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Lord Faulkner of Worcester: My Lords, can the noble Lord say why the Jockey Club is able to exercise rules exactly like that and keep out of racing people whom it believes are not fit and proper persons?

Lord Addington: My Lords, I wonder how many people in the Jockey Club are dealing with limited companies. These are limited companies. The Football Association will have to take that on board. The Government will not be able to. And I am sure the lawyers will get round to the Jockey Club eventually.

In calling for such changes, we must be careful about what we are trying to achieve. If the Government are prepared to say that it is part of the cultural integrity of the community and that they defend local football clubs, that is one thing. However, if they are merely letting businesses carry on, that is something else. I do not like what I am saying, but it is the reality of the situation. The economics are probably against the nature and structure of football and the many full-time professional clubs.

We must address the facts. I do not say that it is easy but we must square up to the task. I approve of promotion and relegation. It encourages people to take part in sport, especially at the highest level, but it puts a strain on the structure of smaller clubs which aspire to climb higher. It makes them vulnerable to the supposed "white knight" who comes in to make money, or for an ego boost, or because he genuinely loves the sport or the club. It is in the nature of things that they will come together.

This is a speech in which I am afraid I can offer arguments but not many answers. But the people in football are the only ones who can deal with the ownership issue. As regards moving clubs around, the Football Association must square up to the fact that if it wants the game to continue as it is, it must defend the

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smaller clubs, which realistically will not make the premier league within the lifetime of anyone here today—that is, unless some others are struck by lightning.

We must applaud the greater involvement of fans in the running of clubs. However, in professional support we have a horrible situation in that we are all heavily involved. Unless we are prepared to move in and take responsibility for the financial running of the clubs, we cannot make many rules. I can say only that we must remind the fans when they complain, "Remember that when people are making money out of your club and are buying players, you are the ones who ultimately will have to fund that either through a change in your habits or through your pockets".

9.16 p.m.

Baroness Buscombe: My Lords, I congratulate the noble Lord, Lord Clark of Windermere, on asking this Unstarred Question. I have canvassed a good number of people of all ages for their response to the question. The overwhelming response has been, "It's up to the clubs, not the Government, to run their show". That said, I quickly turn to an extract of the third report of the Football Task Force, Investing in the Community, wherein it is stated:


    "The ownership of football clubs—particularly those in the lower divisions—needs reappraisal. New models of ownership, such as supporters' trusts and community trusts, could provide a means of improving increasing democracy and accountability whilst building strong community links for the long term".

In other words, reform of the structure and the running of clubs is to be encouraged and we very much support that view.

While it is important not to lose sight of the fact that football has a longstanding, deep-rooted amateur tradition, and while that must be a good thing, there is clearly a need to question whether that amateur tradition can continue to survive when focusing upon the structure and management of the clubs. I must confess to your Lordships that while researching the question, I found a paper written by Tom Cannon and Sean Hamil, which is included in a book entitled Football in the Digital Age: Who's game is it anyway?, to be particularly helpful, for which I thank the House of Lords Librarians. The chapter is entitled "Reforming football's boardrooms" and I shall quote from it briefly:


    "When the structure of the clubs is examined more deeply, the amateur tradition continues to dominate, with few dedicated or qualified staff in key business areas and little dedicated training and development in leisure or sports management, marketing, customer service, media relations, finance or people management. This amateur tradition is suddenly faced with taking on new roles, which are expected of their enterprises, and of their fans . . . the shareholders, the directors and the employees of the businesses".

The paper goes on to state that there needs to be a clearer view or set of views at the top about the levels of professionalism and the true skills that are required to manage clubs efficiently. And the challenges facing football clubs have to be addressed at a professional and strategic level. At the core has to be a strong sense of the club's purpose.

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While individual clubs are generally small businesses and have their own sense of identity, collectively, football is now big business and as such is, as we are now witnessing, vulnerable to risk and new challenges as any other business, particularly given its recent changing environment and funding issues.

With regard to funding, will the Minister give us some reassurance today in respect of those clubs which have been so badly affected—indeed, endangered—by the failure of ITV Digital?

Although we do not believe that the Government should regulate in this area, they have a responsibility to put pressure on those responsible for the failure of ITV Digital. They should accept that responsibility and act accordingly. The desirability for those responsible for that failure to compensate, at least in part, those clubs that are now especially vulnerable is surely overwhelming. Does the Minister agree?

Many of those clubs will struggle to survive because of the loss of their income stream. In the end, football needs to negotiate new television deals. For that reason, are the Government concerned at the prospect that the new digital terrestrial service contract to be announced tomorrow will be for only free-to-air with no pay-per-view services? How can the Nationwide League clubs then be expected to exploit the commercial opportunity of negotiating a new pay-per-view contract with another broadcaster?

Free-to-air digital television only, with no option for pay-per-view, spells no competition for bidding for sports rights such as that for the Nationwide League. Nationwide League and other fixtures are clearly unsuitable for normal, analogue, free-to-air channels such as BBC 1 and Channel 3 because analogue does not have the spectrum. However, football league club matches are ideal for pay-per-view digital channels. Do the Government have a strategy for those clubs, especially in relation to their ability to resell the rights competitively?

There are also real concerns about the internal affairs of some clubs. For example, I understand that the directors of York City circumvented the rules by placing the club's assets, including the ground, into a holding company, with the result that when they sold the club they were able to sell the assets separately. The affairs of Carlisle United Football Club also make disturbing reading. I listened with great interest to what the noble Lord, Lord Clark, and my noble friend Lord Henley said about the club and its now uncertain future.

I also listened with interest to what the noble Lord, Lord Faulkner of Worcester, had to say about Wimbledon Football Club. I declare an interest as caring very much about the future of Wimbledon Football Club and the proposed move to Milton Keynes, because I was brought up near Wimbledon. Although my knowledge of the subject is not deep, I understand the geography and when decisions clearly offend both good common sense and the wish of the community—in this instance, the people of Wimbledon. After all, football clubs stem from and should surely remain at the heart of community life.

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Watching football is one of the few universally popular pastimes that brings and holds communities together. It binds generations.

We understand that some would like the Government to be given power to intervene in the running of clubs—for example, with regard to ticket pricing and corporate hospitality—on behalf of the fans. It must be said that fans are already more inconvenienced by the timing of games shown live on television.

It is reasonable to propose that the Football Association should have greater regard to the probity and overall suitability of football club directors. Frankly, events have shown that some of them are simply not up to the job—something to which several of your Lordships alluded. However, that is not something for which we should or could legislate. One cannot dictate calibre, and I suggest that strong supporter involvement in the running of clubs should, in theory at least, help to confront and expose shortcomings of directors. It should also deter those who think that ownership of a club is a route to a fast buck.

As we have heard, the Government set up Supporters Direct to help groups of fans to acquire a stake in the ownership of their club. Several such supporters' trusts have helped to rescue clubs from bankruptcy, including clubs in Lincoln and Northampton. We agree that that is a good idea and understand that, as of 20th June, 59 clubs now have established trusts; 22 trusts have board representation; trusts own shares in 26 clubs; and trusts have been agreed at a further 14 clubs for later this year.

At the end of the day, it must be for the individual club to decide, within its local community, how it will be managed. However, I shall end on an upbeat note by offering to your Lordships 10 reasons why the Football League matters. The Football League is the most watched live sporting spectacle in Europe. This season, over 15 million people watched the regular games and the play-offs. Those are the best attendance figures for 33 years. With crowds averaging over 17,000, Division One can boast attendances that are twice those of the equivalent divisions in Italy and France and are 50 per cent greater than those in Spain and Germany. Attendances in Divisions Two and Three are more than double the equivalent leagues in every other major footballing nation.

Last season, Football League matches were shown in 136 countries, including countries as diverse as Botswana, Iceland and Iraq. Twelve of England's 23-man World Cup squad and 12 of England's 22-man squad for the European under-21 championship have played in the Football League. The Football League has proved, time and again, to be one of the most innovative forces in the modern game. Promotion and relegation, the play-offs, three points for a win, the golden goal and the 10-yard rule were all seen for the first time in professional football in Football League competitions. All 72 league clubs operate youth development programmes, 19 at academy level. Over 9,000 young footballers are on the books of our clubs,

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providing English football with its next generation of talent. In 1986, in tandem with the Professional Footballers' Association, the Football League founded Football in the Community. Each year, more than 1.25 million children and 7,000 schools take part. We remain the only country to place such a level of emphasis and financial investment on nurturing relations between football clubs and their local community.

Since the Taylor report, the architecture of British football has been transformed. Today, 35 Football League clubs have all-seater stadia, and most of those grounds are capable of holding in excess of 20,000 fans. Last season, the Football League distributed 100 million of revenue to clubs. The Worthington Cup, which generates 80 million, is the most important redistributive mechanism left in professional football. Football League clubs employ over 2,500 professional footballers and thousands more full-time and part-time administrative and match-day staff.

There is plenty to be proud of. We wish the Football League well and hope that it can overcome the various challenges that it faces.

9.27 p.m.

The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, I am also grateful to my noble friend for asking the Unstarred Question. The ownership of professional football clubs is a subject of great interest to many in the House and far beyond. That is especially true at the moment.

As the noble Baroness, Lady Buscombe, said, many Nationwide Football League clubs are struggling to adjust to the changed broadcasting conditions that followed the collapse of ITV Digital. A great many people follow the fortunes of their chosen club, as well as supporting England in the World Cup. In professing allegiance to an individual club, most followers of the sport take a close interest in the control and direction of that club. The extent of that interest has been clear in our debate.

Many people also make considerable emotional investment in the performance of their chosen team. As every speaker has said, it is, naturally, important to them to feel confident that the teams are in hands that are competent and well intentioned. More than that, supporters require the owners of their club to conduct themselves as disinterestedly as, they imagine, they would themselves, if given the opportunity. It is a special form of disinterestedness, for, in the eyes of many supporters, the ideal controller of a football club must combine a fiercely partisan approach to the advancement of the team's sporting interests with an ability to put aside all thought of personal gain. My remarks are not intended as satire; there is a contradiction. Those who own and administer football clubs must strive to combine the roles of supporter and businessman or businesswoman.

As the noble Baroness has just remarked, football is now a big business. Last year it turned over collectively more than 1 billion for the first time. As such, the

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sport must accept the full range of social responsibilities that come with such a position. It must also accept that its business activities and its corporate behaviour are, where appropriate, subject to statutory regulatory scrutiny. In common with other business sectors of comparable size, football must meet the standards required by the Companies Acts and by competition legislation, both of which apply to businesses across the economy. That point was demonstrated in the decision reached by the Competition Commission to refuse BskyB's attempt to acquire control of Manchester United in 1998.

At this point I should say to the noble Lord, Lord Henley, that of course I shall pass his question to my colleagues in the DTI since I do not have the answer tonight. However, I agree with him and with the noble Lord, Lord Addington, about the role of government. Any discussion of this subject must begin from a recognition that the internal regulation of football is a matter for its governing bodies, not for the Government. The Football Association, the Premiership and the Nationwide Football League all have detailed regulations governing the ownership and corporate behaviour of clubs.

But that is not to say that the Government have ignored the undeniable problems of ownership which have arisen in football. Over recent years the behaviour of a small minority of club chairmen has brought the sport into some disrepute. As noble Lords have pointed out, the report of the Football Task Force on commercial issues in football recommended a role for its proposed regulator in enforcing a requirement that only "fit and proper" persons should be allowed to run clubs.

The Government considered that recommendation very carefully, as did the football authorities. "Fit and proper person" requirements exist in a number of other fields. For example, the issue of broadcasting licences is subject to such a test and the failure of individuals to pass that test has led to the revocation of radio licences in the past. But outside the wholly private sphere, such tests work only where they form part of a statutory regulatory structure.

While clubs are private businesses, they are also public companies. They are subject to the regulations of governing bodies in so far as is appropriate for the purposes of fair sporting competition. Football has concluded that it would be impossible to enforce a "fit and proper person" requirement as it would not survive legal challenge. That is not a circular argument, although I realise that it is unwelcome to some. The Government have decided that a statutory, or quasi-statutory, regulatory structure for football cannot be justified. As such, we agree with the sport's governing bodies that a "fit and proper person" requirement would not be workable in football.

The Independent Football Commission, launched by the Government and the football authorities in March of this year as part of the response to the Football Task Force, marks a significant improvement on the approach that was originally proposed. Its members are fully independent both of

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the clubs and of the governing bodies, as well as of the supporters' associations. It forms the apex of football's customer service structure, as well as considering a number of general commercial issues in football, with reviews of merchandising and ticketing arrangements as two of its first tasks.

However, the commission has no responsibility with regard to issues of club ownership; rather, it has been established to consider, where appropriate, what might be called manifestations of poor corporate governance, in particular poor levels of customer service and overcharging. The Government believe that those kinds of issues are more immediately important to football supporters than matters of ownership.

As my noble friend Lord Faulkner mentioned, the commission will consider the circumstances in which Wimbledon Football Club has been permitted to relocate to Milton Keynes. The Government are confident that the commission's consideration will be a balanced one. Notwithstanding that, this is essentially a matter for football and, in particular, for the Football League. As my noble friend said, an independent Football Association panel accepted in May that Wimbledon has no future in the London Borough of Merton. However reluctantly, the league has accepted that decision.

The FA has expressed its concern that the decision,


    "should not in any way be seen as a precedent".

But there are special circumstances. The club has been homeless for 11 years and is losing 20,000 a day. The Government agree with this view and prefer to see the Wimbledon decision as a one-off and not as the beginning of a football franchise system.

My noble friends Lord Clark and Lord Faulkner are right to be concerned about the prospect of British football adopting a franchise system. In the United States, the right to compete in the National Football League—gridiron, not soccer—is, in certain circumstances, auctioned off to the city which bids the highest. The Government agree that such a system runs counter to the historic traditions of British football. We are confident that the sport's governing body shares that view.

In responding to the independent panel's decision on Wimbledon, the Football League was reluctant to override its regulations governing the location of football clubs. The Government believe that that reluctance, which is fully shared by the FA, speaks volumes. There is no appetite for a franchising system on the part of the football authorities. They see the Wimbledon case as an exceptional reaction to the very specific circumstances of an individual club, and the Government share that view.

However, I join my noble friend Lord Faulkner and add my best wishes to the many Wimbledon supporters who have helped to set up the newly-formed AFC Wimbledon, which will carry on the proud tradition of football in the London Borough of Merton.

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My noble friend Lord Clark and the noble Lord, Lord Healey, referred in some detail to the recent events at Carlisle United Football Club.


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