Clause 46 - Duty not to dispose etc of home ground without approval

Football Governance Bill – in a Public Bill Committee am 3:15 pm ar 21 Mai 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Ian Byrne Ian Byrne Llafur, Liverpool, West Derby 3:15, 21 Mai 2024

I beg to move amendment 3, in clause 46, page 38, line 15, at end insert—

“(6A) Before the IFR grants an approval under subsection 6 it must—

(a) consult the supporters of the body in question, the relevant competition organisers and persons representing the local community with which the body is associated; and

(b) have regard to the views expressed by those consulted.”

Photo of Caroline Nokes Caroline Nokes Chair, Women and Equalities Committee, Chair, Women and Equalities Committee

With this it will be convenient to discuss the following:

Clause stand part.

Amendment 29, in clause 48, page 39, line 20, at end insert—

“(4A) A regulated club must take reasonable steps to establish that the majority of the club’s fans in England and Wales do not consider the arrangements to constitute significant harm to the heritage of the club under subsection 4(b

Clause 48 stand part.

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

It is a pleasure to serve under your chairship, Ms Nokes.

Clause 46 is welcome, but I have real concern because, although we are again talking about supporter engagement, there is no mention of a requirement or even a power for the independent football regulator to consult any other parties about the disposal of the ground—often a community asset. If the Minister is not prepared to accept the amendment, which would allow supporters, local stakeholders and competition organisers to be engaged before any such disposal takes place, will he explain why? What powers does he believe are available to the independent football regulator to ensure that supporters, local stakeholders and competition organisers have a voice in any decision made about ground disposal?

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

Football stadiums have immense value. First, they have value to fans, who have precious memories going back generations of standing in the same spot watching their club through the lowest lows and highest highs. In many ways, a stadium is one of the strongest ties a club has to the local community. A club’s staff, players and owners might change, but the pitch remains.

Secondly, grounds also have a financial and fundamental value. They are often among the club’s most valuable assets. In well-run clubs, that is positive, but where a club is already financially unstable, home grounds can become vulnerable to sale in a way that seriously undermines the club in the long term. In some cases, they are sold in a desperate attempt to make a return on losses, and in others they are sold by those purposefully wishing to strip a club of its assets before leaving it behind to collapse. Indeed, there are numerous examples of clubs in financial trouble selling their stadiums to give owners some collateral on their investments or to circumvent profit and sustainability rules. Troubled Sheffield Wednesday sold Hillsborough to its owner for a profit of more than £38 million, covering its pre-tax losses of £35 million. Both Reading and Derby sold their grounds in a similar fashion. But a stadium can be sold only once, and without a stadium in their possession, clubs risk not being able to play at all.

We are familiar with the story of Wimbledon FC, whose home was forcibly moved to Milton Keynes in 2003, resulting in the club being renamed. Finances aside, that decision was devastating for local fans, who felt their club had been stolen from them and their community, as we heard in the evidence session. Given that the regulator is a body specifically established to both ensure the financial sustainability and protect the heritage of English football, it is right that it should have a responsibility to ensure that stadium sales do not undermine a club’s future.

There are of course many circumstances in which a club’s selling its stadium and relocating is a sign of progress and positive investment. Tottenham fans, for example, are now enjoying the benefits of a brand-new state-of-the-art ground, while the club is widely considered one of the best in the country. That kind of investment should in no way be discouraged, let alone blocked. The regulator must therefore be equipped to tell the difference between two very different kinds of proposed transactions—those that propel a club forward and those that seriously undermine a club’s long-term financial sustainability or heritage.

With the expertise the regulator will have, I understand why the Government have decided that it is best placed to grant approval on stadium sales and moves. However, I also acknowledge the concern that the FSA and many fans have about their lack of voice in the decision-making processes in both clause 46 and clause 48.

Amendments 3 and 29, tabled by my hon. Friends the Members for Liverpool, West Derby and for Sheffield South East, give us the opportunity to discuss the role that fans might play in understanding what a stadium change might mean in terms of the fans, heritage and local community. It is of course the fans who will suffer if their team no longer has anywhere to play, and it is fans who best understand the precious heritage and memory that grounds carry for them and their community.

Clause 48 seems to be based on an understanding of that point to some extent, given that the regulator is explicitly tasked with paying attention to whether a relocation of home games would cause “significant harm” to the heritage. However, as Fair Game points out, it would be curious if the regulator were able to understand the implications for heritage without consulting fans. Will the Minister explain how that might work? On what basis will the regulator make a judgment if it is not through understanding the impact on fans?

Combined with the lack of consultation rights in clause 46, the result is that fans are currently given absolutely no voice on matters to do with stadiums, even though they are the ones who will travel there, buy tickets and offer their support. I understand that the regulator is best placed to make a final decision, but it is unclear to me why fans cannot form one of the inputs that the regulator might consider.

The Government’s White Paper said that the regulator should

“have a remit to consider the implications for club heritage of any proposal, the views of fans and the club’s historical connection to its locality.”

Will the Minister share with us what has happened between the publication of the White Paper and the Bill to cause the Government to divorce the idea of heritage from fans? It must be clear why fans have not been given any say in this process. I hope the Minister will elaborate on that point today.

Finally, I want to examine whether the Bill will be able to prevent some home matches being played abroad if that damages heritage. This is not a purely theoretical proposition. Just a few weeks ago, Tim Howard wrote for a national newspaper about why Premier League games being played in the USA was “inevitable”. FIFA has also reportedly begun the process of allowing league matches to be played overseas. When Tim Payton of the Arsenal Supporters’ Trust gave evidence to the Committee, he warned that the movement of games abroad could be the next catastrophe the size of the Super League.

Clause 48 has the potential to provide assurances that this kind of action could only be taken by clubs with the approval of the regulator, should it be seen to damage heritage. However, the wording does seem to be geared more towards permanent relocation rather than the issue of clubs wishing to play single games, or a small subset, away from home.

Will the Minister confirm whether approval only needs to be sought by clubs wishing to play all of their home games elsewhere or whether it also applies to clubs wanting to play a handful of games elsewhere? In particular, will the regulator be able to have a say on league games being played abroad, and if so, would fans be given a say in the process? Given the salience of this issue with fans, it is important that we are clear on how the clause would apply.

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

I rise to speak to amendment 29, which I tabled. We will move on to a debate on clause 49 shortly, to which it relates. It is interesting that fans will get a specific consultation, involvement and approval about changing the crests, shirt colours and names, as those are decisions that can be reversed quite easily. We know about the problems at Cardiff with shirt colours and at Hull with the name, but even if those mistakes are made by the owners, they can be changed the following year. A club cannot go back to playing on its old ground if it has been sold and is no longer an asset of the club. In some ways, the issue of where a club plays and its ground is more important for the heritage of the club, and it needs to take account of the interests and wishes of fans.

In clause 48, we have a regulator that will have to look at the significant harm done to the heritage of the club by moving ground. How does the regulator decide what is significant harm to the heritage of the club in isolation? The fans are the ones who understand that. They are the custodians of the club; they are the ones who go every week, whose families have gone to the club for years and whose children will go in the future for years. They are the ones who have a real stake in the heritage of the club, yet there is nothing in the wording that says they must be consulted.

All amendment 29 states is that in looking at the issue of significant harm to the heritage of the club, we should actually ask the fans what they think about it, so that they do not consider that the arrangements will constitute significant harm. I do not know how on earth the regulator will come to a view that is not a view derived from consulting the fans, so I hope that the Minister will give way on this amendment. At the heart of what we are doing here is ensuring that fans are listened to about the issues that are so important to them, and there is nothing more important for fans of a club than where their club plays, so I hope the Minister thinks that this amendment is in the spirit of the Bill and could be accepted.

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)

The Bill requires regulated clubs and clubs that have been regulated in the past five years, which I shall simply refer to as clubs, to notify the regulator where there is a reasonable prospect of either the club selling or otherwise disposing of its home ground or using it as security for a loan or other liability. The proposed transaction can proceed only if the regulator grants approval. Clause 46, which the amendment seeks to change, deals with only the narrow issue of a home ground disposal or the use of the home ground as security. Those matters do not necessarily threaten the heritage of the club in the same way as forcing a relocation. Where currently regulated clubs propose to relocate in parallel, which may impact on the clubs’ heritage, that is subject to a separate approval from the regulator under clause 48.

Clause 48 sets out that the regulator can grant approval to a relocation only if it does not undermine the financial sustainability of the club and does not cause significant harm to its heritage. Given that clubs will be required to consult with fans on matters relating to home ground, we expect that the regulator would consider that in reaching its decision on whether to approve a relocation.

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

The Minister is therefore saying that a club makes a proposal, consults with the fans and comes to a view, then the regulator must accept the view that the club has come to. Why does the regulator not have a responsibility to ensure that the fans are comfortable with any proposal in the way that amendment 29 suggests? Why is it simply left to a club, which may have a vested interest, to consult with fans and report at second hand to the regulator?

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)

The regulator will be able to see whether that consultation was done properly, and the mechanisms that we are setting up for fan engagement are much strengthened from what they may be at the moment. That gives confidence that what the clubs consult on will be done through a mechanism that is much stronger than some of the examples mentioned earlier by the hon. Member for Barnsley East. By doing that, because it is about the club’s heritage—it is its home ground, and the club is going to move—the club must demonstrate that it has properly consulted with the fans in the way described by the Bill.

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

Where does it say precisely that the club must consult on that? It must consult about shirt colours, names and crests, so where does it specifically say that about the ground?

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)

The heritage of the club will include its home ground. Of course that is part of the description of heritage, so it will come under that aspect. Just selling the club to get a loan, for example, will not move the stadium, but if it is going to relocate, that is a change to the club’s heritage, so that will come under the heritage aspect of the Bill.

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)

As I said a moment ago, clause 48 sets out that a relocation can be granted approval only if it does not undermine the financial stability of the club or cause significant harm to its heritage. It will come under that.

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

That is the IFR’s responsibility, but nowhere in the Bill does it say that fans have to be consulted. Neither the IFR nor the club has to consult on the matter, does it?

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) 3:30, 21 Mai 2024

In schedule 4, paragraph 4(3)(a) on page 93, it says “the club’s home ground”. It is there.

The regulator will examine each transaction in the context of the regulated club’s individual financial circumstances. That should provide sufficient comfort for fans or other proposed stakeholders that the proposal does not adversely affect the financial sustainability of the club. The additional stakeholders to be consulted will not have a financial interest in the transaction. Amendment 3 would impose an additional level of bureaucracy and complexity to the process. It would also introduce a potential delay in completing a transaction, which is often time-sensitive, and it may have adverse implications, such as the buyer pulling out or renegotiating terms. That could undermine the sustainability of clubs. For the reasons I have set out, I am unable to accept the amendment.

Turning to clause 46, a home ground is often one of the most vital and valuable assets that a club can own. However, home grounds are sometimes used as collateral for debt or even sold off entirely to raise money. Although there can be sensible financial reasons for clubs to do that, both courses of action may result in a club’s financial position seriously deteriorating, or it having no ground to play at. Selling the home ground also potentially seriously weakens the club’s balance sheet. Likewise, using the home ground as collateral for a loan might make financial sense depending on the use of the cash raised, but it may also saddle the club with too much debt or high interest costs.

The clause therefore places a duty on clubs that own their home ground to obtain the approval of the regulator prior to any sale or use as security in a loan or liability. The regulator will consider the risk of the proposed transaction to the club’s financial sustainability and block any potentially financially damaging sale of a club’s home ground. The provision applies not only to regulated clubs, but we are also extending it further to capture clubs that are not currently regulated but have been within the last five years. The regulator must be satisfied that the club has taken reasonable steps to ensure that a team play their home matches at the ground prior to its sale or use in a loan—that is, that football club continues to be playing at the ground. That protects against potential bad actors who might otherwise choose to pull their team from the league and no longer be a regulated club so that they can asset-strip and sell off the ground to make money.

Turning to amendment 29, the Government believe that the safeguarding of club heritage and the voices of fans is vital. We expect the regulator to consider whether a club has adequately engaged with its fans in reaching its decision on whether to approve a relocation. However, there will be a number of additional factors for the regulator to consider when assessing whether a proposed home ground relocation will significantly harm club heritage. Those may include the history of the club, distance from the original home ground or the views of others in the local community. Although fan views will be an important consideration, the Government believe that the regulator should be able to take an holistic view of any proposal. I therefore hope that the hon. Member for Liverpool, West Derby withdraws his amendment.

Turning to clause 48, home grounds play an important role in the history of a club, and are often the club’s most valuable asset. Relocating home grounds permanently to areas that have no connection to the heritage and history of a club can have a significant impact on those supporters and the local area, as we saw when Wimbledon moved to Milton Keynes. This clause is aimed at stopping that from happening again.

However, the Government do not want to stifle development that brings value and aligns with the heritage of a club. The impact of a home ground relocation on both fans and the club is why we are legislating for the regulator to preapprove any proposal in this regard. As set out in subsection (4), the regulator must be satisfied that the proposed relocation would not undermine the financial sustainability of the club, or significantly harm its heritage. Clause 48 makes the important and necessary recognition of the vital role that home grounds can play in communities, and adds an extra layer of protection to them.

I commend the clause to the Committee.

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

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 46 ordered to stand part of the Bill.