Football Clubs

– in the House of Lords at 8:27 pm on 3rd July 2002.

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Photo of Lord Clark of Windermere Lord Clark of Windermere Labour 8:27 pm, 3rd July 2002

rose to ask Her Majesty's Government what proposals they have regarding the ownership of football league clubs.

My Lords, I declare an interest as a board member of the Carlisle and Cumbria United Independent Supporters Trust Limited and as the owner of a few shares in Carlisle United AFC. It is apposite that I mention Carlisle and football, because those of us from Cumbria are all aware that the first game of organised football was played on the green sward beneath the magnificent castle of Carlisle. I leave it to your Lordships' imagination to conclude what was used as the ball.

Over the past month it has become clear that there is no dispute whatever over what is the national game of England, Scotland, Wales and Northern Ireland. The fact that it could halt the rush hour in our cities and towns at 7.30 in the morning when the World Cup was being screened makes the point that our national game is football.

I would like to say how proud I was of the English football team. We did not expect much of them when they went out. They got into the last 16 and they were victims of their own success. The outcome was that the beautiful game of football was seen by millions, but there is a problem in England with the ownership of certain football clubs. Indeed, the football taskforce in its fourth report talked about football in England being damaged by scandals. Many issues are involved, but I want to concentrate on two: those of franchising and of fit and proper persons.

I wish to thank the Football Association, the Football League, Supporters Direct and the Professional Footballers Association, with whom I discussed many issues, for their co-operation in helping me to prepare for the debate. I am very much aware that they are conscious of these issues.

My locus for initiating the debate goes back to last November when Michael Knighton, the owner of my local football club, Carlisle United—he is better known as the man who nearly bought Manchester United—invited myself and the chairman of the supporters trust to help him to sell the club. We agreed to do so. Over the past eight months I have learnt much about the business of running a football club and its associated difficulties. I have become wise about such matters as receivership and liquidation. Carlisle United is now in voluntary administration.

I am also aware that many of the difficulties that we face in the United Kingdom emanate from the fact that we have some of the earliest football clubs. Initially that was what they were—football clubs. However, as the clubs became professional, they took advantage of the companies legislation to form limited liability companies. I sometimes wonder, if clubs had not pursued the route of the companies legislation but had instead followed the route of the industrial and provident legislation, whether they might have found it easier to tackle some of the problems with which they are faced today.

However, it is argued that football clubs are companies and therefore should be treated like any other company. Like many others, I dispute that view for many reasons. Suffice it to say that football clubs are unique and have a unique relationship with their customers, their supporters. Their supporters do not switch their support to get a better deal. We would not have many supporters at Carlisle United if that were the case. Supporters want success but that is not essential; they continue to support the same team.

In a sense that highlights the "guts" of the problem. Although football clubs are companies, they are also a community asset. That is what differentiates football clubs from other companies. It is interesting to note that when football clubs get into near terminal difficulties, communities usually rally round to save them. Whether it be Brighton or Doncaster, Bournemouth or Northampton, Portsmouth or Lincoln, fans and communities have tried to save their clubs. Indeed, one can regard ownership of a football club as 80 per cent proprietorial and 20 per cent community. Thus it follows that fans have a place in the running of football clubs. Carlisle United's trust has a handful of members—fewer than 1,000—who pay £3 a week into a fund to buy shares and eventually a seat on the board. That model has been followed by 56 other clubs. We are getting the message across.

But there is a further aspect of community involvement which came home to me forcefully last April. Michael Knighton rang my colleague, and later repeated to me, the devastating news that in his opinion the people of Cumbria did not deserve a Football League club and that it was his intention, unless he received an apology from the independent supporters trust and the local newspaper, News and Star, to take Carlisle United out of the Football League. He said that he would board up the ground, lock the gates and that we could all watch the weeds grow. I felt that that was wrong. I do not believe that any individual has the right to do such a thing with a community asset. I understand that a club should leave the Football League if it is not good enough or if it goes bankrupt, but a viable Football League club should not be forced to leave the League under the circumstances I have mentioned.

I believe that it is equally wrong for people to purchase clubs to move them elsewhere. I think of Wimbledon in that regard. Only this week Clydebank was bought and will be moved to Airdrie. It will play in the Scottish League in the coming season as Airdrie United. I am delighted for the people of Airdrie. However, I am not sure that people should buy clubs and move them from one town to another. There are huge question marks in that regard. We are following an American route with which I certainly do not agree.

But perhaps the main worry of many of us who are interested in football clubs concerns the characters of a few individuals who own, or have a burning desire to own, a football club. In saying that I pay tribute to the overwhelming majority of football club chairmen, owners and directors who love their clubs and are as much fans of their clubs as those who stand on the terraces and pour their money down the drain labelled "football". However, a few individuals give cause for concern. I shall not list them as we all know who they are.

But when I read that Giovanni di Stephano is on the point of purchasing Northampton Town, I shudder. I understand that he was the right-hand man of Arcan, the Serbian warlord and indicted war criminal. He held the rank of general in the Serbian army and has been arrested on more than one occasion by the British police. He has been involved in United Nations sanction breaking and currently boasts that he is Milosevic's legal adviser and that he counts people such as Saddam Hussein as his friends. I simply pose the question: is he a fit and proper person to run a football club in the English Football League? I believe that there should be a "fit and proper" test for all Football League chairmen and directors. If it is impossible to legislate in that regard, the Football League ought to introduce such a test as a condition of membership of clubs in the league, as, indeed, does the Jockey Club.

In 1999 the owner of Doncaster Rovers, Ken Richardson, was sent to prison for four years for conspiracy to burn down the club's main stand. Following a conviction in 1984 of conspiracy to defraud in a race, the Jockey Club banned the same Mr Richardson from racing for 25 years. Doncaster Rovers might still be a member of the Football League if that league had a "fit and proper" test, as does the Jockey Club.

Photo of Lord Henley Lord Henley Conservative 8:38 pm, 3rd July 2002

My Lords, like the noble Lord, Lord Clark of Windermere, I declare an interest as a supporter of Carlisle United who has followed them for many years and who lives very near to Carlisle. I believe that the first match I attended was in the 1965–66 or 1966–67 season. All I can remember is that we beat Bury 4-1.

It is a great privilege to follow the noble Lord, Lord Clark of Windermere, a fellow Cumbrian. I hope that other speakers in the debate will forgive us for taking a slightly provincial approach in raising concerns relating to our local team, Carlisle United. I hope that they will also recognise, as the noble Lord, Lord Clark, made clear, that the issues go much wider than Carlisle United and affect many clubs in all parts of the kingdom. Although these matters are not necessarily primarily concerns of Her Majesty's Government, they are matters that concern a large number of people up and down the country. Therefore, it is a good thing that we have found time to debate these concerns in this House.

I make it absolutely clear that, as a good Conservative, I strongly believe in the rights of property and, despite the wording of the Unstarred Question in the name of the noble Lord, Lord Clark, I do not believe that the Government should take on themselves some role involving interference in the ownership of football clubs. We have seen nationalisation in the past and we know that it does not necessarily work, and we have seen other ways of regulating ownership, which can be equally dangerous.

Having said that, I agree with the noble Lord, Lord Clark, in his use of the phrase, "a community asset". A club such as Carlisle—or any football club—is of vital importance to the people of its area and those who support it. They do so in large or smaller numbers. As we all know, the numbers of people supporting Carlisle have dropped rather dramatically of late but we hope that in due course, as the situation is resolved, the numbers will go up. They are interested in the success of their local club. When it achieves extraordinary results, that can have a much wider effect on the area itself. Many of us will remember—I believe that it was in 1973—when Sunderland won the FA Cup when it was in the Second Division. That had a knock-on effect in Sunderland and on the rest of the North East, not just in terms of general morale but also, some argued, in terms of beneficial economic effects.

A club, although it belongs to its various shareholders and sometimes to a sole owner, has a greater importance to its locality than many other—most other—businesses. That is why, although I stressed earlier my strong belief in property and the rights of property, one occasionally has to remember the words of a former leader of my party and a former Prime Minister, Mr Edward Heath, whom I do not often quote. When he referred to:

"The unpleasant and unacceptable face of capitalism", he was making a very good point. The owners of many of these clubs must remember that they do not simply own the club for their own personal gratification and—possibly—their own enrichment. The noble Lord referred to various owners with a rather dodgy background; there are many other owners whose interest is not necessarily in football. They may be property developers, for example, and have an interest that goes beyond that of the club and involves some other end in itself. All those owners have a duty to consider the wider concerns of the community in which the club is based and from which it draws its support.

The noble Lord, Lord Clark, discussed what has been happening at Carlisle during the past few years under the ownership of Mr Michael Knighton. He gave some idea of the strength of feeling in Carlisle about that ownership and he stressed the importance of the Carlisle United independent supporters trust, which is trying to create some support and raise money so as to buy shares in the club in due course and to get some influence over it. He also—I hope that he will not mind my mentioning this—reminded me that during the local elections earlier this year, we saw far more "Knighton Out" posters dotted around Carlisle than we did Conservative or Labour posters. That gives some idea of the strength of feeling in the area, particularly about the ownership of the club by Mr Michael Knighton and his threat to close the club. Those matters are clearly documented in the local press.

I do not wish to elaborate on that but I want to draw attention to one aspect of Mr Knighton's behaviour which bears some repetition; that is, his almost "sub-Maxwellian", if I can use that phrase, attempt to silence his critics, particularly those in the local press. A press release has recently been drawn to my attention that was issued by Carlisle United, presumably on behalf of Mr Knighton. It refers to criminal proceedings and possible legal action against Mr Knighton's detractors. Some of it deserves to be drawn to the attention of the House. I hope that noble Lords will not object if I quote one or two passages from it. It gives some idea of what I have called the sub-Maxwellian approach of Mr Knighton.

The press release is entitled:

"Criminal proceedings possible over Knighton detractors".

It goes on:

"Senior Barristers from London are pawing over reports and dossiers (five feet high)"—

I rather like the expression "pawing" over reports and dossiers five feet high—

"of the activities of those people who have tried to oust the Knighton family from the ownership of Carlisle United.

It is believed Mr Knighton has been advised by an experienced legal team that he has a strong case to bring criminal proceedings for: defamation of character, conspiracy to defraud . . . victimisation, false and malicious allegation, professional negligence, libel, slander", and so on and so forth. It continues:

"Lawyers believe there may be no fewer than 13 individuals who may be named on the court petition should Michael Knighton take the lawyers advice given to him by some of the Country's leading Barristers who take on such cases".

Parts of the press release are quite laughable. It goes on to refer to:

"A new independent Owners, Chairmen and Directors Association (CDA) whose founder members include the respective Chairmen of Bristol Rovers F.C, Blackpool F.C, Southend F.C and Darlington F.C are said to be backing the case".

I should point out, as the noble Lord stated, that the former chairman of Doncaster had a criminal conviction. The chairman of Blackpool FC has recently served time for rape and the owner of Darlington FC is a convicted safebreaker.

That is the gist of what we are hearing from Mr Knighton. As I said, it is sub-Maxwellian. It has all the feel of that other late owner of a football club, Robert Maxwell, who owned Oxford United. I refer to his use of writs and legal frighteners of a sort that many of us find particularly distasteful.

I do not suppose that Mr Knighton has any case at all; I doubt even the existence of senior lawyers offering such advice and "pawing" over dossiers some five feet high. He is simply trying to prevent legitimate criticism of his own actions as owner and former chairman by the local press and others.

I end with a brief question for the Minister. I do not expect an answer from her because I believe that it is a question for the noble Baroness's colleagues in the Department of Trade and Industry. However, I should be grateful if she would pass it on to them and arrange for an answer to be sent to me in due course.

Some years ago—I believe that it was in September 2000—Mr Knighton was disqualified from acting as a director of any company. Following that—such is the way in which such people act—he put his 24 year-old son and one other in his place as director of Carlisle United Football Club. As I understand the law—I can no doubt be corrected if I am wrong—anyone so disqualified should not be directly or, more importantly, indirectly involved in the management of a company, having been so disqualified. It seems to me, from his actions and his press release, that he has been involved, and is still actively involved, in the management of Carlisle United.

I ask the Minister to ask her colleagues in the Department of Trade and Industry—unless she has an answer tonight—how that policy is policed and what, if any, action can be taken against an individual who has been so directly or indirectly involved despite being disqualified?

Photo of Lord Faulkner of Worcester Lord Faulkner of Worcester Labour 8:48 pm, 3rd July 2002

My Lords, football supporters everywhere will welcome this evening's debate and congratulate my noble friend Lord Clark on initiating it. As a Carlisle supporter, he is well qualified to speak about football club owners who behave in a strange way, as is the noble Lord, Lord Henley. Both noble Lords spoke effectively and with great force.

This is a most timely debate. As the euphoria of the World Cup disappears, football clubs across the country are facing the reality of worsening economic circumstances, which are caused mainly, but not entirely, by the collapse of ITV Digital. There will be many more clubs in financial difficulty as owners who have hitherto been regarded as benefactors attempt to recover the money that they put into clubs or seek to cash in on whatever assets their club possesses, whether they are players who have a value in the transfer market or—much more threatening for the club's survival—the property that it owns.

I have two unpaid interests which I should declare in this debate. First, I am associate director of Oxford United Football Club, which plays in the third division of the Football League, and which was rescued from extinction by its present owner, Mr Firoz Kassam. I was previously a member of the board of Brighton and Hove Albion, appointed as a "public interest" director on the advice of the Football Association at a time when the club was close to disappearing and there were rival shareholder factions whose disagreements, had they continued, could have proved fatal. Secondly, I am an elected member of the Dons Trust, which was set up under the auspices of Supporters Direct, originally to give supporters of Wimbledon Football Club a stake in that club and a say in its decision-making. I say "originally" because since the Dons Trust was formed, events at the club have taken a bizarre and disgraceful turn, as I shall explain in a moment.

The three clubs with which I have been associated, Brighton, Oxford and Wimbledon, have one thing in common: each faced enormous difficulties over its grounds. Brighton's and Wimbledon's were sold by their owners, who profited immensely in the process but failed to provide or invest in a new ground. In Oxford, work started on a new stadium but was suspended with the ground half built. Once Mr Kassam took over, he got the stadium finished and that club can now face the future with confidence. The boardroom disputes at Brighton were also resolved. The club moved back into the city and in successive years won the third and second division championships. They now await the go-ahead for a new stadium and the outlook there is much more cheerful.

However, that is not so at Wimbledon. I start with a little history. Today's football club was founded in 1889 as Wimbledon Old Centrals and played on Wimbledon Common. It moved to Plough Lane in 1912, and stayed there in the heart of the local community until 1991 when it embarked on what was expected to be a temporary ground share in Crystal Palace's ground in the neighbouring borough of Croydon as it was decided—wrongly, as a recent feasibility study demonstrated—that the Plough Lane ground could not be brought up to the all-seated standards demanded by the Taylor report after the Hillsborough disaster.

During the 103 years of its existence, the club enjoyed periods of extraordinary success, including winning both the FA Amateur Cup and the FA Cup, and was elected to the Football League in 1977. Within nine years it had been promoted to the highest league, where it stayed until its relegation two years ago. During the 1980s and 1990s the principal shareholder and owner of the club was Mr Sam Hammam, a charismatic though at times controversial figure who sought, often successfully, to motivate his players by unconventional means. Mr Hammam bought the disused Plough Lane ground from the club and then, in 1994, sold it to Safeway for development for £8 million. Most football supporters believe that the gain which was realised, well over £7 million, should have gone back to the club and been invested in a new ground.

In 1997 Mr Hammam sold 80 per cent of his shareholding to a Norwegian company, AKER RGI, for around £25 million. It is believed that the Norwegians, Mr Rokke and Mr Gjelsten, invested in Wimbledon because they believed that the club would move to Dublin and take its Premier League membership with it. To the short-lived relief of its supporters, whose views had not been sought on any of those matters, the English and Irish football authorities blocked that move.

The next step came in April 2000 when Mr Hammam sold his remaining interest to a company in which the current club chairman, Mr Charles Koppel, is a shareholder. Relegation from the Premier League followed immediately. There then followed a campaign led by Mr Koppel backed by expensive lawyers and PR consultants to win support for the club's move from Selhurst Park, not to a ground in Wimbledon, elsewhere in Merton or, indeed, anywhere in London, but to Milton Keynes, over 60 miles away, where developers offered it a ground, effectively for nothing.

The matter was considered by a series of football authority committees and commissions and was finally resolved by a three-man team on 28th May. It received evidence and submissions from a wide range of organisations, including the Football Association, Wimbledon supporters and Merton Council, all of which were vehemently opposed to the move to Milton Keynes.

The commission's report is extraordinary. It bears reading and can be found on the FA's website. It contains these words:

"We find the cherished and fundamental principles of football in this country in relation to the pyramid structure and promotion and relegation on sporting criteria alone, admirable. Likewise we respect, value and would seek to uphold the community basis of football clubs.

We do not wish to see clubs attempting to circumvent the pyramid structure by ditching their communities and metamorphosising"— that is not a word in my dictionary but it is in the report—

"in new, more attractive areas. Nor do we wish, any more than the football authorities or supporters, for franchise football to arrive on these shores".

Yet, despite those admirable sentiments, the commission determined by a two to one majority to approve the move to Milton Keynes. It appears that the only piece of evidence which influenced it was the threat by the owners to liquidate the club if the verdict went against it. In what is, frankly, an insult to the intelligence, the commission suggested that in perpetuity there should be a corner of Milton Keynes that would be for ever Wimbledon; that street names be changed to represent names similar to those in Wimbledon; that the area of the stadium be called "Wimbledon Park" and that special subsidised trains run from Milton Keynes, and so forth.

The truth is that the commission is allowing the owners to steal the club from its supporters and the community of Wimbledon. It is establishing a precedent which will allow other Football League sides to be relocated by their owners anywhere in the country and the principle of a franchise is being established for league membership. There is no right of appeal against the commission's decision. The football authorities say they oppose it but can do nothing.

The one remaining hope is the Independent Football Commission, the final stage in the complaints hierarchy set up as a result of the recommendation in the fourth report of the Football Task Force, to which my noble friend referred and on which I had the honour to serve as vice-chairman. The phrase,

"the final stage in the complaints hierarchy", comes from the chairman, Professor Derek Fraser. Professor Fraser speaks of,

"its potential for ensuring public confidence in what is our national game, a national institution and an important part of our culture and heritage".

The Wimbledon case will be its first big test and will be crucial in establishing whether self-regulation of football can really work and establish public confidence. It is that which lies at the heart of the debate tonight and in the Unstarred Question asked by my noble friend. I hope that the answer he receives will be that the Government see the real owners of football clubs as being the supporters; the people who follow the team in good times and bad over the years.

Directors and owners should see themselves primarily as guardians of a public asset, as temporary custodians of an entity in which others, such as supporters and the local community, have a genuine stake. In the case of Wimbledon, the club existed for over 100 years before the present owners took it over. It is therefore not just another investment for them to do with what they like.

The supporters, to their immense credit, are determined to keep senior football going in Wimbledon and through the Dons Trust have formed a new club, AFC Wimbledon, which won election to the Combined Counties League. While there is still uncertainty about where the other Wimbledon club will play next season—incidentally, it is now known mainly as "Franchise FC" not "Wimbledon FC"—AFC Wimbledon will start in August at Kingstonian's ground, just down the road in New Malden. I wish them well and so, I hope, do all Members of this House.

Photo of Lord Burlison Lord Burlison Labour 9:00 pm, 3rd July 2002

My Lords, I thank my noble friend Lord Clark of Windermere for bringing this debate before the House and for giving us the opportunity to talk about football when the rest of the country is probably fed up to the back teeth with it. I agree with my noble friend's suggestion that there is a need for credible people to run football clubs. I hope that Carlisle United resolves its problems before the start of the new season. The club has a proud history and has actually played in each of the leagues. I am sure I do not have to tell my noble friend Lord Clark that for a very short time the club topped the whole of the Football League—a record that I wish Hartlepool could reflect on.

At this point I should declare an interest, as I am a president of Hartlepool United. At the outset of my remarks, I should stress that there are many good chairmen and directors of football clubs in this country. In fact, the great majority of people who run football clubs are honest, hard-working and care deeply about the game. I know that both Freddy Shepherd of Newcastle United and Bob Murray of Sunderland are respected for their loyalty and commitment to their own clubs, and to the North East generally. They both play a very active role in their respective communities—long may they continue to do so.

I do not wish to compare the activities of the premier league clubs with some of the things that have gone on in the lower leagues. I am clearly of the view that the problems of the premier league teams are different from those experienced by the third and fourth division teams. However, I am equally certain that all football clubs should be owned by decent people who have a responsibility to the area where they are located, as well as to the shareholders or the owners of the football club.

I should like to take a little time to talk about some of the problems that the smaller clubs have in modern-day football. It has been my experience, both as a player and as someone who has been involved in the game, to know that smaller clubs could not exist without the commitment and financial resources of the chairman and the directors. For example, in the case of Hartlepool—my association with them goes back many years; in fact, to the 1950s—I know that all the chairmen have been reputable, caring people who have wanted to do a job not only for the club but also for the town.

I also know that the club takes pride in its financial transparency. The club secretary, Maureen Smith, is always quite happy to give doubters a run-down on the system used to check the gate receipts and other aspects of the club's finances. I am also pleased to see that every payment made, whether it be to players or staff, is declared to the taxman; of course, that is how is should be in any case. I am also mindful of the role that the chairman plays and of how difficult it would be for the club to survive if Ken Hodcroft and the company for which he works—a Norwegian oil company—withdrew their support.

Ken not only runs the club with his fellow directors, Harold Hornsey and Ian Prescott, but also contributes most of his spare time to the club's affairs. I am deeply sorry that both he and the town were not rewarded last year by getting promotion, which they narrowly missed. They have now missed it for three years running. However, as the team was clearly the best side in the third division at the end of the season, I am sure that they will achieve promotion this year without the need to involve themselves in the play offs.

I should like to make a point on crowd behaviour. Once again, perhaps I may use my own club Hartlepool to demonstrate my point. We have an excellent crowd at Hartlepool. A lot of credit for this must go to the directors, especially the manager Chris Turner who spends time on talk-ins with the supporters and has generally built up a good rapport with them.

An outstanding example of how the club views its role in this respect was seen a couple of years ago during a Sky television broadcast, which featured Halifax and Hartlepool in a league game. Unrest broke out among the Hartlepool supporters because, due to ground alternations, they had been put into a corner of the ground that was the worst area from which to see the game. That is not to blame Halifax in any way. Indeed, I am deeply sorry that Halifax lost its league status last year and has been relegated. I have many happy memories of the Shay, and I hope that the club will be back into league football very soon. However, on seeing the crowd problems arising, the then chairman of Hartlepool, Harold Hornsey, waded into the supporters to calm them down. I thought that that was an absolutely magnificent gesture. It was a clear indication of that man's love for the club, and for football. I wonder how many other chairman would do the same. I can recall watching the broadcast on Sky television on that occasion. The only comment made on the programme was, "There's an official trying to help". I thought that the chairman's efforts deserved something a little better than that simple comment.

The current crisis with television cash is a worry. I have no doubt that too many clubs have become much too reliant on their share of the money. If the issue is not satisfactorily resolved, it may have a profound effect on many clubs. I know that some of the first division clubs, especially those with heavy wage bills, will find it very difficult to keep going on the same basis. However, I believe that many of the third and fourth division clubs will manage because they have smaller wage bills; and, in general, they raise their own players—which I think is the way forward for the future.

We have just had the experience of the World Cup, which I felt we were well placed to win this time had we just been a little hungrier, say, like the Irish or the Koreans. Nevertheless, it was a good performance upon which I believe we can build for the year 2006. It may stand us in good stead for the European championships in 2004. We must have a vibrant system for producing young players for the future. The Youth Development Fund, with its supporting agencies, is an excellent way to develop young players but it needs to have substantially better funding. We should not leave this solely to the football clubs or to the colleges where they run academies. Somewhere in between, I believe that we have the right ingredients to, once again, put Britain on top of the football world. To achieve this goal we must have credible people running football. We must ensure that smaller clubs that play by the rules are helped to survive.

Photo of Lord Addington Lord Addington Liberal Democrat 9:08 pm, 3rd July 2002

My Lords, we must thank the noble Lord, Lord Clark, for bringing this matter to our attention.

On the face of it, football merely looks like a professional occupation consisting of men running around and people trying to make money by attracting fans and selling TV rights. But it is not. Indeed virtually all professional sport involves a degree of emotion and time spent trying to connect with the soul of a community. What they mean to that community is one of the reasons football teams survive.

Only we have a structure where stray teams can struggle on; for instance, not so much moving up and down the league tables, but struggling on in the middle of nowhere, achieving nothing and not progressing for a long time. That is the fate of most professional sporting clubs for most of the time; it has to be.

That is why this is such an interesting subject. It is not about economics; it about what a professional sporting activity designed to attract viewers and fans means to the community in which it finds itself. The same is true of Rugby League and other professional sports, though Rugby League is probably the only one that comes close, with the exception of one or two Rugby Union clubs in certain parts of the country.

So what happens in professional football is of great interest to government. Many of the points raised by the noble Lord, Lord Clark, are interesting, but the Government do not have much control over them. That is the problem we face. They are professional activities selling a form of entertainment.

When it comes to the idea of franchising we must be extremely careful. The Americans have proven that the best way to make money out of sport is to have a guaranteed franchise with a guaranteed feed-in of players from the selection categories. American baseball and football displays that. Once a team has achieved its status it is not relegated. So it can take the bad seasons. It will always have the right level of competition to attract the fans. That is a way that makes money out of sport. But it runs totally against our culture.

The amount of hurt that seems to come out when people do not feel that those in charge of their sporting club are putting enough into it is a flip side to the actual misbehaviour of those at the top. I come from Norwich. We had a man called Robert Chase in charge of our football team who was hounded out of that position. "Chase out" became a chant that rang throughout the city. He was running it as a professional organisation to make money and it was seen as not the thing to do. He was expected to pump money in to ensure that the team remained at the top, but he did not. Alan Sugar at Tottenham Hotspur received a similar version of that reaction; keeping the club financially stable but not spending money—I hasten to add that that information came from a Tottenham fan.

But the idea that the football club is something different goes against its legal status and the reality. Those two situations along with the amount of money being pumped into football have come to a head. In addition we have the withdrawal of money from ITV Digital for those clubs below the Premiership. Football may well be at a cross-roads. It is a fashionable image of late; for instance, it is now the middle class game of choice. People who 10 years ago would not be able to name their local football team now talk about it quite knowledgeably, in wine bars as opposed to pubs. It happened briefly in Rugby Union and that all went sour. Once the corporate hospitality boxes become a little more difficult to sell, one wonders what will happen. And if anything becomes fashionable, by the rules of history it will become unfashionable and something else will replace it.

So in football we seem to have a cultural position that does not respond to the laws of the market. Will the Government intervene to try to encourage the FA to ensure that we have fit and proper tests or a version of them? In theory we may think that is a good idea. Then we consider how on earth we can draw them up. Do we take into account spent convictions, convictions for certain types of activity or somebody who is simply regarded as being unpleasant? Civil rights lawyers are salivating at the thought. We could go on forever with that argument.

Photo of Lord Faulkner of Worcester Lord Faulkner of Worcester Labour

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?

Photo of Lord Addington Lord Addington Liberal Democrat

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 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".

Photo of Baroness Buscombe Baroness Buscombe Shadow Minister (Home, Constitutional and Legal Affairs) 9:16 pm, 3rd July 2002

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.

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. 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, 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.

Photo of Baroness Blackstone Baroness Blackstone Minister of State (the Arts), Department for Culture, Media & Sport, Minister of State (Department for Culture, Media and Sport) (Arts) 9:27 pm, 3rd July 2002

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 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 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.

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

Photo of Lord Henley Lord Henley Conservative

My Lords, the Minister has mistaken me for the noble Lord, Lord Healey.

Photo of Baroness Blackstone Baroness Blackstone Minister of State (the Arts), Department for Culture, Media & Sport, Minister of State (Department for Culture, Media and Sport) (Arts)

My Lords, I am sorry. Did I say, "Healey"? I do apologise.

I do not object at all to what the noble Lord, Lord Henley, said about taking a provincial approach. As a Londoner, the provinces are very important in this respect. My department is fully aware of the concerns of the club's supporters. The Minister for Sport received a substantial petition last summer as part of the "Save our Club" campaign organised by the Carlisle News and Star. My right honourable friend was delighted to accept that petition and to set out his personal concern for the club in the pages of the News and Star.

The Government remain fully aware of the important roles played by clubs such as Carlisle in their local communities, but hard cases make bad law. The special circumstances of individual clubs do not make the proposal to introduce a fit and proper person requirement either more workable or more secure in the face of a legal challenge.

The noble Baroness, Lady Buscombe, asked about Nationwide League clubs and pay-per-view broadcasting. The sale of the broadcasting rights is a matter for the league and for broadcasters. Whatever the ITC decides about the future of ITV Digital's frequencies there will still be a possibility of pay-per-view football rights. But it is not for the Government to interfere in that market.

As my noble friends Lord Clark of Windermere and Lord Burlison rightly said, most football clubs are owned and run by people whose sporting and ethical credentials are above question—including Hartlepool United. Incidentally, I wish Hartlepool better luck next year. But the Government do not underestimate the potential for club chairmen and owners to exploit both football teams and the communities that follow them.

Noble Lords have referred to a number of possible measures which have been suggested in the past to ensure that ill-intentioned individuals do not damage the interests of the national sport. The Government believe that there is a valid alternative approach. Rather than seeking to exclude individuals or groups from club ownership, the better solution may well be to encourage supporters to take an active role in the running of their clubs. To its great credit, the Football Task Force enthusiastically proposed such an approach and the Government have fully implemented its recommendations in this area.

I am extremely grateful for what has been said by all speakers in the debate. I should like to close on a positive note about the value of Supporters Direct. The Government underestimate neither the importance of football in our national life nor its vulnerability to financial exploitation. However, the accepted limits of government intervention in the workings of all sectors of the economy must apply to football too.

Short of outright criminality, it is right that the Government should have no role in dictating who should or should not own a football club unless competition issues are involved. But there are other approaches. The Government take some pride in their role in establishing and funding Supporters Direct. I am grateful for what the noble Lord, Lord Addington, said. The consolidation of the involvement of supporters in the ownership and running of professional football clubs is an admirable aim in itself. It also represents a possible solution to many of the historic ills of the sport.

We have had a very useful debate. Once again, I am grateful to my noble friend for raising these important issues and to all who have taken part in the debate.

House adjourned at seventeen minutes before ten o'clock.