Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1820 - 1839)

TUESDAY 17 JANUARY 2006

Mr Brian Barwick and Mr Simon Johnson

  Q1820  Chairman: What is the total number for the FA?

  Mr Johnson: The FA's income is made up of various sources. The largest section is television but there is also income that we receive from sponsorship, gate receipts and other grants. In our last published accounts, our total income was over £206 million from all the sources of revenue that we have. That is distributed in ways that you may have an interest in later on.

  Q1821  Chairman: The bulk of that comes from television rights?

  Mr Johnson: It is the largest section of our revenue.

  Q1822  Chairman: The other thing I would like to be clear about in your evidence is this. The clubs obviously benefit from this income, including the television rights. How does that work?

  Mr Johnson: Would it be helpful if I just explained broadly what the FA does with its income? From that £206 million that we earn, we firstly deduct the cost of actually selling the rights, administering the contracts that we have. There is then a deduction made for the operating expenses of the Association; that is the operation at Soho Square and running the game and our various operations. There is then an element for the cost of specific programmes that we run. There will be some small-sided football programmes, for example, our medical work and our drug testing. Those are just some examples. The rest of that is then distributed by the Football Association pretty much on a 50-50 basis between what we call the national game—that is the amateur, grassroots game—and the professional game. When we say, as I think we did say in our letter, that the FA's revenues are used for the development of the game, that is absolutely true. Really the very largest part of our income is redistributed through the game and it is fairly equally split between entitlement for the clubs in the professional game and then also counties, grassroots football, the development of football at that level.

  Mr Barwick: It is interesting to make the point that we are an association that reflects the interests of 37,000 clubs. That is the scale of the game: over 1 million players, 400,000 volunteers. Recent research suggests that up to 12 million people have been involved in football in some way, shape or form this year. We do have a responsibility across the spectrum of the game. We take that very seriously.

  Q1823  Chairman: When there is some talk, as by the European Commission, about Premier League being a football monopoly, that hardly seems to be the case on the basis of our evidence.

  Mr Johnson: I am sure you will want to talk about the European Commission.

  Q1824  Chairman: We will.

  Mr Barwick: I do not think we would ever agree that the Premier League is a monopoly. If you simply look at the amount of football that is played, the amount of football that is shown on television, you have: Premier League; Football League; within what we are able to sell, you have FA Cup matches and England internationals; there are international competitions, the UEFA Cup and UEFA Champions League; and then you have the World Cups and European Championships. We have always argued that there is plenty of football around for the broadcasting market.

  Mr Barwick: I became involved in television in 1979 and I have worked, as you have suggested, 25 years in television, including eight years as the Editor of Match of the Day and ultimately I was Head of Sport at the BBC before moving across to ITV as their Controller of Sport. The one thing that I saw in that 25 years was just the great range, depth and diversity of the amount of football that was available to be broadcast or available to be bought for broadcast. With the explosion of channels, there was enough football to handle that. That is the case today. There is a lot of product.

  Q1825  Lord Peston: I was a bit puzzled by Mr Johnson's point about monopoly. You are aware of the competition legislation that pertains in this country. Monopoly in practice is defined in hours, controlling about a quarter of the market. You are not for one moment suggesting that Premier League has a share as low as that, are you, of the saleable market? By any standards that I am asking you as an economist, Premier League is about the most powerful monopoly of any product I know in this country. I am rather surprised. As someone who used to kick a ball around on Hackney Marshes between two coats, I appreciate there is a hell of a lot of football played by a lot of us and we get told off by our mothers when we come home covered in pure mud. That is not what we are talking about today, much as one wants to see it fostered.

  Mr Barwick: That is very critical to our aspirations.

  Mr Johnson: To be fair, I think the European Commission's case was actually about the principle of collective selling, the decision taken by the clubs banding together to sell their rights, rather than whether they were a monopoly or not. I was not involved in the case. Obviously I am aware of the collective selling aspect of it. That was their main area of interest. We have a common interest in that because, of course, we have an element of collective selling of our rights. I did not mean to mislead on that. The Chairman had referred to the word "monopoly" and I think I made the link with the case.

  Q1826  Lord Maxton: Can I get one or two things clear? You are the controlling body which lays down basically football in England—and Wales?

  Mr Johnson: In England.

  Q1827  Lord Maxton: Quite rightly, you have said that one of your aims is to ensure through broadcasting that that game is encouraged. You spend some of the income on the grassroots, I think 50 per cent of it, of the game, quite rightly. I think everybody would be delighted about that. The fact is that 73 per cent of the live football matches shown on television in this country are not under your control. Do you have any say at all in the sale of Premier League rights?

  Mr Johnson: We do not.

  Q1828  Lord Maxton: None?

  Mr Johnson: No, because that is a league that affiliates to the Football Association, so they have to be part of the rules of the game, the regulations of the game, but they are free to deal with their own commercial rights exactly as they choose. That is the same with the Football League, the Football Conference and any organisation. Because the Premier League is the biggest of the leagues, a successful league, they obviously deal with their rights in their own way. To a certain extent, I think the FA is proud of the development of the Premier League because the amount of income that it has generated for the game of football, the way that the league has become a league of such interest and such excitement, I think reflects well on English football. Clearly, there is an element of what the Premier League earns from the distribution of their income that is redistributed into good causes and, through the game, through the Football Foundation. That is something that we support, but we do not have a role; we cannot direct, nor would be choose to, how they would deal with rights.

  Q1829  Lord Maxton: Take it that you give 50 per cent of your income after your costs, so to speak. In the Football League, the Premier League is not giving anything like 50 per cent for the grassroots of the game, is it?

  Mr Johnson: No, they are not, but we do have different objectives.

  Mr Barwick: We are a non-profit making organisation. It might be worth spending a minute or so on this. We are the governing body of the game in England. We are responsible for regulation, governance, promotion and administration of the game. In the context of this inquiry, we use the FA as a key asset to generate funds for distribution throughout the game. We organise senior men's, youth and women's national competitions and a number of representative England teams at all ages and for all abilities. We have 16 teams. Everybody talks about England but there are 16 teams that leave our door. Our main commercial assets are, of course, the FA Challenge Cup and the England Men's Senior Team. We are able to generate income from the rights to those events. We are a non-profit organisation and so broadcasting sponsorship primarily has the right to exploit those assets and that is the way we generate revenue to develop the game at all levels and improve standards. We are a different organisation with different aspirations dealing with the same handbook.

  Mr Johnson: Chairman, I am aware that you took evidence from Richard Scudamore of the Premier League and I know you pressed him on what their objectives were. I wondered if this would be helpful to the committee. When we put our rights out to tender a couple of years ago, we published to those bidding broadly what our objectives were at that time, which are broadly similar to what they are now. With your permission, might I read those to the Committee? It might be helpful to this element of your discussion.

  Q1830  Chairman: How long are they?

  Mr Johnson: There are six of them. The first is to maximise revenues for the benefit of the game as a whole. Number two is to increase active participation in all forms and at all levels. Number three is to extend the appeal and influence of English football to both the domestic and a global audience. Number four is to raise the level of exposure of the FA's events. Number five is to reinforce the values of the FA's brands—the word they used at the time. Number six is to provide support and exposure for our commercial partners. I know you pressed Mr Scudamore, quite rightly. I thought it would be helpful to know broadly what our objectives were.

  Q1831  Lord Maxton: Would it be better if, in fact, more of the money of that 73 per cent of the total income—or is it 73 per cent from broadcasting goes to Premier League—was going down to the grassroots of the game and therefore maybe it would be better on the BBC?

  Mr Johnson: We can speak to this Committee about the FA and the way we spend our money.

  Q1832  Chairman: I think you have enough issues with the question.

  Mr Barwick: We like to think we have to deal today with the FA's situation.

  Q1833  Lord Peston: Your aims obviously, as someone who is keen on football, are tremendously sympathetic to me but you kept using the words "English football". It is very rare that in the team I support there is an English player on the field. If you look at the Premier League, with an average of 30 men in a squad, 20 to 10, there are only 600 people, and at a rough guess half of those are English, maybe fewer. I try to count them up when I am looking at the Sunday results. It is that order of magnitude. Is there not a serious question for you as the governing body anxious to promote English football that you do not seem to have any way, as it were, to encourage the use of English players?

  Mr Barwick: I think it is an interesting point. Let me answer it in two or three ways. Firstly, I am intensely proud of the Premier League as a competition. I was the Editor of Match of the Day on the very first Saturday it started. It was an exciting competition on that day and remains an exciting competition. One of the reasons it is an exciting competition is because of the quality of the players that the product has brought to the game. I don't know which team you follow. If you tell me, I will tell you your best player. Two of the things that follow are, I think: one, we have an English national team which is possibly as strong as any in my lifetime, and I think that is because they are playing with good players all the time; and, beyond that, there is an academy system now behind the game which is trying to bring in the next generation. Of course, as the Football Association, we have to be concerned with the next generation that is coming through, of course we do, and we are. It is an interesting point.

  Q1834  Lord Maxton: One week's salary for some of the players playing in your team would meet the expenditure of a top level amateur team for a whole season. Amateur teams would roll over to get £100,000 on an annual basis. That is the sort of money that is going to foreign footballers. Would it not be better spent in the game?

  Mr Barwick: I think Mr Johnson will deal with that one!

  Mr Johnson: I wonder whether we are slightly straying away from the BBC when we talk about players' salaries.

  Chairman: If we are not careful, we will get on to the future of the English football manager any moment. Let us move on to Lady Bonham-Carter.

  Q1835  Baroness Bonham-Carter of Yarnbury: Curiously, in your letter you talked about the CCPR Voluntary Code and said that this guarantees that at least 5 per cent—only 5 per cent—of all TV revenue is reinvested in the sport.

  Mr Johnson: I put that in just to help the Committee. That is a voluntary code that members of the CCPR sign up to. Of course, ours is entirely different; considerably more than 50 per cent of our revenue is distributed. When the members of the code first signed up to that a number of years ago, I think all the members of the CCPR at that time agreed that whatever they do, they will always make sure that 5 per cent of their income will be used in that way.

  Q1836  Baroness Bonham-Carter of Yarnbury: This is the broadcasting income?

  Mr Johnson: Yes.

  Q1837  Baroness Bonham-Carter of Yarnbury: What happens to the broadcasting income that is not reinvested in the sport?

  Mr Johnson: It is up to the sport to deal with that.

  Q1838  Baroness Bonham-Carter of Yarnbury: In your case?

  Mr Johnson: In our case, as I explained earlier, from our income we take out the costs of servicing the income, the costs of running the organisation, and then we distribute it throughout the game. The largest part of what we generate is reinvested back into the game of football.

  Q1839  Baroness Bonham-Carter of Yarnbury: Do you believe that it is important, indeed necessary, for the BBC to retain its position as the dominant broadcaster of the FA CUP?

  Mr Barwick: It is interesting that the BBC's re-involvement in the FA Cup has coincided with the elevation of the competition again. The FA Cup has had to fight for its place in the modern football calendar. There are some really seriously strong football products, if you can use that word, out there now, and the FA Cup has been a wonderful competition. It is recognised throughout the world as the finest domestic cup competition in football, but it has had to punch its weight. One of the ways it has punched its weight I think is to have a relationship with the BBC, and indeed in our current programme arrangement with Sky where they have given the competition a real boost, both in match coverage but also in promotion around the matches. The very fact that the BBC has a number of television channels, a number of radio channels and a sophisticated website operation means that when they tend to get behind something—Strictly Come Dancing for example—you know it is on the BBC. I sense that this has happened with the FA Cup. I have to say that the FA Cup has rewarded both broadcasters richly with some remarkable games, even in the last three weeks.


 
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