loving people in this country. It is about a different situation.

Q754 Paul Farrelly: When we went to Germany we were quite impressed by the ethos there that everybody spoke about, in particular their reaction to their national teams' disappointments in Euro 2000. They told us what they had done about it, and of course they all have their rivalries in different levels of the game. When we pushed them on how they developed their model they were quite open. They said, "We copied the French". So the question for UEFA, as far as our FA is concerned—just like the Germans, without putting themselves down or singling anyone out for particular merit, they said, "Yes, we copied the French"—which country should we best copy, do you think, in terms of football governance?

William Gaillard: You should copy the Dutch.

Paul Farrelly: The Dutch?

William Gaillard: Because they have the advantage of speaking English most of the time. It might be an easier task.

Q755 Paul Farrelly: Who would be your models of best practice, in terms—

William Gaillard: I think, as I mentioned, I was recently in the Netherlands and they have an excellent grassroots model. I think the key issue is that there should be—what exists in most European countries within the FA—a national technical director that would be fully in charge of football development, football education and grassroots for the whole country, and then of course would delegate part of the work to the local associations to the clubs, maybe even to the leagues, but would remain in command of the overall picture. I think that is what exists in most of the good educational models in Europe, and that should extend of course to football education for both boys and girls.

Q756 Paul Farrelly: One of the characterisations of the FA with the Premier League is that the tail—a very big tail—wags the dog. The dog has an awful lot of old whiskers but is determined to hang on in there, which are the FA Council who can act as a block from the amateur game on any progress or reform. Do the dogs in Europe have such old and crusty whiskers generally or are they more professional—

William Gaillard: You have probably seen it but it is a relative exercise for a dog to bite its own tail, and sometimes this is what it would need to do when the tail is wagging it.

Paul Farrelly: I do not want to get too far—

William Gaillard: No, there have been situations in Europe that I can easily qualify in which the amateur game has been perhaps too dominant, and there have been situations that have been more balanced. I think that is what should be aimed at. It is obvious today that perhaps the idea that has been floating around of introducing independent directors can be a positive one. The model that is being fostered by the Burns report is not completely compliant with, let us say, FIFA statutes because the election process is reduced to a minimum. The chairman is basically selected by a committee of head hunters and then it is approved. The election process is just that approval process. So it is not completely compliant with FIFA statutes.

At the same time most people are telling me that this is the best way out for England, the best way to reform itself. I am no authority in judging who is right. I would tend to listen to the local people because they know their situation better than we could from across the Channel.

Q757 Paul Farrelly: Time is moving on, I only have one final question. You talked about the grassroots and if we take Spain, Spain is a country that has two clubs which sell their own TV rights, which are very dominant. Yet, by the same token, we have seen the Spanish team develop and Spain is held as a paragon of virtue in terms of the coaching and the development, all the way up from the grassroots. Whereas we, on all the statistics, from the national team to the number of coaches and youth development, seem to have lagged behind. Why are we not as good as other countries, like Spain and Europe?

William Gaillard: I think Spain is a paradox in many ways because in some ways maybe the dog has lost its tail in Spain. We have on the one hand this domination of two clubs, which again has been there for decades, and on the other hand we have a strong FA that does not really get itself involved too much in the professional game but on the other hand has developed a tremendous education system with branches all over the country; very centralised with a great technical centre near Madrid in Las Rozas, and with overwhelming results. I think for men they have won all different competitions in Europe that there are to win; less successful with women. Germany is the real model there.

Q758 Paul Farrelly: Why have we not been so successful, what has held us back?

William Gaillard: I think this is what I was pointing out to you before: the lack of streamlining; the lack of a single authority over football education and development; the weakness of the FA in this sense; the fact that there is no national technical director; the fact that the FA, the different leagues, the PFA, run their own show as far as football education is concerned, and that is a weakness.

Chair: Do you want to do youth development?

Paul Farrelly: I discussed—

Chair: You don't want any more?

Paul Farrelly: No.

Q759 Chair: In that case, Mr Gaillard, can I thank you very much.

William Gaillard: Thank you.

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© Parliamentary copyright 2011
Prepared 29 July 2011