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

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

Culture, Media and Sport Committee

Football Governance

Tuesday 29 March 2011

Mr David Bernstein, Mr Alex Horne

Mr Roger Burden and Ms Kelly Simmons

Mr Stewart Regan

Evidence heard in Public Questions 448-585

USE OF THE TRANSCRIPT

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

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

Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 29 March 2011

Members present:

Mr John Whittingdale (Chair)

Ms Louise Bagshawe

Dr Thérèse Coffey

Damian Collins

Paul Farrelly

Alan Keen

Jim Sheridan

________________

Examination of Witnesses

Witnesses: Mr David Bernstein, Chairman, the Football Association, Mr Alex Horne, General Secretary, the Football Association, gave evidence.

Q448 Chair: Good morning, everybody. This is a further session of the Committee’s inquiry into football governance and I thank the FA for inviting us to Wembley to hold this morning’s session. I welcome, as part of our first panel, David Bernstein, the new chairman of the Football Association, and Alex Horne, the general secretary. Mr Bernstein, you are relatively new in post. Can you set out how you wish to see the FA develop in the coming months?

David Bernstein: Yes indeed. First, may I say how pleased we are that we have been able to play this fixture at home? There is a great deal, clearly, that needs to be done in football and we believe that the FA should be a leader and seen to be the leader of the game in this country and should provide, in many ways, what might perhaps be dangerously described as moral leadership as well.

We are taking this inquiry extremely seriously and obviously the recommendations that you come through with and the Government come through with we will listen to with the greatest of care. When I took this position, I knew that the status quo was not an option, that some change is necessary, but the change needs to be for the right reasons and at the right pace. I am confident that Alex, whom I have worked with in different capacities for a number of years, and I can deliver that change.

There were five themes that I identified very quickly as part of the agenda that I want to pursue. The first deals with football in terms of Club England, that is, the international side of football, the first team and the other teams that we have, and youth development which clearly is vital; I am sure we will come to later on. Secondly is respect, because the respect side of the game is very important to me. There is a huge amount of what we have done at the bottom end but I think that those at the top end of the game that need addressing. Also I suppose respect for the FA because perhaps one of the reasons we are here today is that there are some questions about that. Thirdly, governance which is obviously one of the key matters for today. Fourthly, relationships, both in terms of overseas relationships and relationships within the UK. Finally, efficiency because I think in terms of running the organisation efficiently and prioritisation of resources, there is a great deal to be done there. Those are the five themes that I have come up with early on, and while only two months have gone, I feel they are reinforced by those two months and it revolves around those five issues.

Q449 Chair: Alex Horne, you will have heard the evidence we have received from predecessors in your position, particularly Ian Watmore, who said he was neither a chief nor an executive. You changed your title to "general secretary", I note. Do you have some sympathy with that comment? Do you agree that your job is nigh on impossible?

Alex Horne: No, I do not agree that it is nigh on impossible. I understand some of the frustrations that Ian experienced, but in the year since Ian left we have achieved an awful lot as a team of executive. We have delivered against a stretching business plan across all the divisions in the organisation and, most notably, for the first time in the 11 years that we have been talking about it, we have moved forward with the development of our St George’s Park National Football Centre, our home for coaches nationwide, which will change fundamentally our approach to youth development in this country. We have delivered a 25-point plan for youth development with recommendations stretching right across the game, showing that the game can work together and, as it happens, we have delivered a Desso pitch here at Wembley and we have a very, very good playing surface. With a bit of patience, we have delivered a lot in the last year.

Q450 Chair: But do you see scope for further changes?

Alex Horne: As David has outlined, the status quo is not an option; we have already put forward recommendations for further independent directors on the board. What we have done as well is to put a number of independents into our structure at what I believe are the right places. For example, we have independent directors on the Wembley board. Operating an asset of this nature holding multiple events requires specific skill sets and we have looked for directors who have those skill sets.

We have done the same thing with our St George’s Park development and also with our Football Regulatory Authority where the body responsible for setting the rules across the game has a balance of professional game, national game and independent members. We are not averse to change. We have independents in a number of places, but we should never be complacent about looking at that structure.

Chair: Okay, we are going to come on to a number of those issues.

Q451 Paul Farrelly: The reason we started this inquiry was that the coalition Government, following each party’s manifesto, put in a commitment to encourage more supporter involvement but it clearly did not have much of an idea as to how to do it, so we have stepped in to give it some thought. A question to both of you: what role, if any, does the FA consider is right for supporters in either the running or governance of football clubs?

David Bernstein: As with many of these questions, it is a more complex question than perhaps first meets the eye. There are a number of different levels of supporter involvement. The first would be information; undoubtedly, supporters are entitled to full information from their clubs––a proper dialogue, whether it be financial or about ownership. They are absolutely key stakeholders and there should be a very free flow of information between clubs and supporters. I think anything less than that is unacceptable.

Board representation varies greatly from club to club and I have already met some supporter organisations; I met with the Arsenal Fanshare people who run a very sophisticated supporters scheme. I was most impressed with them with what they are doing and of course also with Arsenal who are a very progressive club in these matters. They do not want board representation in that particular case; they are not looking for it. I think that board representation could be, in some cases in some clubs, highly desirable, in others it could be risky for supporters; there are some boards that they may better not be on. I don’t think there is one rule for all. I think in some cases board representation is a good thing. In others, I think it may be less desirable.

The other key area of course is shareholder representation and one needs to distinguish between a controlling holding by supporters or minority supporter shareholdings. I think on the whole minority holdings, where possible, are quite desirable. As chairman of Manchester City, we were a public company. When I was chairman, we had 5,000 shareholders. We had an AGM where 800 shareholders turned up and I was very, very proud of that and I was very disappointed, in many ways, when the club was taken over and all the shareholders were removed to a single ownership.

I think controlling shareholding, however, is a difficult one and it will depend very much on the club and the state of the club. I have already been round the country visiting quite a few clubs, one or two outside the League, and there is, we all know, a huge imbalance of finances within many clubs, both League clubs and non-League clubs. My concern would be that if supporters rush in to ownership they may find that they are involved in something that is rather more than they expected; the funds have to go in the beginning and then, maybe, depending on what happens in the financial areas-I am sure we will be talking about it later on-the funds need to be put in year after year and we all know that many owners are subsidising their clubs year on year. That is not a situation I suspect supporters would want. I think it is complex. Clearly, more involvement is better than less involvement, but I don’t think there’s one rule for all.

Alex Horne: That was very comprehensive, but I can add that I think what we would seek to see are no barriers to entry to these models, if supporters go into them eyes wide open and they understand the risks that David referenced in terms of liquidity and ownership of clubs and the fiduciary responsibility as directors of clubs. I am intrigued by the notion of fiscal support or tax breaks, which I know has also been floated into the Committee.

Q452 Paul Farrelly: We have just produced a report into the arts and heritage and we commented that the big hole at the centre of the Government’s so-called philanthropy strategy was that they propose nothing to encourage it. They must have read some minds because in the budget they did put forward a policy on inheritance tax and legacies. Do you think football is such a special case that it merits special incentives and tax treatment to encourage supporters to invest in clubs or not?

Alex Horne: I certainly think, given the community nature of clubs, it’s something that is worth the Committee looking at further.

David Bernstein: Yes, I think I would support that. I don’t have that much to add but, yes, given the sort of the complexities involved and maybe the financial scenario. I certainly thought of the Arsenal supporters people. They were very much pushing the need for some help in that respect.

Q453 Dr Coffey: You are very familiar, Mr Bernstein, with the finances of Wembley stadium, To what extent is the requirement to pay for Wembley stadium, that constant top-up, constraining the ability of the FA to support the national game, the grassroots game?

David Bernstein: Yes, I am familiar with our finances. By 2015, we will have paid £150 million of debt plus interest and by 2015 we are anticipating that Wembley will become cash-positive and will start pushing cash back into the game. There is a lot to be done between now and then. In this environment, as you will know from the many businesses in sport or entertainment, it is not an easy call but that’s our aim. Clearly, in the interim, Wembley has been using FA finance to balance its books, but I think given what we see, given the fact over this few weeks we are in now, we’ll have eight events attracting 700,000 people to the stadium, it’s a fantastic national asset. Yes, there has been a degree of restriction of funds going to the rest of the game, but it is short term and hopefully it will turn, as I say, by around about 2015.

Q454 Dr Coffey: I recognise you have the national game strategy, which is trying to develop that. My understanding is that the amount of money going to the Football Foundation has been cut at certain points.

David Bernstein: It has.

Dr Coffey: It seems quite concerning trying to develop the grassroots instead of topping up the stadium.

David Bernstein: Yes, obviously, no one wants to cut that sort of funding, but it is short term and, as I say, by 2015 we should start move into cash-positive territory. We should have a double whammy positive effect for all those areas.

Q455 Dr Coffey: We heard last week from Ian Watmore that he considered that the professional game got a 50:50 with the national game. He didn’t think that was the right thing to do. Given the straitened finance, is there a view to, in the future, giving more priority to the national grassroots game?

Alex Horne: If I may, it was recommended by Lord Burns that we formally recognise a 50:50 split of surpluses to distribute to the professional game and the national game. It is now set in our articles of association. To change it would require, not only 75% shareholder vote, but also Premier League, Football League and the national game board approval. I have to say, I think it reflected the priorities at the time. I understand the model. However, I do think it is very restrictive. If the size of the surpluses change dramatically, it’s a very restrictive mechanism to have written into our articles and there may well be, five years on, a better way to invest our resources against that of strategic priorities.

Q456 Alan Keen: I was reluctant to ask this question; I was reminded when Thérèse asked about the stadium. I’ve been on this Committee since 1997 and I remember at one stage the FA were given £20 million, providing they made sure there was an athletics track at Wembley or the facilities to build one and take it away again. Was that liability ever taken away from the FA or does it still exist and, if it does, should you pay it to West Ham?

Alex Horne: I’m not sure I do know the answer fully, Alan. Can we take it away and can confirm to the Committee?

Q457 Alan Keen: I will support you in not having to pay it back but I just wondered whether that was still-

David Bernstein: Yes, I am sorry. It is something I am not conversant with it. We can come back to you on that, if we may.

Alex Horne: I think our commitment to the IAAF remains in that if we were asked to we would have to convert the stadium into an athletic stadium but, on the basis of the Olympic Park development, I assume that liability has been expunged.

Alan Keen: I am sure West Ham will-

David Bernstein: I can say I was very involved with the City of Manchester Stadium and the whole move from Maine Road to that and certainly the view of our supporters-and I am sure supporters across the country-is English supporters do not like stadia with athletics tracks around them. I know there are ways that one can convert from one to the other. Certainly, at City of Manchester Stadium, we did make a quite sophisticated move from the Commonwealth Games to a football stadium which went extremely well. I think it was probably very much a very good example of how a stadium-

Alan Keen: If I remember, I think it was Sport England who provided the financing.

David Bernstein: They did, indeed. They did, indeed, but we complied absolutely with Sport England on the list of requirements.

Q458 Dr Coffey: Could you remind us how many directors there are at WNSL because I can recall Melvin Benn, the music promoter, is an independent director?

David Bernstein: On the board we have seven, I think.1

Q459 Dr Coffey: Seven and how many of them are independent?

David Bernstein: There are two independent non-execs; Melvin Benn and Ian Ritchie. I will be coming off as chairman, because it is clearly not proper that I am chairman of the FA and chairman of that; that will happen very quickly now. Alex is on the board and then we have two executive directors. It is a much more conventional board, as a board that would stand up to plc corporate governance.

Q460 Chair: Can I come back to the FA’s investment in the national game? You also receive quite a substantial amount of public money––something like £25 million over four years to invest in the national game. While the target that the FA have set is to increase participation by 150,000 people over that period, recent figures show that participation has dropped by over 45,000 in the last four years, so it appears you are going in the wrong direction. Can you say what you are going to try and do to reverse that?

Alex Horne: Yes, the national game strategy very much has in its heart increased participation and that is of players but also of the support infrastructure required for the players to deliver: quality coaches, referees, and so on. One of the issues that we’ve had with the Sport England measurement is that it’s global across all sorts of social football and our investment, historically, has been very much structured around 11-a-side formal affiliated football. Over the last two or three years, we have worked very hard to make sure that we’re embracing all forms of the game and encouraging football to be played in many formats.

The small-sided game is much more relevant to people now who are time-hungry, where resources allow for that flexible playing after work and so on. Very specifically though, to turbo-charge the move towards those targets, we have brought on board our sponsorship with Mars and absolutely targeted a very, very substantial investment from Mars in delivering adult social play. Towards the start of next season, we will be launching our Just Play initiative which will see 100 centres and 800 Just Play co-ordinators operating across the country, designed exactly to help deliver against those Sport England targets.

Q461 Chair: Do you agree with the estimate that participation has fallen by that amount and, if so, what do you put it down to?

Alex Horne: I could not challenge the statistics. I think one of the anomalies is that the numbers we are measuring, which are around the number of registered teams, we are not seeing the same decline. We are seeing the number of teams, at least to hold static if not increase across the men’s game, the women’s game, 11-a-side and smaller forms of the game. We are probably scratching our heads a bit in terms of why the Sport England numbers have come down by so much.

Q462 Chair: But even by your measure, holding the number of teams static when you are investing that kind of money in is not an enormous achievement.

Alex Horne: No, no, I appreciate that and, as I said, we are absolutely targeting improvement in those statistics over the remaining two years of the four-year whole sport plan funding.

David Bernstein: There are social trends which one has to fight against with many young people moving away from active participation in sports generally. I am chairman of a tennis club and the same thing applies: there are fewer people playing generally so I think there is a hill to climb in that sense.

Chair: Certainly, it is a challenge facing all sports but it is also perhaps the key objective for the legacy of the Olympic Games.

David Bernstein: Absolutely, absolutely.

Q463 Jim Sheridan: Could you expand on your answers to Mr Farrelly about the financial regulation of English clubs, particularly about ownership and indeed the scrutiny of the clubs? Do you think that the current financial regulations are robust enough or are there changes that you think should be made?

David Bernstein: There is a lot happening and some of what is happening perhaps is a little piecemeal; we have Financial Fair Play coming in with quite a part of the Premier League. We have forward testing. We have a degree of wages control at the bottom level of the Football League. So there is quite a lot now coming together in a sort of a maybe slightly piecemeal basis. I think my view would be that, although one is comparing a very wide range of economic models between the Premier League and the Football League, nevertheless, there possibly should be more consistency across the field.

I would like to see Financial Fair Play potentially extended across the whole of the Premier League and maybe moving in to the Football League as well, but I think progress is being made; it’s being taken very seriously, I know, by the Leagues. I think perhaps the question should lead on to as well is the FA’s role in this and a number of other areas that you may want to touch on. We believe that the FA’s supervisory role should be increased. I think perhaps we have allowed some of these things to drift away from us. The way the Leagues are run with self-regulation we think is absolutely right; we wouldn’t want to change that or try and pull that back but I think our supervision over the way that is done could be upgraded.

Jim Sheridan: Do you have anything else to add, Alex?

Alex Horne: No, I don’t think so. I think that covered everything.

Q464 Jim Sheridan: David, I think you mentioned in an earlier question that supporters have a need for as much information as possible; we heard at a previous session when Niall Quinn was telling us there was some sort of clandestine organisation that looks at people trying to take over clubs or ownership of clubs, but he did not think it was important that the fans knew just exactly who was lurking in the background and who was taking over the clubs. What do you think? Is that right, given that what you’ve just said about supporters’ information?

David Bernstein: I’m sorry, but I haven’t read what Niall Quinn said; I have great respect for him but, no, I disagree with that. I think that supporters should have very open access to ownership of their clubs. One comes down to this whole fit and proper person question. No, it is absolutely key that supporters know who runs their clubs and we have seen incidents over the years of perhaps ownership falling into hands that are not totally ideal.

Q465 Jim Sheridan: Can I use two clubs as examples? There is the telling case of Leeds United where supporters do not know who owns their club; that has to be looked at. Secondly, look at Portsmouth last season who managed to get to the FA Cup without any sanctions whatsoever. Is that acceptable best practice?

David Bernstein: That is a difficult one. The Leagues can and do put sanctions on clubs going into administration. Administration is not a cessation of trading; companies who go into administration continue to trade. Of course in the FA Cup it would be difficult to find a sanction other than throwing the side out of the competition-obviously you cannot deduct points-which would disrupt the competition and have all sorts of other effects.

In one way one would say, yes, it would be great to do something for a club in that situation, to penalise them in the FA Cup, but it would cause difficulties. There is no halfway measure; you either let them stay in or you take them out. If you take them out, then you have to be able to have a walkover I presume and you would have all sorts of implications. Not ideal but I would have thought probably best dealt with as it was.

Alex Horne: In the matter of Leeds, it is worth noting that the ownership structure is known to a limited number of executives in the League and in the FA. Our rules do not allow us to be transparent with that; I think it is time to look at the rules because I agree with David that fans should know who owns their clubs.

Q466 Jim Sheridan: As part of this investigation, the Committee visited Germany. We have seen how the system works in Germany in terms of the licensing system; I take it you know the licensing system in Germany. Do you have any views? It seems to me that the president of the German FA had a far more effective role in terms of organising club football. Would you like to see that brought into the English FA?

Alex Horne: I’m familiar with the licensing scheme; it is very similar to the UEFA licensing scheme that exists in European football, which I’ve been involved with for six or seven years. I sat on the original UEFA licensing panel that wrote the licensing rules and then the latter rules around Financial Fair Play and the model was based on the German model and the French model where they license their clubs.

The danger with an overly formal licensing scheme is it becomes bureaucracy for the sake of it. There are a number of good practice/best practice governance measures that come through that licensing scheme, most of which the Premier League today has adopted and put into its rules, most of which are now moved down into the Championship rules. I think English football adopts good practice where it’s appropriate, for example, around qualification of managers and so on.

Turning to financial regulation, I think there is a decision moment for the game because I agree with David; I think it is time to look now at the gap and consider closing the gap between the salary cap that exists in League Two and the cost control measures, the Financial Fair Play measures, which now exist for clubs in Europe. There is a moment to reach across all four Leagues and look at appropriate cost control measures in all four Leagues and listening to the Chairman of the Football League’s evidence. I think that would chime with their position and their concerns regarding debt in their clubs. If we were going to go down a more formal hard financial regulatory model we would not need some form of overarching licensing system to make sure it was transparent, auditable and fair.

Chair: But it is not the position of the FA but that is the direction you are going to move.

Alex Horne: That is the direction that David and I would both seek to move in. One of the things I will add as well is that David, in his point about relationships, has called a meeting of the chairmen and chief executives of the Premier League, the Football League and the national game to make sure that we are sitting down and understanding some of these whole game issues and making sure that we are agreeing our approach: if you like, uncluttering some of the regulatory framework that exists, making sure our roles and responsibilities are clearly defined across each of those bodies and making sure that we’re adopting the right strategic approach when it comes to, for example, financial regulation of clubs or perhaps future youth development measures. That is something that David has already put in train.

David Bernstein: This relationship area is incredibly important. There are natural tensions between the leagues and ourselves, that’s healthy but there’s also a huge area where we have mutual interest. I think we need to sort of embrace that, work with our colleagues in the leagues and the national game to work on the positives, although there are a lot of positives. Of course, the Premier League and the development of the Premier League, which gave rise to these tensions but is a fantastic success, arguably, is one of the great sporting successes of all time.

Q467 Chair: Indeed, but do they agree that you should move towards a licensing system?

David Bernstein: Well, we will see. No, I’m not saying they agree that at the moment and we have yet to begin to explore some of these things, but I’m hopeful.

Q468 Chair: It appears to be your view that you should move in that direction but if you don’t have the support of the Premier League you will run into the same brick wall that all your predecessors have run into.

David Bernstein: Understood, but it’s a journey that people have to take and the way we’ll be taking it quickly and we will work them, hopefully, to a positive conclusion.

Q469 Jim Sheridan: Is it, therefore, the intention or the ambition of the FA to take over-or primarily take over-financial responsibility for the clubs?

David Bernstein: No, sorry, definitely not. I just want to emphasise that is not the intention. I think the delegated authority that exists is absolutely right, I think it is absolutely right that the leagues have primary responsibility for that, but it is, I think, for us, as I said earlier, to ensure that our overview, our audit, if you like, of what is happening is more extensive than it has been.

Q470 Ms Bagshawe: Just a quick summary: Mr Horne, you seem very uncomfortable with the issue of transparency, that the supporters of Leeds United have no idea who runs their clubs. Earlier, Mr Bernstein, you drew a distinction between transparency for supporters sitting on the boards of clubs and ownership models, where supporters own the clubs, but you said that in some cases, it might be dangerous for supporters to have representation on the board of some clubs, but not on the board of others. In what way would it be dangerous for supporters to be represented on the boards of clubs?

David Bernstein: Well, dangerous perhaps is too strong a word, but yes, what I mean is that being part of a board has responsibilities and exposures, and it would be very important for anybody going on to a board to understand those. Given the imbalances in football at the moment and the situation in some clubs at the moment, I think there are some boards that supporters should be very wary about joining, for obvious corporate reasons.

Q471 Ms Bagshawe: Fair enough, but assuming the supporters would delegate somebody who would be commensurate to fulfil those responsibilities, would you agree that it is a regrettable situation that in a major club like Leeds, their supporters do not know who owns it?

David Bernstein: Absolutely. Sorry, I said earlier-I thought I was clear-I think the supporters should know who owns all and any club, absolutely. I do not think there should be any exceptions.

Q472 Damian Collins: I just go back to Leeds United. Mr Horne, you said that executives within the game know who owns Leeds. By that, do you mean they know who the investors are in the trust, the Swiss-based trust that owns the majority shareholding in Leeds United?

Alex Horne: Yes.

Damian Collins: There are, so have you-?

Alex Horne: It is my understanding, yes, Damian.

Q473 Damian Collins: Who told you that?

Alex Horne: The director of governance at the Football Association, so-

Damian Collins: So he knows?

Alex Horne: Yes.

Q474 Damian Collins: Who else?

Alex Horne: Well, as I say, I think there are two or three executives within his team who know. The requirement to submit that information is a requirement to become an affiliated club under Football Association regulations, so in order to grant them that access, which they need to be a voting member of our shareholding and to play in the FA Cup, we had to understand that information and then we were able to grant that access.

Damian Collins: So presumably, there are issues like dual interest, which you have oversight over?

Alex Horne: Correct.

Q475 Damian Collins: So would that mean you would need to know whether a major investor in that trust also had a stake in another football club?

Alex Horne: Correct, which is why we know, but as I said earlier, our rules do not then allow us to openly expose that shareholding, for want of a better word.

Q476 Damian Collins: But is it required that you are told the names of those people so that you can assess whether their club passes the test, even though their names as individuals are not even known by the chief executive of the Football Club?

Alex Horne: Or indeed, the general secretary of the FA.

Q477 Damian Collins: Would the FA would have dealt directly with the trustees to understand those points?

Alex Horne: Yes.

Q478 Damian Collins: With regards to what I might call the FA’s licensing system proposal, is that similar to the recommendations that Lord Triesman made in his report that he submitted to the Committee in response to the questions by the previous Secretary of State? He recommended that independently audited club accounts were lodged with the FA, that the FA would have oversight over that. Are you working from his report, his recommendations? Is the FA continuing in that vein of thinking?

Alex Horne: Just to reiterate, we are working on the premise that the UEFA licensing model which exists works, and it works in co-operation with FA executives and league executives. The work is done by a combination of those executives. The decision is made by a committee of FA members, on behalf of the FA board, but much of the work is delegated to the league executives, supported by FA executives. So it is a hybrid model, if you like, of co-operation, which I think is the model we should be looking at.

Q479 Damian Collins: You say the UEFA Financial Fair Play regulation model works. Does that mean that you have had discussions with UEFA about enforcement of that? Does that mean that UEFA have made decisions about how they are going to enforce the regulations and work potentially with national governing bodies to help them do that?

Alex Horne: UEFA absolutely enforce their regulations in their competition and they recognise the national associations in each of the countries as the body responsible for regulating and for licensing the clubs. So that is what happens right now. UEFA has no authority to extend that into domestic leagues, because they are only competition organisers, so they can only do this on the basis that those clubs want to participate in their competition.

Q480 Damian Collins: Lord Triesman floated these ideas nearly two years ago. Has the FA been in constant dialogue with the Premier League about moving to a licensing model or a model at least where the FA has or other bodies have scrutiny of clubs’ accounts, the ability to call them in, or even sort of what was suggested to us last week, you know, put clubs in special measures that they think have financial problems? Are these issues that you have been actively discussing with the Premier League?

Alex Horne: Yes, and they are issues that the two leagues currently enact. There are already special measures put in place where clubs are submitting financial information for a season, forward-looking information, and where leagues have concerns, particularly in the Football League, they are embargoing them from, for example, entering into the transfer window. So sanctions do exist, the work is happening and it is happening at League level in consultation with ourselves.

Damian Collins: But you are talking about something much more substantial. What I am trying to get at is, if we take Lord Triesman’s word for it, it sounded like Sir Dave Richards and the Premier League were not particularly interested in the FA’s view on this subject. Are you making more headway?

Alex Horne: I am not necessarily talking about anything more substantial. As David said earlier, I think this can work with the delegated authority to the Leagues. What I think we need to do is to agree with the Leagues that it is time to do this. We need to set the rules very clearly so they work across the spectrum of the four senior professional Leagues in particular to make sure there then aren’t any gaps or unintended consequences, for example, for conference clubs. As regards headway, I think that is where stability of leadership with David and myself comes into play and David’s meeting that he has called to try and move some of these agenda items on.

Damian Collins: In terms of stability of leadership, I suppose only time will tell.

Alex Horne: Yes, sure.

Q481 Damian Collins: An issue that we have discussed quite a lot with clubs and other individuals who have come before the Committee is the football creditors rule. What is the view of the FA on the football creditors rule?

David Bernstein: I can understand the rule being the subject of some criticism, because there is clearly a perceived-and probably actual-lack of equity in some respects. However, I think from my point of view, the FA’s point of view, we would, on balance, remain supportive of it. Why? Because the integrity of the competitions is protected by it, and without it, there could well be a snowball effect if a particular club hits the buffers. I think I’m more confident in saying that in the context of the additional financial regulation and control that we’re talking about; that, with Financial Fair Play, with forward testing, with creditors being paid more promptly-I mean, there has been all sorts of issues of course with Inland Revenue liabilities. Well, that is going to be much reduced now. They have to be paid more promptly.

As part of that, I think if Alex and I had our say, we would like to go back to the days of football transfers, of money between clubs being payable within one year and getting away from extended terms, which have their dangers. So I think, on balance, not an easy call. We would want to maintain that, but with much stronger controls around to avoid the exposures that have arisen.

Q482 Damian Collins: The chairman of the Football League told us he could not find a moral argument for keeping the football creditors rule. Do you think he is wrong? Can you find one?

David Bernstein: As I said, I can see there is a moral argument, but I think on balance, I respect his view. My view would be that, with these other measures, the exposures could be greatly reduced and integrity and protection of the league is very, very important, and very important for supporters.

Q483 Damian Collins: Lord Mawhinney said he takes a completely different view about integrity of competition, and that clubs going into administration and clubs being allowed to over-extend themselves, safe in the knowledge they may not have to pay all their non-football creditors damages the integrity of the competition, and certainly damages, I think, the moral authority of the game in terms of its standing.

Alex Horne: It is a difficult one, this, on the basis that it is a closed league, the participants have to interact with each other for the duration of a season, they have to play matches against each other and they will trade with each other in terms of players. So the rule seeks to make sure there is no advantage or unnecessary advantage to a club in entering some form of insolvency, particularly on the other members of the League. So it is quite a selfish sort of members’ club rule, but I think very necessarily it is a selfish members’ club rule, because I think if you were to allow a club to fail owing large sums of money to other clubs, there’d be a real call for that club to be extinguished from the League.

Q484 Damian Collins: I agree with you. I think it is a selfish club rule that allows businesses that support a local club within its community to lose out and potentially face financial hardships themselves, whereas a football club at the other end of the country is completely protected by the integrity of these rules, and other people in the game have spoken out about this. In fact, David Gill said when he came before us that he thought that we could get rid of the football creditors rule, and that if we did, clubs would be more responsible in their financial transactions with each other, because they will have a vested interest in ensuring that the clubs they are dealing with can truly afford to pay their bills. Do you think David Gill is wrong?

Alex Horne: No, I understand both sides of the argument, and I think it is a difficult one. Corporately, we’ve defended this hard over years, and I understand why we defend it. If now is the time to re-debate it, then it is another topic for our discussions.

David Bernstein: You see, if the forward look test works and football liabilities were perhaps more confined, in other words, long-term credit was not given so easily, I think you may achieve, in a sense, what we want without doing away with this rule.

Q485 Damian Collins: That may be, but I must say, in your opening remarks, Mr Bernstein, you said that thought the FA could give moral leadership for football, and I’m not seeing much moral leadership on this issue, I’m afraid.

David Bernstein: I hear you. I think we have a number of roles. One of them is to maintain the integrity of the leagues and ensure this whole thing continues to work properly. I repeat, it is a view which goes along with the controls which I think is so important, which would change the whole look over a period of time, of football clubs’ balance sheets, which we all agree is desperately needed.

Q486 Alan Keen: We are talking about finances: could I come on to what I believe is the crux of the whole thing? I am a great supporter of the private enterprise system. I spent all my working life, 38 years before I came into Parliament, most of that time as a company director in a national company as well as having my own business for a spell. I am a great supporter of that, but there are restrictions on the free enterprise system. In fact, I even felt sorry for Sky when they had taken such a wonderful initiative and took a gamble as well when they started to pour money into football in order to increase their intake from subscriptions, and it has been vastly successful. I felt sorry for them in a way that that initiative that they took and the gamble had to be penalised; Europe wanted more competition. Now, coming on to the football itself, the vast amount of money in the game is put in by supporters, either through subscriptions through Sky and through to the Premier League, the sale of merchandise and entrance fees. It is supporters who put the mass of the money in. If I was a Premier League club owner, whether I was one who had bought the club by using the club’s assets to borrow the money and my intention was to take as much money as I could out in as short a time as possible, by either selling the club or taking it out in management fees, or whether I was somebody like Abramovich, who I think is a genuine football supporter, there is still a vast amount of money in football and we are scraping to fund grassroots football. So the balance is not right.

I understand the ownership of clubs. You cannot just go and take it away from people and it would damage the game, but would you agree with me that this is whole crux of the problem that we are facing? I mean, it is connected with the ownership of clubs and supporters’ rights. It is a long question, this. If, for instance, the next television agreement doubled the amount of income for the Premier League clubs, would you not agree with me that all that money should not go to Premier League clubs and there should be some sort of regulation? Football should be able to demand much larger chunk of that money to fund grassroots football. It is how we do that that really is the crux of the whole thing. Do you agree with me on the case I am putting forward?

Alex Horne: I think the thing I would point out is that, while there is an awful lot of money going into the Premier League, there are very few clubs making a profit.

Q487 Alan Keen: But if the TV deal was doubled next time, as it almost was last time, would that still be spent on salaries to players? It is not going anywhere else, apart from some club owners whose intention is to take money out of the game. Whatever it is, it is supporters putting the money in, and they care about grassroots as well, and there are at least three of us on this Committee still playing football at our advanced age now, because we care about the game at every possible level. Do you not agree with me?

That is the crux of the problem that we are facing, that the vast amount of money in the game is going out in players’ wages and we would only have to take a relatively small amount more than we are taking now, but it is not easy to take that money out from the Premier League. I am a great supporter of the Premier League. Its achievements have been absolutely fantastic and we are very proud of it, but there is an imbalance, and it is an injustice as well, when we are struggling to finance grassroots football. I know that a lot of money goes from the Premier League now to fund grassroots football, but that balance cannot be right. I am asking you, do you agree with me that balance is wrong?

Alex Horne: I am not sure I do. I think that the Premier League, as a separate commercial entity returning circa 10% of its revenue to the rest of football, is not an inappropriate number. I’m sure you could have a different number, but it’s a very generous number for a commercial organisation.

More importantly for me is the second part of the question around the overall cost control measures. I think that’s an example where the clubs may well be prepared to. It may be time to embrace overall cost control measures, because the fact is that income coming into the League does pass straight through the League. The European nature of it, the competitive nature of it says that the performers on the pitch deserve to be remunerated for entertaining us all. The supporters pay to see the football being played, so players deserve to be paid commensurately with the income into the game, but not necessarily significantly over and above the income into the game.

David Bernstein: If a Premier League club subject to Financial Fair Play, i.e. balancing its books-let’s assume that for the moment-and over a period of time, its income, let’s say, goes up from £300 million to £500 million, and it is able to increase its wages to players still at 50% of turnover, but to 50% of £500 million, is that a proper thing to do? Well, it is the wages that attract the players. It is the players that make the league. The Premier League is a success, in a sense, because of the amount of money going to players, and if the club is in balance and if these other areas that we are talking about are dealt with, then I think that is really, whatever one’s moral view on the subject, a matter for the club as a self-standing organisation to trade as it will, if the club is complying with the financial regulations we’ve been talking about.

Q488 Alan Keen: The question I am really leading on to is: football is different from the rest of private enterprise. Should we not be entitled to make sure that the FA, when it started the pyramid-it is not quite at the top of the pyramid, not within this country-should be able to make sure that more money goes to grassroots? If the TV income doubled again, the extra wages to players would continue, as you have just agreed. You could add another 50% on the players’ wages. Maybe Messi and a few of his colleagues would come and we would impoverish the rest of Europe. We would get them all here, which would be bad again for the development of English footballers. You know, that must be true.

I know it is extremely difficult for you two to agree with what I am saying, and I am sure you do not disagree with me. We can talk about the rights of the free enterprise system, of clubs holding on to that money, but football is different. I mean, this is what we really have to face. We have the media sitting in the back. The media needs to bring these issues forward and highlight them for the rest of the football family to discuss. I know it is difficult. I did not expect you to give any answer other than you have given.

David Bernstein: We have to be clear. Alex’s and my agenda is to try and perhaps take the high ground again on behalf of the FA and to reclaim some of the areas and functions that perhaps have been allowed to slip. Nevertheless, there are areas which are really beyond and should be, I think, beyond the FA’s remit. The actual mechanics of how a club operates, of how it manages its wages policy, as long as it’s complying-I keep saying the same thing, complying-with the financial regulations that are and maybe should be more extensively put in place, and some of these things are, I believe, on the edge or beyond our remit. There is a limit to what I think the FA can be expected to tangibly do.

Q489 Alan Keen: What about quotas then for League clubs? That would be one way of us not going further and further so that clubs have no English players left playing for them on a Saturday or something.

David Bernstein: Yes, of course.

Alan Keen: You know, there are regulations that can be brought in that can address this without having to go completely against private enterprise, normal company law, European law.

Alex Horne: If we are going to get into youth development-looking at the Chair, I’m not sure long we have-but if I try and give a succinct answer to cover a couple of your points, one of the exciting things about the Premier League proposals for elite player development is that it will necessarily be diverting and requiring investment into young home-grown playing talent. What we’re striving to achieve around that turbo-charged academy system is a much broader, deeper talent pool of young players coming through the system from five years old.

You may have seen in the press recently that we are rewriting how the game is played across the country. We are seeking to play more developmental football later on different sizes of pitches, so that the game is much more about learning to play, being comfortable on the ball than it is about necessarily points or winning or tables. We are working very hard to fuel the pipeline, if you like. The Premier League and the Football League are working very hard to increase the output of their academies, and that then benefits our international team structure.

So we’re then working very hard at the other end of that spectrum to make sure that we’re working with the best young English players coming through the academy system and converting them into teams who can win at all levels. Our under-17s are current European champions, our under-21s, although they unfortunately lost last night, are number one in the world and go to Denmark in the summer with the prospect of doing very, very well.2 A number of our development teams are performing well, but we need to keep working on that and make sure we have a pipeline of international players and international teams who can succeed in future tournaments.

All of that is underpinned by another central FA attribute, and that is the development of coaches. We are setting about professionalising the coaching industry, licensing coaches, continuous professional development for coaches, more better-qualified coaches with age-appropriate skills being available to the game at all levels across the grassroots and into the academies, and that’s our investment into the structure.

Just to turn full circle, that’s the clubs’ and league’s investment into the structure, which is so important to long-term development of better home-grown, and selfishly, better English players. I would rather see that work, if I’m honest, than force a quota system. The whole game is aligned behind that approach, and that’s what we’re going to focus our time and energy on.

Alan Keen: The Chair will not let me get further into the argument, otherwise I would come back at you straight away.

Chair: We need to move on.

Q490 Jim Sheridan: I am not asking you to comment on this particular question, but just before on what Alan was saying about money leaving football, throughout this inquiry we have heard of genuine concerns about the role of footballers’ agents in the game and the money they take out of the game. It is just to put on record that there are genuine concerns about the role of football agents.

David Bernstein: Absolutely, understood.

Q491 Paul Farrelly: I want to move on to your internal review. In your written evidence, you said you would keep us updated with progress. Your written evidence also said that David was due to receive that review on 1 February. So will you tell us what it recommended?

David Bernstein: Yes. May I precede that by quoting something to you? I addressed the FA Council last week on the question of independent directors, which is a focal point for the moment on the internal review. I would like to read a couple of paragraphs of what I said, because I think it sort of sets the scene. I said, "There was a widely held thesis that the FA is gradually losing authority and that this is not just a factor of a rapidly changing football landscape, but of a corporate governance structure that has not adjusted to take account of these changes. Independent directors are not the only governance issue we should be discussing, but nevertheless a very important first step". I just wanted to make it clear that that has been put to the council. It was accepted, I think, by the Council, and I think we are on the first stage of a journey with this.

The actual results of the review, what they focused on-and it may not sound particularly exciting to the Committee-were basic governance issues. I do have a list of them here: draft formal schedule of matters reserved for the board; enhanced corporate governance; sections of the annual report; performance appraisal of the chairman––unfortunately––to be introduced; annual report to include a summary of the roll and membership of the nomination committee; director development to be considered, to include the appraisal of individual directors as part of an overall performance. It is certainly not for now, but you are most welcome to it, that is a detailed paper that has been produced.

Now, what has not been addressed at this moment, because I did not want to get ahead of ourselves, are some of the other perhaps more fundamental questions I know have been raised in other evidence and that we are aware of. I think it is very important to try and get the first steps through successfully, i.e. the independent directors, both because I think it is a really crucial issue and also in a way it tests the system, and ours is quite a complicated system. I mean, in order to get this adopted, I’ve had to put the matter already to two board meetings in February and March. It went to the Council for discussion in March. I then have to do a road tour around shareholders around the country. It then comes back to Council in May and then it goes to the shareholders, I think in May. So it is quite an extended process to get this done, and I do not really want to get too involved in other basic issues at the moment until we have this hopefully put to bed.

Q492 Paul Farrelly: So are you hoping that after the FA Cup final, before people go off for the summer break, that you will get this proposal through?

David Bernstein: I will do everything I can to get it done, yes.

Paul Farrelly: You said it did not sound terribly exciting.

David Bernstein: Not those particular items, no.

Q493 Paul Farrelly: I think that is probably an understatement. I mean, to what extent is your internal review anything more than what you might call in the rag trade a two new suits policy or a suits assessing suits policy? What else is in there?

David Bernstein: As far as the governance review is concerned, there is a lot of compliance type detail, things that a major public corporation would do, and the sort of thing I am used to from the commercial world, proper compliance stuff; other areas concerning the board and other related matters, structural matters within the FA, how the committees are organised, the role of the FRA and so on have not been fully concluded yet. Frankly, I’m happy that they haven’t. I think we need a bit more time and I’d like to get this independent directors situation out of the way first. I think there is a little bit of a danger here that as a new chairman, all full of enthusiasm and so on to get certain things done, I do not get too far ahead of my own constituency. If we are going to get things done effectively, I think we need to ensure that I’m working with my colleagues and the board and Council, and so on and keep them on board, clearly.

Q494 Paul Farrelly: I understand that, but I think what people are looking for perhaps is a firm smack of leadership. Let me just ask one question which has been left in the air: regarding fans, you think fans should know who owns their football clubs. Some people within the FA know who is behind allegedly the trusts at Leeds, but you have not said what you are going to do to make your wishes and ambitions a reality. Does your review address this particular point?

Alex Horne: The first step is David’s meeting with the other chairmen of the other bodies and the chief executives of the other bodies with myself, to sit down and reset the architecture. Once we know who is responsible for what, in my view, we should understand our role within the overall hierarchy before we go back and look at our corporate governance again. Corporate governance is a constant thing on the agenda. As David said, very rightly, the immediate recommendation is around incremental independent non-executives. I think we want to run that through in parallel with our conversations around how we think the overall architecture should be reset and then come back to that. Once we have agreed our role and our role in oversight and/or delegation, that will enable us to look again at the right corporate structure for the FA.

Q495 Paul Farrelly: That was not the question. My question was what, if anything, in your internal review is there to say, "This is what we want to do"? For example, take the issue of transparency amongst the constituent members of the Football Association what is there saying, "and this is what we are recommending to make it a reality"?

Alex Horne: Forgive me, Paul. I am not sure I understand the question. The transparency of directors-

Q496 Paul Farrelly: No, transparency of ownership. David, do you perhaps understand better?

David Bernstein: Yes, I understand the question. I think the slight difficulty here is I have been in position for two months. I have made, I think, a lot of progress in a very short period, and maybe my length of period here and what you’d like to hear is not an ideal mix. I am into the Club England chairmanship, which I think was extremely important for a number of reasons you might want to touch on. We have the independent director thing moving and a lot of other initiatives going, but we haven’t yet come to a conclusion on some of these things. In a way, I’m almost pleased that we haven’t. It would be premature for me to come up with answers, with a wide range of answers, so quickly.

So on some of the things you would probably like to hear from me, I’m not quite there yet, and nor do I want to be, because I think it would damage the first very important step of independent directors. I do not want to make independent directors sound like the be-all and end-all, but I think it is important, I think it is symbolically important for the FA to get this done and I do not want to prejudice that.

Q497 Paul Farrelly: Can I ask you, David, then in what sense do you think that to date the Football Association has not behaved like a respected governing body?

David Bernstein: I think probably what has happened is that the FA is in some respects unfairly maligned. I mean, let me say-it has not been said yet-that I think the staff within the FA, a lot of the basic work being done within the FA are absolutely fantastic. I am new on the scene here. I am incredibly impressed with the quality of a wide range of work and personnel who are employed by the FA. The problem-and there has been a problem-has been at the top of the organisation. We have had too many changes: changes of chief executives, changes of chairmen.

We have had clearly a poor performance in some major areas, such as the World Cup bid, the World Cup itself, the World Cup performance, and these are high-profile, very important areas. The FA perhaps lacks confidence because of those things. I think it’s my job, working with Alex, to get the FA on the front foot, to take the high ground in the way we’ve described already.

I think there’s very important work to be done, but I think it’s building on what is a very, very strong organisation in many ways. I think because of the problems at the top end, some of the issues, many of the good things lower down in the organisation are not properly recognised. I have already been around the country quite extensively, to the Midlands, to Middlesbrough, looking at youth developments, looking at sites where Football Foundation money has gone into. There is fantastic work being done. It’s very, very impressive, and a lot of that is lost because of some of these high-profile issues.

Q498 Paul Farrelly: I just have one final question on your structures. The strong view that we have heard from many people who have been in and out of the FA’s doors is that the FA does not work because it is too riddled with entrenched, vested interests. The same might be said of the structure just below the FA board, the Professional Game Board. Can you tell us what the purpose of the professional game board is and has your internal review recommended that there are independent non-executives attached to that committee as well?

Alex Horne: The Professional Game Board’s role, as outlined in the Burns recommendations, is to oversee matters relevant to the professional clubs, to the 92 professional clubs. Very specifically, that is where we’re debating the youth development proposals at the moment on behalf of the whole game. That is where they discuss the distribution of the moneys, the budget, the funding formula that we referenced earlier. So it is a tight remit around the 92 clubs. It is made up at the moment only of club representative directors.

Again, you may not like the answer, Paul, but I think in our conversations with the leagues, as we agree who is going to be responsible for what, one of the answers will be, "What is the role of the Professional Game Board? What role should it play on behalf on football?" I have to say, sitting as an executive, there is a lot of duplication of my own time and of roles and responsibilities. There is a lot of overlap between the professional game board and other committees of the FA, the FA board, league boards and so on. One of the key things we can do is unclutter all of this, and be very transparent about the roles of each of these bodies. What role should the professional game board play in a reshaped architecture for football? Again, once we agree that, the membership will be clearer.

Q499 Dr Coffey: One of the perhaps worse examples of lack of corporate governance seen in the FA in recent times was that one person unilaterally was able to renegotiate Fabio Capello’s contract just before the World Cup. How was that possible?

Alex Horne: No one renegotiated his contract unilaterally. The issue around the private contract between an employee and the FA was that there was a contract through to 2012 for four years. Within that contract was a clause allowing either party to terminate for an amount of liquidated damages. We were coming under a lot of pressure in the run up to the World Cup for certainty over whether Fabio was staying or not. There was speculation about clubs coming in for Fabio, and it was agreed with a few individuals at the top of the organisation, the last chairman being at the heart of it, that we would delete mutually those two clauses. So effectively, we would remove our ability to terminate Fabio’s contract with liquidated damages and he would delete his ability to walk away from our contract with liquidated damages. So having qualified top of the group very comfortably, facing that uncertainty going into the tournament, it was exactly the right thing to do, and that decision was made in April or May 2010.

Q500 Dr Coffey: I was under the impression it was just one person who made that decision, so how many people exactly were involved in that, because it seems a significant change to the liability of the FA?

Alex Horne: Well, no.

Dr Coffey: Especially given the performance of the team in the World Cup.

Alex Horne: Forgive me, it was not a change to the liability of the FA on the basis that the liability existed. The contract existed in the first place, so there was no change to the liability of the FA. I’ll hold my hand up on behalf of David Triesman and say that I think, with hindsight, it was a whole board decision, and should have gone to the whole board, but it did not.

Dr Coffey: So it did not go to the whole board.

Alex Horne: It did not go through the whole board.

Q501 Dr Coffey: Could that ever happen again, that same situation?

David Bernstein: I think if I am Chairman, it will not happen again, no.

Q502 Dr Coffey: So will it happen again?

David Bernstein: Not while I am Chairman.

Q503 Dr Coffey: Does that rely on you as a personality or does it rely on-?

David Bernstein: No, I think it’s as a proper organisation. I think we have the remuneration committee. Any contract of any size, even much smaller than what we’re talking about here, or any changes of significance should go through the remuneration committee and then, if necessary, to the board. I would ensure that proper governance is in place for those things.

Q504 Dr Coffey: Lord Triesman has gone, but is anybody else who was involved in making that decision still involved in governance within the FA today?

Alex Horne: Forgive me, because I do not know who exactly was involved in it, so I am not sure I can be very specific, but there will be a couple of board members and a couple of executive members who knew about it, yes.

Dr Coffey: I am confused, Alex, because you seem to be clear it was not just one person, it was a few people, and now you are not sure who did it, who made the decision, apart from Lord Triesman.

Alex Horne: I am not comfortable sitting here and naming four or five people. I don’t think that is fair on those individuals, on the basis that the decision has been reviewed internally and we have held our hands up to a corporate governance mistake. I think the overlapping roles-David is not here to answer the question, and David was the senior member involved as chairman of the association, and clearly felt he had the authority to make that commitment. It was only after he left that the board questioned it.

Dr Coffey: I accept you cannot answer on behalf of David Triesman.

Q505 Damian Collins: Mr Bernstein, I appreciate you have not been in post that long and you clearly set out your task of trying to convince the FA Council of the need for change.

David Bernstein: Yes.

Q506 Damian Collins: When Ian Watmore was before us last week, he said that the FA will not change without some sort of external pressure. I am not going to ask you whether you agree with him or not, but do you think that the FA Council shares the sense that many people have shared with us through this inquiry-probably people outside the FA share-that the FA does need to change and that, within an environment where you are already regulating and controlling yourself, is the pace for change or the need for change really taken seriously? Is it seen as a kind of nice to have, something you could get around to? If there was the threat that if change did not come, change might be forced on the FA, do you think that it would make it more likely the FA Council would grip that?

David Bernstein: Difficult question: you are asking me to sort of judge how a group of whatever it is, 110 people are going to react. I mean, may I say, just to put it on record, that the Council members individually are a fantastic group of people. They are often demeaned. This blazers thing comes into play. But I must have met with a quarter of them individually now. They have come to see me. They are people who have dedicated their lives to football, people who give tremendous service, have tremendous knowledge, and although I’m not 100% in agreement with the total structure of our committee system within the FA, nevertheless, the committees do a fantastic job of detailed review and investigation. So I think there is a lot of merit to the body; let me say that straight away.

They are fairly conservative; the Council is a fairly conservative body, which one might understand from the make-up. We will have to see. I felt the reaction to my initial presentation, the one I just read, was quite positive. I am hoping we will get the majorities we need. The council works on a 51% majority and then the shareholders work, on many issues, on a 75% majority, so there are sort of two levels of approval required for these things.

Q507 Damian Collins: When we look at other industries that self-regulate, where that works well, I think, is where there is almost a clear understanding that, if self-regulation failed, another sort of regulation will come in its place.

David Bernstein: Yes, the Council does not respond well to threats. They are very competitive people. They come from a sporting background and so on, and so they need handling in a sensible, civilised sort of way, but again, I think with my football background, it does help a lot in football to have been involved in football. I think my football background, I hope, will be a positive influence, but we will see.

Alex Horne: I think we have a number of examples where the structure has embraced independence. Our commissions all have independent members on them now, which was not the case years ago, two or three years ago. The FRA, as I have referenced, has four independent members and the national game and professional game members working in that body recognise the value of the expertise and experience that those independents can bring, so I think there are advocates for change in the shareholders.

Q508 Paul Farrelly: Going back to your evidence, you say that the FA recognises it is important to learn from the best practice governance arrangements, both across football and wider across other sporting bodies. Could I just ask you two things you have learned so far, and from where, just to pick one each?

Alex Horne: If I may go first, David, the independent director recommendation is absolutely mirroring best practice and common practice now in every other sporting body. So we understand that there are independent directors on all the major––and many other––sports’ governing body boards. For example, that is substantial evidence behind our recommendation for independents.

David Bernstein: Yes, I think the proper application of wider corporate governance, you have touched on the remuneration committee issues, for example. I think we have some of these things in place. I think there is a little bit of a danger in that, historically, the FA has sometimes, because of the pressures for a speed of decision necessary, that maybe some of the controls have been innocently circumnavigated. I think it is very important, and I think the example that you have been discussing with Fabio Capello’s contract was maybe a good one, that we ensure that we fully comply with our own procedures, even when we are under pressure. One cannot overestimate the pressures that arise with football issues surrounding England. You want to see the media over the last few days about various fairly peripheral issues, I personally think. The pressures are very intense. It is very important the system stands up to those pressures.

Paul Farrelly: So no more innocent circumnavigation.

David Bernstein: Yes.

Q509 Chair : Can I finally turn to the Football Regulatory Authority, which is responsible for disciplinary policy? It draws on members of the FA to adjudicate individual disciplinary cases. It was suggested to us that those should be done externally and it is not appropriate for the FA to do so. How do you respond to that?

Alex Horne: Can I just explain the distinction, because the FRA is the rule-making body? It sets the policy. That is the body with four national game representatives, four professional game representatives and four independents on it. They do not appoint the commissions. That is a completely separate body, completely independent.

Chair : But the people who judge disciplinary cases come from the FA.

Alex Horne: No, they come from-the commissions are made up of, in the first instance body, two FA people and one person from a football panel. So there is a panel of individuals nominated from across the game, ex-referees, ex-players and so on, who will sit in hearing on each of the commissions; one football panel person plus two Council members on every commission.

Q510 Chair : Do you not accept that it should be done externally, completely?

Alex Horne: No, I do not. I think that history on the whole would show you that the commissions made sensible decisions, and the adding in of football people has definitely helped with making consistent, appropriate decisions. So they are adding expertise into consistency. This has been done well, but I think the addition of football people has improved the process. If I may say, the second body, the appeals body, is then further independent. It has two independents, the independent chair and one FA person. Occasionally, these things are three, four. The constitution of these commissions is very much dependent on the case matter in front of them as well. So if there are doping cases or child abuse cases, then again, the balance of the commissions will change to make sure we have the right, appropriate representatives on it.

Q511 Chair : My last question: the FA draws parts of its income from the England team. Tonight, fans will have spent quite a lot of money to come and watch England playing. Do you think they are being short-changed, because they are not going to see people like Rooney and Lampard on the pitch tonight?

David Bernstein: No, I do not. The manager-and the manager has to have the say in these matters-has a balancing act. He picked a very strong squad for the two matches. Every member of the squad, I suggest, is a top class player. He has to balance, as we had with the World Cup, fatigue issues, other competitions that some of these players are playing in, relationships with the club managers, which is very important. We are looking for an improved balance of give and take with the clubs. It requires both not just giving and not just taking with the club managers to ensure that we get that right players, certainly for the competitive matches.

This is very much a manager’s decision and I think the team he will put out tonight may lack one or two of the glamour names, but will be a very strong team, indeed, and a team with players who I believe he really wants to trial, and really see how they perform on a very big occasion in front of a capacity crowd, to see how they will hopefully perform in competitive matches later on.

Q512 Chair : So is the team that plays tonight entirely the first choice of the manager?

David Bernstein: In all the circumstances, yes, no one has forced him to send players back. It is his decision to do everything that he has done with regard to the squad, absolutely.

Chair : The reluctance of the Premier League clubs to release players for a match like tonight-

David Bernstein: No, sorry, we had all the players that we wanted and the manager has decided to send, I think, five of them, back to their clubs for various reasons, as I have just tried to explain. I am in complete support of the manager in doing that.

Q513 Chair : One of the criticisms of the rather disappointing performance of the England team to date is that some of the star players do not get as much opportunity to play together for the team, as they might do.

David Bernstein: Possibly-there is no question about the tensions we talked about earlier between success with the Premier League, the Champions League, international football, the effects on the FA Cup, which we have not touched on today. There are a great range of tensions there, and running the England team is no easy job. Just for the record-I will put it down here-of the 18 competitive matches that Fabio Capello has managed England for, we have won 13, drawn 3 and lost 2, one of which was a dead rubber match. Unfortunately, the other match we lost was a very, very important one in the World Cup, but his record overall is actually outstanding. I know that has been blurred by the very, very poor World Cup performance, but generally, his qualification record previously was good, and so far we are top of the group table for the Euro championships and hopefully, we will stay there.

Chair : I thank the two of you very much.

Examination of Witnesses

Witnesses: Mr Roger Burden, Chairman, national game board, the Football Association, Ms Kelly Simmons, Head of national game , the Football Association, gave evidence.

Chair: We are now going to turn our attention to the national game . I welcome Roger Burden and Kelly Simmons.

Q514 Jim Sheridan: Beneath the FA board, the policy responsibilities are divided between, as I understand it, the national game board and the professional game board. How successful has this division of responsibilities been?

Roger Burden: I think in the last four years it has been particularly successful. I say the last four years because that is since the Lord Burns review, when both the professional game and the national game were given quite clear delegated authority about responsibilities-you were discussing the PGB earlier-and with that authority came the split of the surplus too, which we call the funding formula, where it is 50:50 between us. So the relationships have been really good the last four years. I have no issues at all. I am surprised at some of the criticisms I have heard.

Q515 Jim Sheridan: From whom?

Roger Burden: From some of the people who have presented in front of you.

Q516 Jim Sheridan: Kelly, do you wish to comment?

Kelly Simmons: I think, from the executive side, the focus on working with a board that is completely focused and committed to driving the growth and development of the national game, and having a clear strategy and a long-term budget and investment into that has really paid dividends. I think you will see from our submission, some of the results we have had in terms of growing the game, growing and improving the quality of coaches and referees, investing in facilities. The whole range of work we have done, I think, has been very much because we have had that real focus and leadership from people who are experts around the board, in the area of the national game. I think it has been a good thing for the organisation.

Q517 Jim Sheridan: Can you see any benefits in appointing FA executives or non-executives to the national game board?

Roger Burden: To the national game board? We have the general secretary comes in, we have Jonathan Hall and we have Kelly coming in. They are not members of the national game board, but they speak when they have something to say. I have never thought that; 15 or 16 of us around the table, I think that is more than enough.

Q518 Jim Sheridan: What is the purpose of it, if they are coming to the national game board?

Roger Burden: You mean the national game and the national game board?

Ji m Sheridan: What is the purpose of Kelly coming into the meetings with the members?

Roger Burden: They are the executives. It is just like any other board, really, where the board is looking to the executive for the initiatives, and we present what we think is the appropriate support and challenge to the executives. They come with the budgets. They come with ideas and reports against progress. We have quite a comprehensive strategy with key indicators which we like to hit, and again, that was mentioned this morning. It operates, I think, the way you would expect a board to operate, with executives reporting in.

Q519 Jim Sheridan: On the criticisms that you think have been unjust, would you like to give us a flavour of what the criticisms are that you do not agree with?

Roger Burden: Yes. I have heard––not followed every word of it, but I have heard–– that some members of the professional game board have been criticised for being overbearing and some because they have vested interests so are not putting the fair view to the board. I do not agree with that. I do not see that. It surprises me that people are surprised that the chairman of the Premier League is not a pussycat. He is a resilient man; you would expect him to be that, but he does not roll anybody over at the FA board. It has not been an issue for us.

Q520 Chair : You channel quite a lot of money down into grassroots football, primarily through county FAs. We have had suggestions that the county FAs are not entirely accountable for how that money is spent. Can you say what audit procedure there is that you use to make sure that the money goes to where it is supposed to?

Roger Burden: Yes, I can give a couple of top level views and then Kelly can give you some detail. Most of the money we give counties-and it is something in the order of £10 million a year, I think-is for salaries, development staff salaries, referee development, child welfare officers, as well as a chief executive. Every county needs them. So that is very easily auditable, because we only give the money based on the payment of salaries. From the chairman of the national game board’s point of view, we do have an internal auditor in the FA and he has been out to counties, reported back to me and through to the national game board and Kelly with regard to the controls that operate in the counties, and he has been entirely satisfied. Frankly, it is not difficult, because it is all based on salaries, if the people are not there, and they are not earning the money, they do not get the grant.

Chair : It is not entirely salaries.

Roger Burden: No, it is not entirely salaries, the majority is salaries. There is also some revenue funding, and Kelly can talk about that.

Kelly Simmons: There is a blend. In terms of the national game budget, some goes to the county football associations in terms of workforce, but also revenue grants, which I will come on to. Obviously, there is investment into the Football Foundation. There are league grants. There are grants for clubs. There is the skills coaching, coach development. There is a whole range of funding. So I would not want it to be thought that it just goes into county football associations. You know, they are our key delivery agency in delivering national game strategy, and provide and oversee the administration and development of 130,000 teams playing in 1,200 leagues across the country every week of the year.

The national game strategy, really, sitting under that are county football association strategies in line with that national game strategy. To get that money, we assess their plans and they have to set targets on how they are going to grow the game, raise standards, increase coaches, grow referees, and so on, so a range of key performance indicators. We track that through a score card process every quarter. We have regional managers that work with those county associations as partners and we are tracking their plans and the return on the investment that we are making in those counties, and working with them to share good practice, to make sure that we get that money to work as well as it possibly can.

Then on top of that, as Roger mentioned, there was a board audit committee that has gone in and looked at that funding. In terms of the workforce, there is a clear set of conditions, how the counties must recruit, deploy and develop the workforce, to make sure they are providing good service to develop the game. I think there are a number of accountabilities in there.

Q521 Chair : If there were allegations of inappropriate awards being made by a county FA, who would investigate that?

Kelly Simmons: Awards in which sense?

Chair : Grants being made.

Kelly Simmons: Our money goes primarily into workforce and some programme money, but the main grants would be through the Football Foundation. The strength of the Football Foundation is you have a separate body that is assessing the grants that are being worked up at a local level to the county football associations and the partners. In other words, if it was a Football Foundation grant, that would go back into the Football Foundation in terms of query. If there was a concern in terms of something the county was doing, that would come back to the executive, and if there was a concern that we could not fix, obviously, I would work with Roger and the board.

Q522 Damian Collins: I want to talk about youth development. Why has it taken so long to get the National Football Centre plan up and running, and with a delivery date? It has been the longest gestation probably of any public project in recent memory.

Roger Burden: Yes, that is a good question. The very first board meeting I attended, Howard Wilkinson presented for the National Football Centre. I think that was probably nine years ago. And at the same meeting, there was a meeting about Wembley too, so at a stroke the board was being asked to look at something like £150 million, and there is the answer. We did not have it. The National Football Centre has been put off, not because any of us did not think it was a good idea, purely on the basis of funding. When it eventually came through and we were satisfied that we could fund it-and the national game is putting £6 million into it, incidentally, as is the professional game-we agreed as soon as we were comfortable that we could pay for it.

Q523 Damian Collins: Ian Watmore, I think, gave us the impression that he found the National Football Centre lying dirty and tattered, in rags in the gutter somewhere and picked it up and put it back on the agenda; that it had been an unloved and forgotten part of the FA’s programme. Is that fair? Obviously, I do not suppose you will say that is a fair description, but there seemed to be a lack of impetus for quite a long time, and that was not just about money, but about priorities.

Roger Burden: Yes, I think the priorities thing is fair, but money is at the heart of it, because, shortly before Ian joined us, we had reviews on the National Football Centre and it just was not affordable. It did tend to come up and down on the priorities, depending on a certain amount of pressure from the then-chief executive, and whether or not the chief executive of the day really felt that this was a viable moment to put it forward.

Q524 Damian Collins: I appreciate you said money was a part of it, but it was not just money. What else was it that caused it to go up and down the list of priorities?

Roger Burden: I do not think the National Football Centre ever went out of favour as an idea or concept. All of us were happy with it, but with Wembley and the television money going down, we could not afford it. It was as simple as that. At least in my view, we could not afford it. I voted against it when we were asked for £40 million, because I did not think the FA had £40 million.

Q525 Damian Collins: The reason I ask is that there has been criticism that we have a problem of lack of qualified coaches, and the National Football Centre plays a key role in that. We have less than 10% of the level of fully qualified coaches that you might see in other comparable European football countries. Why do you think that has happened, and who is ultimately to blame for that?

Roger Burden: I am not sure why it has happened and I do not know if anybody is to blame for it. I think the important thing is now that we have got to grips with it. The World Cup was a bit of a focus for us. Kelly has various figures that she can give you. Coaching is a whole game issue; it is not just national game. We are encouraging all our teams now to have qualified coaches, at least at the first level. All the children’s teams is what we want, and we are really starting from now, and I do not think there is any point in looking back to see why we are where we are. The important thing is that we are looking forward and Kelly can tell you some of the things that we are doing.

Kelly Simmons: Yes, we have been working really hard. We started from a very low base. In 2000, when the FA did the first football development strategy, less than 5% of those coaching grassroots football, youth football, had any qualification whatsoever. We are now up to 72% of all junior football-mini-soccer and junior football-is FA chartered standard, which means that they have a minimum qualification. We are just about to announce our 500th community club, multi-team girls and boys, youth to adult, minimum level 2. We are working hard on getting the Tesco skills programme out there so that children get additional, top-up, age-appropriate specialist coaching. I think you will see that in action later on. We are investing through the national game board in regional coach development managers who are working with improving the skills and knowledge of the coaches working in the grassroots game. Regional 5 to 11 specialists really focus on the new age-appropriate agenda in the philosophy that the FA has published around coaching and working with young players. We are putting a lot of effort and focus in. I think we are starting from a very low base in terms of previous history.

Q526 Damian Collins: Other witnesses have commented that in some ways what we are seeing now is the coming to fruition of recommendations that were made in the Lewis report five years ago. There has been criticism of the FA with Lord Mawhinney, for example, on this point saying this is an example of the failure of the governance structures and the leadership of the FA, that these issues have been left to drift for too long, and while the right thing is being done now, it should have been done some years ago. Do you think that is a fair comment?

Roger Burden: I think it probably is fair, because the figures prove that we do not have enough coaches compared to competitor countries-I will call them that-in Europe, in the competitions. I think it is fair, but we are doing something about it. We have not just started in this past year. National game has been encouraged by Sir Trevor Brooking in investing in local coaches for some years now, as Kelly has mentioned.

Kelly Simmons: We are training about 45,000 coaches a year, so we have significant numbers coming at the base. The focus will be that St George’s Park will be a major asset in making sure that more of those local coaches can get to the top. It is not just the A licence and the Pro licence, but specialising in working with young players, which has been a real gap.

Q527 Paul Farrelly: What percentage of the Football Association’s total income is spent on coaching and youth development?

Kelly Simmons: Coaching, I believe, it is £8 million on coach education. Youth development, through the PGB-it is not our own-I believe £7 million goes through the Football League Trust into centres of excellence and academies on the boys’ side. On the girls’ side, it is between £2 million or £3 million on the girls’ centres of excellence, and about half a million on the talent pathway for players with disabilities.

Q528 Paul Farrelly: So, just under £20 million. How does that figure as a percentage? I have not got the annual report accounts in front of me.

Roger Burden: Of income, surplus, we are looking at £80 million. In terms of surplus, we have a surplus of about £80 million, which is split between national game board and professional game board, but there is also other income coming into the FA, and we do not have those figures in front of us. We only have our own figures.

Q529 Paul Farrelly: I am just trying to get a feel, because you mentioned other countries, how do we rank as a nation?

Kelly Simmons: Significantly higher; I am on the UEFA grassroots panel and work with a number of my equivalent colleagues across Europe in some of the big countries, and the Football Association invests significantly more in children’s football, grassroots football and coaching.

Paul Farrelly: As a percentage of its overall income?

Kelly Simmons: I am sorry. I meant total. Yes, cash total, I meant.

Q530 Paul Farrelly: That is apples and pears, is it not, depending on the country’s size? Can you give us a feeling, do you have a feeling for how the FA ranks percentage-wise against Spain, France, Germany?

Kelly Simmons: You would have to go back and look at their turnover and their investment in coaching. My sense would be that we are pretty high, I think, in terms of that, and that is over recent years: as the FA’s turnover has significantly increased, we have been able to invest more back into the game. You have seen we have significant numbers of coaches in level 1, level 2 starting to come through that coaching pathway. I think now, with St George’s Park and with that focused effort, we will see us closing the gap on the top level coaching qualifications.

In terms of the national game, we need a blend of funding. We need to fund coaches. It is absolutely critical, but we need facilities; we need referees; we need leagues and competitions; we need clubs. It is one piece of the whole pie, if you like, of football development we need to invest in. We are investing in skills programmes, coach education, coach development, regional coaching infrastructure. So there is a range of investment in there that we are trying to move those coaches through.

Q531 Paul Farrelly: If we can write to you afterwards, it would be useful.

Kelly Simmons: Yes, of course.

Roger Burden: The figures must be available. We just do not have them.

Q532 Paul Farrelly: This is ultimately about sharing out money. Do you think there is more the professional game could and should do, be it the Premiership or the Football League, to help improve the coaching and youth development, outside of their own academies? Is there a case to be made, if it is not in their interest but in the national interest, that they could contribute and should contribute more?

Roger Burden: You mean financially?

Paul Farrelly: Yes.

Roger Burden: I had not really thought that there was until I was listening to the debate this morning. Personally, and from the national game board’s point of view, we have been very happy about the way the money is split. They have been really supportive of the things we have wanted to do with our money. Obviously, if there is more money around, I would hope that they would see their way to help the national game. Although I do not have any concerns or criticisms, we always want more, and in the case of the national game , we have a lot of mouths to feed in order to do what we want to do and increase participation. But I do not have any concerns about the level of support we are getting from the professional game.

Q533 Paul Farrelly: Final question on this topic: we have been to Germany and taken some evidence of their response to Euro 2000, their dismal performance, and their youth development, which we saw coming through in South Africa. We have learned from them that they have a contracting system where the children at the age of 15 to 18 can be contracted, which gives some protection for proper recompense, as against the poaching that will inevitably happen. Do you think that current arrangements between the Premier League and Football League clubs and proposals for changes to the academy system are right, or should there be anything else in place that protects the smaller clubs and gives them better recompense?

Roger Burden: It is not really our field, in terms of the smaller clubs, because I know you are looking at the smaller Football League clubs, but what I have seen recently with the way the Premier League and the Football League have been talking to us and to our people, I thought it was a step in the right direction. There is going to be a change and you are probably already seeing some of that, some of the arrangements.

Paul Farrelly: I am not talking from the point of view of your own niche but I am talking to you as a representative of the governing body of the national game .

Roger Burden: Yes, okay. I am satisfied. I think it is right. I think the way the programme for children coming through the game and the opportunities that exist are right. That is one of the things we want to achieve. We want to get children playing and we want to make sure they have the skills coaching so that, if they are good enough, there is an opportunity and we want to make sure they do have the opportunities to get into the professional game if they are good enough and they want to. I think those opportunities are there now.

Kelly Simmons: The academies and centres of excellence for boys doesn’t sit within the national game. In terms of the youth review that Alex touched on earlier, I see it as our role is absolutely vital in trying to drive through and work with the Leagues and clubs to make the changes that are required to make sure that all children have the best introduction to football. We are looking at: at what point do children stop playing mini-soccer and move into the adult game; whether nine versus nine is a better transition; at what point you bring in league tables to try to take away some of the competitiveness and make sure that all children get to play and try different positions, and it is the right kind of environment, which Respect is really trying to drive, to make sure that the environment on the sideline is good and conducive in terms of player development.

I see that as being our role, alongside bringing as many players into the game as possible, which I think we are doing through the growth figures. We have had over 5,000 new teams since we launched the strategy for children, so widening the base and making sure that we continue to do that work around coach education. Then we hand them on, obviously, into the academies, the talented ones.

Q534 Dr Coffey: I want to ask one supplementary question, Chair, on that particular point before moving on to structure. Do you think the national game was a bit slow in recognising that primary schools were no longer particularly teaching football any more? School sports dropped significantly in the 1980s.

Kelly Simmons: It is very hard, isn’t it? You look at the scale of primary schools in this country and the resources that we would have had in the FA several years ago to try to tackle that. We work very hard, and have been working over a long term to make sure that, where football is not played in primary schools, we have a healthy English Schools FA that provides out of school competitions and we are working very hard in terms of our junior club development. I think we have made some great strides with that. I think we mentioned earlier 72% of those clubs now reach our kitemark.

I think the biggest issue for football is not so much that football is not played in primary schools; it is the physical literacy of the children coming out of primary schools, which I think affects all sport. It is really important that football and the governing bodies work with the Government and with education to try to address that. That is what the skills coaching programme is that you will see later. It is not just about football skills; it is about trying to improve children’s movement and physical literacy so that, when they come out of that sort of 11 age group and pick their sport maybe that they want to specialise in, they have the foundations. What we are finding, and I saw it when I was coaching in schools, girls and boys just do not have that movement and co-ordination to enjoy any sport and have a lifelong love of it and be good at it. So I think physical literacy is a bigger issue in that sense.

Q535 Dr Coffey: Moving on to the FA structures, Mr Burden, why did national game representatives oppose the full implementation of the Burns report? I am not saying they were wrong to, but why did they do it?

Roger Burden: There were issues in there that we were not comfortable with. There was not much that we opposed. I think Lord Burns did suggest-

Q536 Dr Coffey: Can you recall what you did oppose, specifically?

Roger Burden: Yes. We did oppose the two independent directors. We were not convinced that that was necessary, but we did support the idea of an independent chairman. So it was a compromise internally. You may not be aware but, as I think the chairman said, you do need a 75% majority in Council in shareholders to get things through. It was our sense that we would not get that through with two independent directors. Colleagues were reluctant. At that time, the national game board and the professional game board held equal votes within the main board. We had six and the professional game board had six and the chairman and chief executive did not have a vote, which puts us in quite a good position, we would think. As corporate governance, it is not a great position and that is why Lord Burns was encouraging us to give the chairman a vote and give the chief executive a vote. For corporate governance reasons, I happen to agree with that.

So it seemed sensible that one of the ways we could achieve what Lord Burns was after, which was to break this sort of six-six position, was to have an independent chairman. That seemed a sensible compromise, which as we went around the country talking to colleagues we thought they would support, and it did give us an independent chairman and it has given the chief executive, general secretary now, a vote. The professional game board and ourselves both gave up a member of the board, so we went down to five each, and you have probably seen that, plus the two. I think for corporate governance reasons that was a good thing to do and I think that was a reasonable compromise.

Q537 Dr Coffey: We heard from David Bernstein earlier that he thought he had a good hearing. You are obviously a leading player in the national game. Do you think you will see any further changes and if so what would you like to see changed on the FA board and Council?

Roger Burden: My experience of being on council for many years and working with the committees is that they are, as you have heard, sensible football people and they want to do what is best for the FA. So in the board, when the chairman put the idea to us, I was one of the ones that said, "You need to consult because, if the grounds are good, and the signs are the grounds for this are good, then Council and shareholders will go with you, but what they will not do after just a few weeks in the post is suddenly switch to something that they remember just four years ago only just got through the shareholders. So we need to tread carefully." You heard the chairman say that is exactly what he wants to do. There is no doubt in my mind, if a strong case for more independent directors is made, Council and shareholders will support it.

Q538 Dr Coffey: Will you be supporting it?

Roger Burden: If the case is made, yes.

Dr Coffey: So you are not convinced yet?

Roger Burden: No.

Q539 Dr Coffey: The Committee has already heard from Lord Burns, Lord Triesman and others that national game representatives are conservative and have acted as a brake on structural reform. Are there any changes you would like to see to the FA Council to try and not necessarily be quite so conservative but open to new ideas, perhaps term limits, not almost have a place for life? I know you have to be elected, but there is no limit to how many times you can be re-elected to Council.

Roger Burden: That is true. We do have an age limit, though, and I supported that. That was challenged. There is an age limit now; you have to retire from council at 75. You have to come off the board at 70, which I think is good corporate governance. So there is an age limit; it is not a place for life. Interestingly, there is a position, after you have served the FA for 21 years, you become a life member. Only at the January council we were successful in establishing that even life members have to retire at 75, so there is no longer a place for life. Some are already on there and they can go beyond 75, but for the vast majority of us we will be kicked off at 75, even if we are elected every year. My own position is that I represent Gloucestershire on the Council; I have to be elected within Gloucestershire every year and all of us from the national game have to stand for re-election to the board every three years, which again I think follows good governance policy.

Q540 Dr Coffey: So you would not want to see any changes to perhaps trying to encourage fresh blood in at the highest levels of our game?

Roger Burden: It is really difficult. Part of Lord Burns’ report, which we did support, was that we should be more open in Council and make sure people were properly representative: we increased the women’s representation, we introduced a referees’ representative, players, managers and there is a disability representative. So we did become more open and there are over 100 of us and I would need to be convinced that that is not enough, that we need more. I do not think we need any more in Council.

Q541 Dr Coffey: You were acting chairman for about seven months.

Roger Burden: Nine months.

Dr Coffey: Nine months, sorry. There is something in the papers today about a report you wrote when the inquiry started off, which was working together with the Premier League and the Football League for a co-ordinated response to kill off the nonsense about infighting that politicians and the media seem keen to invent. I was a little surprised by that, only because the Committee has not come to that view. It is people who have worked with the national council, like Lord Triesman and others, who very strongly suggest that there are internal tensions. So why do you think it was sensible to put your thoughts in writing?

Roger Burden: Because I do not see that in the boardroom. Some of the disputes that we have heard from Lord Triesman, and I think Ian too mentioned it, I have not seen in the boardroom.

Q542 Dr Coffey: Have you seen them in the corridors outside the boardroom?

Roger Burden: Yes, but what is wrong with that? Ian is a good example where he resigned in frustration and others have been accused of disagreeing with him, but the place to bring these presentations, chief executive, is in the boardroom. He put up his 100-day idea, and I liked nearly all of it––not all of it, but nearly all of it. I am sure we would have made 80% or 90% of it, but he resigned so we did not have a chance to have that challenge in the boardroom. If some of my colleagues in the professional game may not have not been supportive of it, I would have heard their arguments. I liked what Ian put but we never had that opportunity, and Lord Triesman may have been in the same position where outside the boardroom he had some disagreements. He should have brought them inside the boardroom and there he may have found he got some support.

Q543 Jim Sheridan: Could I ask you basically what you see as the main challenges facing the English national game? As a Scot, I am keen to find out what those challenges are and see how best we can make them even more challenging.

Roger Burden: Thank you very much. Kelly has touched on them. We are here to increase participation in football. We want to see as many people playing football and going to watch football as we can, preferably playing because then, if they are today’s player, they might be tomorrow’s administrator or tomorrow’s referee, like me. I was a failed player so I went into refereeing and administration. What we want to do is give everybody that opportunity to participate. That is our challenge.

Within that, of course, you then have the challenges that Kelly has touched on in terms of making sure we have good facilities, making sure that children in particular have a safe environment in which they can play, and "safe" means they have properly checked and trained people looking after them. It is our belief, as we have said that, if they do get properly coached by coaches that have been trained, it will improve their skills and they will enjoy it. They may not go on to be elite players, but hopefully they will play football until their maybe late 30s, maybe even 40s now with veterans league. I was sitting at the back and I heard somebody was playing football. I could only suspect it was veterans league football, but forgive me.

Jim Sheridan: What made you think that?

Roger Burden: It is really once you are in your early 30s, you are into the veterans league.

Jim Sheridan: And they don’t have any agents either.

Kelly Simmons: I think we are really clear what the challenges are because one of the strengths, I believe, of the national game strategy is that, before we produced it, we had a major research and consultation into the national game, involving over 20,000 stakeholders: players, coaches, referees. They were clear what the challenges are for them and where they wanted the FA to invest its money to tackle some of those challenges. Behaviour came out very strongly. The Respect campaign was a response to that. 40% of those this year surveyed believe that Respect so far has improved their experience of the game. We know that 2.5 million people, despite 7 million playing, still want to play the game, either play more or play, and we have been working very hard to create both junior football and the 5,000 teams I mentioned earlier that we have grown since the launch of the strategy.

On the point you touched on earlier with Alex, it is about trying to create more flexible football for adults and tap into the changing lifestyles and the way people want to consume their football and responding to that with the new partnership with Mars and the work that we are trying to do with Sport England to turn that round. Facilities is a big one, obviously, and we can never have enough resources to tackle the demand on pitches and facilities. But since the strategy, working in partnership with the foundation and other partners, we have invested over £200 million into new or improved facilities.

So we know those are the kinds of challenges that we are working really hard to address and we feel we have made some inroads. Obviously, there is a lot more to do. We are just out now on the extension of the national game strategy to 2015. There is a survey online currently at the moment. Over 10,000 people involved in the game have done it, so we will be getting a really clear steer about how we have performed, how they think we have improved what they have set out and they have asked us to do, and where they think the priorities are going forward.

Q544 Jim Sheridan: Finally, you seem to indicate that you have a good working, constructive relationship with the professional game, but just on the question of resources and powers, hypothetically, if that relationship was not there, do you have the relative powers and resources that you would need?

Roger Burden: Powers, yes, because the split of cash is in the articles. We have heard that, haven’t we, with the 50:50 split of cash? That gives us the power. We have 50% of the surplus and the authority is delegated from the board to the national game board. Obviously, we have to report up to the main board. If our professional game colleagues wanted to be difficult they could protest at the main board. They haven’t done but, if they did, there are only five of them and there are five of us and we then have the chairman and the general secretary. Heaven forbid it would come to that. It never has, but I do think we have the power. Do we have the resources? It comes back to the money.

Q545 Jim Sheridan: Has it never happened then? Even out in the corridors of power it has never happened?

Roger Burden: No, not between us and the professional game. They have always been incredibly supportive. Kelly was telling me at her level it is the same.

Kelly Simmons: The board unanimously supported the national game strategy and the investment into it. I came along to the board and presented, along with support from Roger, and there was complete support for the strategy. We have worked very closely with the Premier League through the Football Foundation, where I think they are shortly due to announce they have invested in projects totalling nearly £1 billion. So that is the kind of relationship we have with the Government and the Premier League. At local level, there is some fantastic work going on between the county associations and Premier League and Football League clubs and they have been working on driving the Football for All agenda. We have just recently announced that through the work we have done with the clubs there are over 1,000 teams of people with a disability. The new women’s super league, semi-pro league launching in April, five of those clubs are supported by their men’s Premier League club. So I think there are good relationships all the way through.

Q546 Damian Collins: I wanted to go back to the Burns report and the issue of the two independent directors. From what you said in response to my colleagues, it sounds like the Council considered that having two independent directors on the board, your fear was they would be more likely to side with the professional game. If that is people’s view, four years may have elapsed, but it is a numbers game. On Mr Sheridan’s question of power and control, those numbers will not change and I do not believe it will be eloquent words that will convince you to change your position. It sounds like you want to cut a deal with the chairman of the FA if he wants to get his change through.

Roger Burden: No, you misunderstood me. I understand about independent directors. I am non-executive director of the FA, as are nine other people. It is quite a lot of non-executive directors. There is a lot of challenge within the boardroom and we have an independent chairman with the experience of the professional game, and indeed grassroots. So there is an excellent mix there.

This was the first time this had happened when this had been offered to us and previously we were six-all. There was concern that somebody who was independent of the game may find himself easily seduced by the professional game. He would much rather accept an invitation to go to watch Arsenal than he would to come down to the King George V in Cheltenham. So there was this concern and I think we have overcome that slightly. I think a lot of that has gone, and Lord Triesman helped that because Lord Triesman had a grassroots background. There was a concern about what true independence means. I think we all can see the strengths of true independence bringing some real external thinking to a board. Every board benefits from that, but that is where our concerns were four years ago: would he remain independent for long?

Q547 Damian Collins: Are people still concerned at how easily independent members of the board may be seduced by the odd corporate freebie?

Roger Burden: No, I am talking four or five years ago. The new idea of "Can we have two independent directors?" is a relatively new idea again, because we thought we were doing okay.

Q548 Damian Collins: So your concern is that the independent directors might mean that the professional game ends up having more of a say is not found any more?

Roger Burden: No longer, no, that is no longer the case and personally I do not have that concern now. I have met a lot of people who I think are certainly of the stature that they would not allow themselves to be seduced. I think that was an unfounded concern that we did have four or five years ago, which I do not believe will sit out there now.

Q549 Damian Collins: From what you said, it sounds like if colleagues share your views then Mr Bernstein may be successful in getting his two independent directors?

Roger Burden: Yes, I think the Chair has to put the case to colleagues; it is a strong case. It is not a strong case to say, "Everybody else will go away and they will be quiet if we do two independent directors", or I suspect that is possibly the case. We will have less criticism. It is one case, but I would like to understand the way the board would be strengthened by independent directors and my colleagues. What are the reasons, what will they bring to us? I know some of the answers incidentally.

Q550 Damian Collins: What do you think they are?

Roger Burden: I think they can bring specialist skills that we do not have on the board, but I think that the chief executive of Manchester United brings particular skills to us that an independent director cannot bring, so we have to be careful that we have the right mix.

Q551 Paul Farrelly: Mr Burden, you have been involved in running building societies?

Roger Burden: Only one.

Paul Farrelly: The picture that we have had painted to us by a number of people and I think you have rather reinforced today is that there are five professionals from Gloucester on the board who have all the money. Then there are five well-meaning people from Cheltenham who are on the board; they do not like to rock the boat because they are rather grateful for the money they are given. A day or so before every board meeting, the five blokes from Gloucester all meet up to decide that what goes on in Gloucester has nothing to do with the people from Cheltenham and certainly nothing to do with that chairman and chief executive who come from neither. The well-meaning people from Cheltenham do not disagree with that. That is not a recipe, is it, for a successful, agile, responsive organisation like a building society that needs to move with the times?

Roger Burden: No, it’s not what I said.

Paul Farrelly: That is the picture that has been created.

Roger Burden: I’m sorry you got that impression, but it is not what I said. I was trying to respond to why we got stuck four or five years ago and I definitely did say that is not the view today, we have moved on. I think if you look at the board and the debate and board agendas-I do not know if we are going to get a chance to see that-I think anyway it’s a properly run constituted board where it has the right degree of challenge, where we do not all vote en bloc, and I think that is the way boards should be. I’m sorry you got that impression but it’s not what I said.

Q552 Alan Keen: Is Cheltenham & Gloucester still a mutual?

Roger Burden: No, no, no, C&G was bought by Lloyds Bank some 10 or 12 years ago. I cannot remember when. I was there. I was at C&G. It is nothing to do with me now; I’m out of C&G. I retired.

Q553 Alan Keen: Was it a mutual before that?

Roger Burden: Yes, it was a mutual, yes.

Q554 Alan Keen: Would you agree that mutuals have been more responsible through the economic crisis than the-

Chair: Alan, I think that we can refrain from-

Roger Burden: I am happy to talk about that outside.

Alan Keen: No, it is to do with supporters’ ownership.

Roger Burden: I am not going to answer it, Chair, because I am a director of a mutual building society today. It is not Cheltenham & Gloucester but it wouldn’t be right for me to answer it. I’m happy to have a quiet word over a cup of coffee, but not here.

Jim Sheridan: Out in the corridor.

Roger Burden: Why not, yes.

Q555 Alan Keen: It was to do with supporters’ ownership, of course, but can I move on. You mentioned veterans’ football; I understand that Germany has veterans’ football organised at quite a high age-level. Can I ask you why it has never been looked at by the FA because there are two benefits from veterans’ football: one is the obvious health one, but the other is less easily recognised by people. Veterans have money to spare compared with younger people and, if you get veterans organised to play they get them into the clubs themselves, the grassroots clubs, they can give a lot to it whereas at the moment they are probably sitting in front of the telly watching football. Why has the FA not been involved in organising veterans football?

Kerry Simmons: It has in the sense that we invest in the county FAs to develop football right across from mini-soccer through to adult football. They have targets for adult male as well as adult female. The male ones have been challenging, as we’ve seen a decline in 11-a-side which we’ve halted now and a big growth in 5-a-side, for the reasons we touched on earlier. A couple of focus areas that a number of counties have done is to look at vets’ football and local vets’ leagues and keep people active in the game, but there is a balanced work programme so a big focus for us at the moment is drop-out at the younger age. As with all sports we are losing a large number of players in that sort of 14 to 16 age band. We’re trying to bring children into the game, make sure they don’t drop out, provide them with the right range of flexible opportunities to play as an adult, be it 11-a-side, small-sided or the Just Play type of concept we talked about earlier and keep them in.

It is right, we could do more in terms of veterans’ football, but certainly a lot of counties and leagues have done a lot to keep people in the game and put over 35 leagues in place.

Roger Burden: My own county started a veterans’ league this season from seeing the same guys playing unaffiliated football. Our development manager went out there and spoke to people and we have a league and now we’ve double-figure teams in it; it’s a few hundred chaps playing football and I think it’s growing.

Alan Keen: After the kids have gone to bed, you would have to use the small pitches, still play with large balls but smaller pitches, if you don’t mind. Sorry, Chair.

Roger Burden: I do see it as a growing area of football, you’re right.

Q556 Chair: Can I ask you a final question, Mr Burden? As you said, you were acting chairman of the FA for a time and you contemplated applying to-

Roger Burden: I did apply.

Chair: One of the reasons you gave for withdrawing your application was that you said that liaison with FIFA was an important part of the job and you weren’t prepared to deal with people that you did not trust. Would you like just to expand on that?

Roger Burden: Yes, it all came from the World Cup bid where the day I walked out of Wembley, having accepted the role as acting chairman, I received a call from one of the World Cup teams to ask me if I would go to South Africa and support some of the work they were doing during the World Cup, which I did, and I put off my holiday to go. I went twice to South Africa because the World Cup bid team wanted me to and I shook hands with important people, in FIFA and others, as I was asked to do. I met several of the FIFA executive committee, both in this country and in Switzerland. I treated them with respect which I thought they deserved and I felt they were treating me with respect. I think they were taking me for a fool but, at the time, I thought they were treating me with respect and I was happy to do all that for the English bid. Then of course on the day we were faced with coming second; it did not concern me, I thought the Russian bid was a good one; they were always a good competitor, I’ve got no issue with them winning. It was the way we lost that I have the issue with and we came a very poor fourth with only one vote on top of our own representative, as I expect the Committee is well aware.

It was against that background, as I saw it. First of all, the background in which our bid was recognised as being the best by most objective judgements-indeed, some of FIFA’s own judgments-and they set down the criteria on which judgments were made. In our group we were at the top, level top. Yet, we only got one vote. It felt to me as though they were not being fair and they were not being objective and we had put a lot of resource into this; not just money, people, and I’ll talk about those. That was one thing. I thought, "Well, who are these people, that they’ve put us through this and then they’ve just gone and done something else?" I did not like that and I did not like the fact that they had promised-I think we were up to five, it might have been six, but certainly five-Prince William that they would support us and they did not. We only got one of those; I think most of them subsequently rang our chief executive to say that they were the one that voted for us. If we had hung on a bit longer we might even have won the vote by the end of that week. But that’s not what I’m used to. These are people at the top of the game with whom, as I recognised in my letter, I understand the FA has to have a relationship with them and I wasn’t prepared to do that.

I’ve worked with people that I’m not sure whether I can trust-we have all done that in life and business-but this was the governing body. This was an important set of people. I just could not see myself at having to negotiate with them, having to agree with them and then walking away saying, "Well, their word just is not worth it; I don’t know if we’ve got a deal or not." It is something that I’m not used to; I wasn’t prepared to put up with; and I thought it was best if I stood down rather than refuse to meet them or be rude and sarcastic, which I can do. I’m quite good at that. That wouldn’t be right for the chairman of the Football Association and I withdrew. I had applied and I had a first interview but I did not attend it; I withdrew before I got to the first interview but those are my reasons and I’ve not regretted it.

Q557 Chair: You say that you think that our bid at least deserved that second place and that we had pledges from considerably more than the one person who did eventually vote for it with us. Why do you think that those others did not support us?

Roger Burden: I genuinely do not know. On the objective assessment, I would have expected substantial support and on the personal commitment I would have expected at least five and I have absolutely no idea what criteria those who voted used because it was not what they set down. I just do not know.

Q558 Chair: You must have thought about this.

Roger Burden: Yes, I have and I have my own views and they are personal ones and I think, if I understand, you will have heard stories. I’ve heard stories. All I know is that they didn’t follow their criteria. I mentioned the people. I attended what we hoped would be the celebration party, which turned out to be the wake, working with the World Cup bid team, which was not just the two or three that most people see; there’s a lot of staff on the World Cup bid team, who had given a year to two years of their lives because they believed that the England bid was going to be the best and they believed that the criteria that they had been asked to follow would be followed by those voting. That was an emotional moment, to see those people having to deal with the fact that we only got one vote also brought that failure home to me. I find it difficult to explain what was in the minds of the people who voted.

Q559 Chair: Without naming individuals, you’ve said you had your own views, would you like to expand as to what those are?

Roger Burden: No, no, I would not. Those views are clearly that, for some reason, they chose not to follow the criteria and I genuinely do not know why they did that. This is not a Russia thing, because we knew Russia had a good bid for all the right reasons. But to get fewer votes than Holland was confusing and, indeed, Holland got fewer votes when they went on; that some were just voting to keep us out, by the look of it. It did not say anything about that in the book. There is no point in me in giving you my view. All I know is what I’ve told you, that we had the best bid, by most measures, and some members committed to the prince that they would support us and it did not happen.

Q560 Jim Sheridan: Did those corridor meetings not work?

Roger Burden: Some did I expect. There must have been some meetings in the corridors by some that got more votes than us that worked.

Chair: I think that is all we have. Thank you very much both of you.

Examination of Witnesses

Witnesses: Stewart Regan, Chief Executive, the Scottish Football Association, gave evidence.

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

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

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

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

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

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

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

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

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

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

Stewart Regan: That is correct.

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

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

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

Stewart Regan: That is correct.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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