⚽ English Football: Financial Sustainability and Governance

• The debate was initiated by Yuan Yang, the MP for Earley and Woodley, who highlighted the widespread concerns about the financial sustainability and governance issues affecting football clubs across England.

• Over the past three decades, more than 50 English football clubs in the top six tiers have faced administration, with notable cases including Bury, Macclesfield Town, and Wigan Athletic.

• Research by Fair Game indicates that most of the top 92 clubs in England are technically insolvent, meaning their liabilities exceed their assets, which poses a significant risk to their sustainability.

• Reading Football Club, based in Yuan Yang’s constituency, is facing severe financial difficulties due to its owners, Dai Yongge and Dai Xiu Li, who have been criticized for mismanagement and irresponsible ownership.

• Three main issues were identified: the unequal distribution of income across the football pyramid, unsustainable expenditure, particularly on wages, and the problem of irresponsible ownership.

• MPs discussed the widening financial gap between the Premier League and the rest of the football pyramid, with Premier League clubs and recently relegated teams retaining 94% of broadcast revenues.

• The pressure to spend beyond means, driven by the allure of the Premier League, leads to unsustainable financial practices such as spending more on wages than revenue, as seen in Reading’s case.

• Ownership issues were highlighted, with calls for more robust tests and regulations to prevent owners from mismanaging clubs or using them for personal gain.

• The introduction of the Football Governance Bill was welcomed by many MPs, with a call for an independent football regulator to address these issues and protect clubs and fans.

• The Bill aims to ensure financial sustainability, empower fans, and prevent breakaway leagues, with proposed amendments to include fan consultation on ticket prices and considerations for the broader football pyramid.

• MPs from various constituencies shared examples of how football clubs contribute to their communities, emphasizing the social value beyond the sport itself.

• Concerns were raised about potential over-regulation and its impact on football, with some MPs warning against excessive government intervention.

• The debate underscored a cross-party commitment to improving football governance, with a focus on maintaining the sport’s integrity and ensuring its future for fans and communities.

The parliamentary session on the financial sustainability and governance of English football exhibits a moderate level of disagreement among the participants. The disagreements primarily revolve around the approach to regulation and specific aspects of the Football Governance Bill. Below are detailed examples and explanations of the disagreements noted within the transcript:

1. Approach to Regulation:
   • Disagreement Displayed: There is a significant divide between those who support the introduction of an independent football regulator and those who express concern over over-regulation. For example, James Wild (North West Norfolk) (Con) voiced concerns about ‘over-regulation and overreach’ and questioned the potential negative impact of mandated revenue distribution on clubs. Similarly, Dr Luke Evans (Hinckley and Bosworth) (Con) highlighted the importance of being cautious with regulation due to the global standing of the Premier League, while still acknowledging the need for some regulation. In contrast, multiple Labour MPs, such as Yuan Yang (Earley and Woodley) (Lab) and Andy McDonald (Middlesbrough and Thornaby East) (Lab), strongly supported the need for robust regulation to protect clubs and ensure financial sustainability.
   • Evidence: James Wild’s statement about ‘possible over-regulation and overreach’ and his comments on the impact of the proposed backstop powers on the negotiation dynamics between the Premier League and EFL contrast sharply with Yuan Yang’s call for a ‘right-touch regulator’ to build a sustainable football pyramid.
2. Distribution of Revenues:
   • Disagreement Displayed: Another point of contention is the distribution of revenues within the football pyramid. Chris Bloore (Redditch) (Lab) argued for a fairer distribution of money to enhance competition, while James Wild expressed apprehension about the government mandating revenue distribution and its potential negative effect on clubs’ financial stability, especially those relying on parachute payments.
   • Evidence: Chris Bloore’s remark that ‘we have to make the money go down the pyramid more fairly’ directly opposes James Wild’s critique of including parachute payments in the backstop, suggesting that such a move would harm clubs’ ability to compete effectively.
3. Owner and Director Tests:
   • Disagreement Displayed: The session showed some disagreement over the implementation and potential effects of the new owner and director tests proposed in the Football Governance Bill. While many MPs, like Olivia Bailey (Reading West and Mid Berkshire) (Lab), supported stricter tests and protections, concerns about how such measures might impact club management and operations were articulated by MPs skeptical of the regulatory approach.
   • Evidence: Clive Jones (Wokingham) (LD) supported the new rules requiring assessments of honesty and integrity but suggested that more should be done to protect club assets beyond just stadiums. This view illustrates a nuanced disagreement on the specifics of regulatory measures, as opposed to the broader support for regulation detailed by Labour MPs.
4. Role of the Regulator and Influence on the Game:
   • Disagreement Displayed: The role of the proposed regulator in ensuring the sustainability and governance of football while not stifling the sport’s growth was another area of disagreement. The shadow Minister, Mr Louie French (Old Bexley and Sidcup) (Con), questioned whether the new regulatory framework would prevent dynamic changes like the creation of the Premier League and highlighted the necessity for the sport’s independence from government interference.
   • Evidence: Mr Louie French’s query on whether the Premier League’s formation would now be banned under the new rules embodies a disagreement on the potential long-term effects of regulation on the evolution of football. His questioning of government involvement versus the sport’s autonomy directly counters the position from MPs in favor of tighter regulation.

In conclusion, while there is a strong consensus on the need for action to address the financial sustainability and governance issues in English football, the session displayed clear disagreements on the extent and mechanisms of regulatory intervention. This level of disagreement, centered particularly around the implications of the Football Governance Bill, warrants a rating of 3 out of 5.