Examination of Witnesses

Football Governance Bill – in a Public Bill Committee am 3:00 pm ar 14 Mai 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Tony Bloom and Steve Parish gave evidence.

Photo of Virendra Sharma Virendra Sharma Llafur, Ealing, Southall

We now hear from Tony Bloom MBE, chair and owner of Brighton and Hove Albion Football Club, and Steve Parish, co-owner and chair of Crystal Palace Football Club. We have until 3.30 pm for this session. Will the witnesses please introduce yourselves for the record?

Tony Bloom:

Good afternoon, everyone. I am Tony Bloom. I have been chairman and owner of Brighton and Hove Albion Football Club since 2009. I will give a brief introduction about how I got to that position. I have been a fan of Brighton since I was very young: I was born and brought up in Brighton. My grandfather was vice-chairman of the football club in the ’70s, until he passed away on the team bus in 1980. My uncle has been on the board for almost 40 years. The football club and football is in my blood.

As some of you may be aware, we had some rogue owners in the 1990s. They sold our stadium, the Goldstone Ground, without a stadium to go to. We were really struggling. The owners did not keep the fans informed at all—in fact, they lied to the fans on an ongoing basis. It was the fans who saved the club.

Tony Bloom:

I will be quick. The point is that there is no doubt that the club almost went out of existence because of what happened. The owner of a football club should not be allowed to sell the stadium.

Steve Parish:

I am Steve Parish, co-owner of Crystal Palace Football Club and also the chairman. Fourteen years ago I bought the club out of administration. It was its second administration in a period of 10 years. Since then we have been fortunate enough to have a level of success against what I think everybody agrees is a difficult backdrop and industry, where for some to do well others, unfortunately, have to do badly. It is very enjoyable, although as Sharon pointed out it is also very stressful. It is very much about the local community and the fans who we serve.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

Q Good afternoon to you both: thank you for joining us. One of the factors that led to the fan-led review and, indeed, the Bill, was the European Super League proposal. Had that been successful, what would the impact have been on your club?

Tony Bloom:

The Super League was a dreadful idea; in my opinion, it never had a chance of being allowed to go forward in this country. Apart from the owners of the six English clubs—it is different on the continent, where there was a bit more support—everyone was dead against it. Even the fans of the clubs by and large were completely against it: it never had a chance. I do not understand it, apart from not wanting to miss what they thought was the gravy train. It would have been terrible for English football and for Brighton and Hove Albion Football Club. Because of what those six clubs did, it has brought a bad name to the Premier League, which is such an amazing product. It certainly does not help clubs like mine.

Steve Parish:

We believe that the effect of it on the Premier League would have been catastrophic as the top four positions would not really have mattered. The race to the Champions League and relegation are obviously the two things that preoccupy most football fans, and obviously there is the Europa League and other things as well. However, if there was no consequence to getting into the top four—in fact, if you could finish 10th and still qualify for a European competition—that would obviously make a mockery of all the domestic leagues and the whole meritocracy of football. Sadly, that still goes on.

A stealth version of the super league is gradually coming into operation. If Aston Villa are fortunate enough, as it looks like they will be, to qualify for the Champions League, which would be fantastic for all of us and for football, they will not enjoy the same money for doing exactly the same thing in the Champions League as an Arsenal or a Liverpool will, because the amount of money you get is based on your five-year performance.

We are constantly fighting to have a meritocracy. As the manager of Atalanta said when they succeeded in Europe, seeing a club like that that does not have the fanbase or fan size do well gives hope to all the clubs, but there is a continuing move from clubs in Europe to pull the drawbridge up and create a permanence around qualification for Europe, which is something that we all have to be careful of.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

Q In posing my second question, I would like to preface it with quotes from you both. Tony, in 2022 you told The Athletic:

“Not a lot irritates me in football...Maybe the governing bodies of FIFA and UEFA, who both regulate the game but also run tournaments. There’s a big conflict there.”

Steve, in 2023 you were reported as saying:

“The people organising the tournaments and the people regulating them, and taxing those tournaments for the greater good, should be two different people.”

In the context of those quotes, are you pleased to see an independent regulator established that can help regulate football finances without a conflict of interest?

Tony Bloom:

I was talking with FIFA and UEFA because they are always looking to create more tournaments and more revenues for themselves, such as the FIFA club championships. They were looking to have a World cup every two years. UEFA now have an expanded Champions League, which is in direct competition with the Premier League.

The domestic competitions are of the utmost importance to the country and to domestic football in this country, although the other ones are fine. What I think is absolutely wrong is that they regulate the game, yet they can distort it against the interests of the domestic fixture list and the domestic tournament. The FA is not looking to do that. It has one tournament—the FA cup. The FA works very well with the Premier League and the Football League in terms of that tournament, so they are very different things. I was talking about UEFA and FIFA, and for me that does not relate to the FA. That is why I do not think that the two things go hand in hand.

If you are asking me about a regulator, obviously a regulator is coming in. From my point of view as an owner of a football club, I am concerned about a lot of things. I do not think that anyone in industry is a great fan of having external regulation. If it is light touch and on things about sustainability and ensuring that clubs cannot sell stadia, their chance of going out of business is reduced and they cannot change their club crest or colours without discussions with fans, I am in favour of that, but I have significant concerns with a lot of the other things.

Steve Parish:

FIFA controls the world calendar, so it takes first crack at the calendar. It is pretty clear that FIFA wants smaller, 18-team domestic major leagues and one cup competition, so there is a huge difference between the scope creep of their tournaments and the governance role that they should have in the game.

The issue is certainly not about distributions. In fact, if you are going to compare the distributions, I think UEFA give something like 5% of their overall income to solidarity payments, whereas the Premier League give 16% of their overall income even now to solidarity payments down the pyramid, so I do not think that you can compare those two things. In so far as you touch on somebody to adjudicate or the right person to adjudicate or look into whether the distributions down the pyramid are at the right amount or right level, there may well be some role in that, and it looks like that is where we are heading.

When we sit in the much-maligned Premier League, where we are all tarred with the same brush as being just full of self-interest, I can certainly speak for Tony and myself and say that we understand the position and obligation we have to the greater game. We also do not feel like we are permanent members of the Premier League—certainly not. Far from it, we know that pretty soon we could be back in the Championship. I am pretty sure that Sharon would agree with a lot of the things that we stick up for and advocate in the Premier League if she was in the Premier League. It is interesting that Sharon wants the ladder up and she wants to get there, but I am also pretty sure that, once she gets there, she does not want to just go straight back down again. She wants the possibility of staying there.

We have heard about parachute payments and all this distortion, but Palace did not get promoted with parachute payments, and nor did Forest, Brighton, Wolves, Brentford or Luton. In fact, Bournemouth did not get promoted the first time with parachute payments, and nor did Fulham or Burnley. There are a lot of prosperous clubs in the Premier League that did not get promoted with parachute payments—the average is one club a year. There are these causes célèbres, where everybody looks at things through their own individual lens. I understand that, and it is important that we have a broad perspective; my concern is whether the regulator will have that.

We are talking about a system that, at the moment, has served us incredibly well. We have got a democracy, really. Football is run by the clubs and their various governing bodies. Over the last 150 years, we have managed to make it the world’s most popular game. Within that, we have managed to make the Premier League the world’s most popular league. Of course, if we had a regulator that made all the right decisions all the time and was not lobbied by the big clubs more than maybe the smaller clubs, then of course that might be of benefit, but I am severely worried about the potential unintended consequences and the power of the big clubs to dominate the debate.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

Q I appreciate the point you are making, and obviously we are very supportive of the Premier League being incredibly successful, but half the clubs in the top five leagues are technically insolvent. The independent regulator is obviously here to try to deal with some of those issues. Very briefly and very simply, do you welcome the concept of an independent regulator?

Steve Parish:

The problem with football is that there are so many moving parts. Competitive balance and sustainability in some ways go hand in hand. If you look at Bolton as an example, there was a lot of money invested in Bolton. The infrastructure was massively improved. Yes, it got into financial trouble, but it did end up a lot better off, with a lot of investment over that period, and it enjoyed a sustained period in the Premier League.

My big concern is that if you only focus on sustainability, the biggest businesses can always cope with regulation the best. There is another chasm, which is between the top clubs in the Premier League and the rest of the clubs. If you look at the Bill, it classes relevant revenue as the broadcast income, but broadcast income is 75% of Tony’s and my revenue, and about 20% of the bigger clubs’ revenue. So straight away, it has the ability to competitively disconnect the league even further.

That is just one concern I have. Of course, if the regulator is well informed, lobbied by all the right people and comes to the right decisions, which create the right platform for football to continue to thrive, it will be a good thing. But when I read the Bill—when I see how, frankly, imprecise it is; when I see areas where the Secretary of State can interfere or where the rules can be changed; or when I see 116 different licences or each club being treated differently—I do see a lot of worrying issues that could arise.

Photo of Damian Collins Damian Collins Chair, Draft Online Safety Bill (Joint Committee), Chair, Draft Online Safety Bill (Joint Committee)

Q I want to ask Steve Parish first, and then I would welcome your comments, Tony. Steve, you referred to the danger of domination by the big clubs—I think you rightly alluded to the fact that in some ways the Premier League is a two-tier league. Is that not made worse by, effectively, a competition that sets its own rules and organises itself?

Within the Premier League board, you have all those big clubs. Would it be more effective to allow some of the enforcement and supervision of the league’s rules to be done by an independent regulator that is, if you like, separate from the politics of football? It is set up by Government, it is not open to being lobbied or cajoled, and it is not making decisions on the regulation of clubs that it has to trade off against other decisions that are taken by Premier League clubs about how they organise the affairs of their league.

Steve Parish:

If the Bill looked at the whole of football, that might be the case, but we are looking at it in a very myopic way. We are not looking at all the European revenue, the growing scope creep of European fixtures, the increase in the size of UEFA club competitions, or the gerrymandering of coefficients, so that even if we qualified, we would not get anywhere near as much money as a club that has been in the league three years previously. Within the Premier League itself, the top clubs have got—what is it?—four times our income. That is probably going to head towards five or six times our income.

The Bill, very narrowly, looks only at the Premier League media money. Actually, the Premier League is the most egalitarian by distribution in Europe by far. Where it is heading to right now is 1.8:1. Although that is worse for Tony and me, this is still by far the fairest league in Europe: in Germany, the ratio is about 3:1—the top club to the bottom club. So actually, in terms of distributing the revenue that it gets, the Premier League has done a very good job of making it fair and maintaining competitive balance.

The problem is that such huge revenue is now pouring into these clubs from European competition, and from the commercial deals that that gives them, that it is creating a massive distortion. What I fear this Bill will create is a permanent top six or top seven and then a kind of washing machine of clubs that will rotate between the two divisions below. That may well be what some people want as a vision for football. It is not mine. Mine, like Sharon’s, is to try to get into the Premier League and stay there. I accept it comes with jeopardy every year. I accept there are three relegation places. I accept that everybody is trying to stay in the league and it is highly competitive. But the aim, I think, of most clubs is to try to stay there, ladder up and improve.

Tony Bloom:

Obviously I have had many years in the Championship and League One, and we have had many discussions there. The relationships between the Football League and the Premier League, I think, have got a lot worse since there was talk about regulating football. Overall, although there have been difficulties over the years, it has worked very well. But ever since the Football League has realised that there is going to be a regulator and, “If we can’t get a deal, there may be something from that,” things have not worked out so well, so I think there are, again, unintended consequences.

I think it is much better for football—the Football League, the Premier League, the National League and the FA—to work things out itself. Without it being perfect, I think the fact there have been three liquidations since 1992, despite the fact that, as you say, so many clubs are in financial distress—most clubs lose a lot of money every single year—is a very good result. You can look at other businesses. I know we do not want to compare businesses to sport; it is a completely different stratosphere. But I do worry about what will happen if you put in lots of extra regulation and lots of extra cost for the clubs, even though I am sure the Premier League will pay the vast majority of the regulator bill. I am just worried about future investors. That is absolutely critical.

Photo of Damian Collins Damian Collins Chair, Draft Online Safety Bill (Joint Committee), Chair, Draft Online Safety Bill (Joint Committee)

Q If we passed an amendment to the Bill that made parachute payments illegal and they were scrapped, how would that affect your preparations for next season?

Tony Bloom:

I think it would be disastrous for the Premier League. The Premier League has done an amazing job to make it far and away the strongest domestic league in the world, and that is where we want it to stay. It is so important for this country. If that was to happen, then outside the biggest five or six clubs, which may think their chance of relegation is tiny, the clubs could not invest the money in players. And then what would you have?

In countries like France, with Paris, and also with Juventus and Munich, there is domination between the top one or two clubs and there is frequently only one winner in the league. The middle and bottom clubs would not be able to invest, and the differential between the top clubs and the middle and bottom clubs would be so big that it would not be so competitive. Then people would not want to watch it; the broadcast money would not be there; and we would veer towards Spain, Italy, Germany and France. I think it would be an absolute disaster. Clubs could not invest because of the worry about relegation. As it is, with the parachute payments, clubs still have to sell players, typically. Often, they get into serious financial problems even with the parachutes.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee, Chairman of the House of Commons Members' Fund

Q I have a couple of issues to put to both of you. You have said that everything works well. I think most people would be in disbelief at hearing that statement, because we all can see problems in football right the way through. Individual clubs have had them. There are problems right through the leagues in terms of funding and insolvency. Both your clubs nearly got to the point of extinction. Can you not see the need for regulation to stop grounds being sold away from clubs and to stop clubs going into administration repeatedly and facing those problems?

Steve Parish:

The reality is that all around Europe and probably the world, football is a billionaire or millionaire-funded industry. That is the reality of it. It does not make money anywhere in the world. We are not unique: this is not a country where uniquely we lose money in football. It is not a business with a profit principle; it is a business with a winning principle. Whatever rules you put in place, people’s desire to win will always trump their desire to make money. So the problem is that if you restrict our league so much that we are taken out of that game, you very quickly could make us very uncompetitive in terms of a European landscape.

Steve Parish:

I have put more money into my club in the Premier League than I used to in the Championship. I write bigger cheques in the Premier League than I did in the Championship. It used to cost me a lot less money to run in the Championship.

Tony Bloom:

The reality is that across the world in sport—but particularly in football—clubs everywhere lose money every year. People put it in because they want to be competitive, and they want things for their community, and so the problem you have for every single owner in this country is that they want to be competitive, and they want to spend money, but they want to try to be sustainable—and the two are not compatible. Almost every club—and certainly every league—loses a lot of money. The Premier League loses a lot more money than every other league, and that is true on the continent as well. To be competitive, that is what you need to do—spend money. That will never change, whatever happens with the Bill. You will always have that, and you need to accept it, because that is the reality. Without that, or if you try to stop that, the Premier League would not be the best league in the world.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee, Chairman of the House of Commons Members' Fund

Q Some might argue that the regulator is there to put backstop powers in place in general to try and stop that unsustainability of clubs going bust, when fans then have no team to support.

Tony Bloom:

But going—

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee, Chairman of the House of Commons Members' Fund

Q It seems that both of you are arguing from a completely self-interested point of view. You are saying that, “It is terrible in the Premier League because the few at the top are rigging the system to suit themselves with the help of European competition, and we in the rest of the Premier League clubs find this unfair, and the distribution of resources ought to be fairer to us; however, when we look down to the EFL, we say we do not want parachute payments to end because that disadvantages Championship clubs, so we are happy to support that because it supports our friends in the Premier League”. Is all that self-interest?

Steve Parish:

That is not what we are saying at all. We are representative of every club like us; what I—quite clearly—said to you is that I believe that if Bolton were in the Premier League, they would believe what I believe, which is that yes, the pyramid should have a sustainable amount of money, or more money so it can better compete—as Tony says, it is very unlikely, in a normal business case, that any of these things will ever look sustainable; there are a lot of people putting a lot of money into football from their own pocket for the enjoyment of the public and their fan base—but there is another problem, and that is the growing wealth of the big clubs, and that has to be identified. What we need to do is make sure that when we pass these distributions down the league, they come from the right place and are fairly apportioned. That is not me being selfish—that is me being sensible.

Steve Parish:

As I said, if you had a regulator that we all believed would uniquely make all the right decisions for football, of course we would be in favour of it. What you asked me is what my concerns about the Bill are; my concern with the Bill as a starting point is that relevant revenue is only broadcast income, which would be 75% of Bolton’s revenue should they get into the Premier League, and it is about 20% of the top six’s revenue. That straight away is an example of an area of concern.

I just want to come back on parachute payments, because I need to give you some numbers. In the Premier League, if you finish around midtable, you will turn over about £180 million—it is not an unreasonable thing to budget for. The first year in the Championship, with parachute payments, is about £70 million—so you have about an £110 million drop in revenue, which is pretty catastrophic for any business to try and contend with if they get relegated. Many clubs manage to get back in the first year—on average, it is about one a season for the last 10 years—but the average finishing position of a parachute club is eighth. Many clubs, like Stoke or Sunderland, disappear from the Premier League, and that big gap and big drop gets them in a lot of financial difficulties. This is why parachute payments are so important for the sustainability of football.

Tony Bloom:

You talk about self-interest: that is not the case at all. I care about every football club in this country. I am not worried about the top six—I have not said anything about the top six. We have regulations in the Premier League, and if something is going to be changed, you need a two thirds majority; if they get two thirds majority, and the top six vote, and get a few more people, that is the way it is. I am not complaining. Football needs to vote, and the Premier League has its constitution; I have no issues with that.

I used to be in the Championship, and we had parachute payments. I was not complaining—we just worked away to try and be the best we could for our football club. I was never in favour of parachute payments when we went and won the Championship; I never voted for that or discussed that. All I was asking when I was in the Championship was for there to be a bit of sustainability so clubs did not lose an average of £10 million a year, which was voted against because clubs wanted to give themselves a chance to get promoted to the Premier League. I am saying exactly the same in both divisions.

Photo of Stuart Andrew Stuart Andrew Assistant Whip, Parliamentary Under Secretary of State (Department for Culture, Media and Sport), Parliamentary Under Secretary of State (Department for Business and Trade) (Minister for Equalities)

Q Tony, I was interested in the comments that you made a moment ago. You said that your concern about the regulations and the Bill is that your preference would be for the Premier League, EFL and National League to all work together for a solution for the future of football. Why has that not happened?

Tony Bloom:

Because of the talk of a regulator, as I said—

Photo of Stuart Andrew Stuart Andrew Assistant Whip, Parliamentary Under Secretary of State (Department for Culture, Media and Sport), Parliamentary Under Secretary of State (Department for Business and Trade) (Minister for Equalities)

Let me finish my question. There has been talk of a regulator for a much shorter period than there have been issues relating to the historical problems in football; this has not just happened since the publication of the White Paper or the fan-led review. The reason why the fan-led review was brought in the first place was that a solution had not been brought by football. My question again is why that has not happened, because that is why we are here today—because football has not stepped up.

Turning to another thing that I want to talk about, I agree with you and I am glad to hear that you want to see the sustainability of clubs within the pyramid. The independent experts who we heard this morning said that the problem in the past was that too many clubs were looking in the rear-view mirror, whereas this Bill presents us with a real-time approach that will identify problems much earlier so that they can be addressed. Do you welcome that?

My final question is about fan engagement—to change the subject completely. I am interested in whether you think the Bill hits the right notes on that and what you do there, because I hear that you have an interesting approach as a club.

Tony Bloom:

In terms of fan engagement, we are a club that regularly engages with the fans. Even before talk of a regulator, we had many fan forums with a broad range of our supporters’ clubs. I do them, as do the CEO, the head coach and so on. We have seen in the last couple of years that we have a fan-led board and we have many meetings as well. Our relationship with our fans is really good. I can talk only about my football club, but if you speak to our fans, they would be very happy with the engagement. What was the second question?

Tony Bloom:

When I was in the Championship about 10 years ago, there were big discussions, big debates and big negotiations with the Premier League. For sure, as you can imagine, the English Football League wants to have more revenues and a bigger percentage of the Premier League revenues. A deal was done—it was not easy, but it got done.

Of course the lower league clubs always want more money. As Sharon was saying, if she gets promoted, she is going to have a much bigger bill. If there was more money going into Bolton, no doubt for that season and the season after, things would be a bit easier, but have no doubt that when more money goes into the English Football League—the vast majority of it will go to the Championship—it will go on player salaries. That is what happens, so there will still be issues. Unless you have sustainability levels where there are caps on spending, and clubs have their money there, there will always be such issues.

On your first question, regardless of the Bill, the English Football League and the Premier League are becoming much more forward thinking in the way they have the football regulations for finance. Regardless of what is happening with the Bill, that is what the Premier League and the English Football League are looking to do, which I think is a positive thing.

Steve Parish:

The implication is that nothing is being done. Profit and sustainability rules were the first step in trying to control spending. People have to realise that we are subject to competition law as well, and we are being challenged on some of these things within the league. Some of the things that the majority of clubs would like to do—salary caps in some instances, which some people would like to do, or the cost caps that we are working on at the moment, which are broadly salary caps—are challengeable under competition law, so we have to get advice and be very careful that we are proportionate in the things that we undertake.

In terms of why a deal has not been done, I think it is quite simple: it is the backstop. It was made quite clear in the last panel that view of people at the EFL is that whatever deal is given to them now, they will pocket it and then go and see the regulator to get a much better one, because they do not think it will be good enough. I genuinely think that is the reason that a deal has not been done so far.

Photo of Ian Byrne Ian Byrne Llafur, Liverpool, West Derby

Q You are both custodians of the clubs that you own, and bloody good ones, to be fair—you are two of the better ones. Would you not agree that if something happened to you and you had to walk away from them, having the regulator would mean that there was a better chance of getting two custodians like yourselves, and not like some we have seen previously? I am speaking about the experience of Liverpool, with Hicks and Gillett, and what is happening at Everton now. The status quo cannot prevail. For the benefit of your clubs, when you move on, do you not think that the regulator gives you a better chance of getting better owners?

Photo of Virendra Sharma Virendra Sharma Llafur, Ealing, Southall

I ask the witnesses to send their responses in writing, as I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank our witnesses on behalf of the Committee.