English Football: Financial Sustainability and Governance

I beg to move,

That this House has considered the financial sustainability and governance of English football.

It is a pleasure to serve under your chairship, Mr Turner. Clubs across the country face unsustainable finances and poor governance, which is why so many MPs have gathered here to represent their local clubs. We have a range of clubs from up and down the football pyramid and up and down the country: from Brighton to Basingstoke, from Bolton to Luton, from Wolves to Aylesbury. We have MPs from various parties, and we even have Reading fans in the same room as Oxford United fans, showing the unity and strength of feeling across Parliament that football must have a sustainable future.

Before I go into the concerns that we all share, and the remedies we would like to see, I will give a brief history of how we got here. Since the premier league was formed over three decades ago, over 50 clubs in the top six tiers of the English men’s football pyramid have gone into administration. One of those clubs is Bury. After being sold for £1 in 2019, Bury went out of business and was expelled from the league. The following year, 2020, saw the demise of Macclesfield Town and Wigan Athletic going into administration. In the following year, 2021, while England’s top six clubs briefly broke away to try to form a European league, Derby County slipped into administration.

These clubs and this chaos is just the tip of the iceberg. According to research by the non-governmental organisation Fair Game, the majority of the top 92 clubs in the game are technically insolvent, meaning their liabilities exceed their assets. That is a precarious situation for any business to be in, but football clubs are not just any business; they are the foundation of many of our communities, and they bring many of us pride in the areas that we live in.

One of the clubs that might be technically insolvent is Reading football club, which has its home stadium in my constituency of Earley and Woodley. Reading is one of the oldest clubs in England, and had previously been known for its good management. Now, after four winding-up petitions, five points deductions and persistent late tax payments, Reading sits on the brink. I started getting involved with the campaign to rescue Reading football club when I bumped into some fans at a local fair in Woodley a few years ago, who had read my reporting in the Financial Times. They knew I had an interest in scrutinising companies with complex structures and distant owners, and they asked whether I had an interest in scrutinising a local company with a complex structure and distant owners. But fans should not have to do that kind of scrutiny. Life needs to be a lot simpler for fans just to be able to follow the game, and not worry about whether the game is up for their local club. So many fans have experienced what Reading has gone through, and we owe it to them to voice the problems that we see across the football pyramid.

I will pick out three particular problems, which I am sure will feel familiar for many of those listening: first, how clubs receive income; secondly, how they spend their money; and thirdly, irresponsible ownership.

Chesterfield football club wanted me to put on the record its support for the work of football governance. Does my hon. Friend agree that it is extraordinary that, on the one hand, we have a monstrous success story in the level of money in football, but on the other, we have almost the entire English football league running effectively bankrupt and relying on the owners for bail-outs year after year? That simply cannot make sense as a model, can it?

I agree with my hon. Friend, who is an advocate for his local club, that too many clubs across the country are suffering from the unfair distribution through the football pyramid. In fact, that is the first issue I will describe: the problem with the money going in. The last four decades have seen a complete transformation in English football, which has been characterised by a widening gap between the clubs at the very top and the rest of the football pyramid. Ticket sales over that time have become less important as a source of revenue. Instead, the biggest source has become the multibillion-pound broadcast deals agreed by the Premier League.

We all celebrate the success of the Premier League’s dealmaking, generating the most revenue out of the big five European leagues. That dealmaking is notable for many reasons, not just the large amount of money involved. The 20 premier league clubs get together to sell a deal collectively. However, economists and competition lawyers have raised concerns about the impact that collective selling has on fans and smaller clubs, and they have argued that collective selling is justified only when there is a public benefit. However, most clubs do not currently benefit from these broadcast revenues. The vast majority stay in the premier league and, as a result, the gap between the top and the rest grows wider every season.

This season, premier league clubs and the four recently relegated clubs held on to 94% of the league’s broadcast revenues. That means that the remainder of the 68 clubs in the EFL received just 6%. In comparison, the German Bundesliga ensures an 80:20 split between the top two divisions. Meanwhile, the Union of European Football Associations—better known as UEFA—allocates 75% to the champions league and 25% to the two competitions below it. Those leagues have chosen those ratios because they find that it creates a sustainable pyramid for them. The EFL has long sought a similar distribution ratio with the premier league.

My hon. Friend is making an important point about costs. One of the brilliant football clubs in my constituency, the Aylesbury Vale Dynamos, really struggles with the cost of keeping its ground maintained. It is at real risk of flooding, and the cost of dealing with that is huge. The other club in my constituency, Aylesbury United, has not had a ground in Aylesbury since 2006. Does my hon. Friend agree that, given the costs that they incur, having access to a secure and financially sustainable ground to play on is an essential part of the sustainability of vital grassroots football clubs?

I agree with my hon. Friend, who has a deep interest in her local clubs. Fans need to be able to see their clubs perform in their local area. Many MPs who are in this debate have concerns about the relocation of their grounds or lack of appropriate grounds.

The final problem is ownership. The first two problems have shown how little incentive there is to be a well-run club that spends responsibly. Most clubs rely on a generous owner to stay afloat. When the good will or cash flow of that owner starts to run dry, clubs often have nowhere else to turn. Reading fans know the perils of this dependence. The current owners, the Dai siblings, put the club up for sale almost two years ago, but they have not been seen at the club in well over a year. Fans have mostly been kept in the dark. Credible bidders for the club—some of whom I have had the fortune to speak to—have made offers, and they have been turned down and dragged through lengthy negotiations. Bidders have faced difficulties in navigating the ownership structure of the club in which the stadium, the training grounds and the club itself have been separated into different corporate entities, and in which club assets have been used as collateral for other loans.

My hon. Friend is making an excellent speech, and I can forgive her for being from Reading—at least she is not from Swindon. Oxford United, which I was grateful that she mentioned, must be able to move out of the Kassam stadium for which it is charged unviable rent, despite lacking a fourth stand and many other problems. Does she agree that the club’s exciting proposals for a new stadium in Kidlington must go forward, but that future governance models need to stop previous owners from entrapping clubs in unviable and unsustainable stadiums?

I very much agree. Stadiums are also vital community assets. I look forward to one day seeing Reading beat Oxford at the new Kidlington stadium.

What the EFL has at present is the use of fines. The owners of Reading have been fined on numerous occasions for failing to fund their monthly wage bill, but that has not changed behaviour. The most frustrating thing for Reading fans, as I am sure it has been for Portsmouth, Leeds, Bury and Charlton fans before them, is a feeling that the whole chaos could have been avoided if the EFL had had sufficient powers to implement a more robust owners test when the current owners, the Dai siblings, first took over.

I never thought I would say this, but I have a lot of sympathy with Reading fans at the moment. When I was a kid growing up, my team, Brighton and Hove Albion, experienced a lot of what my hon. Friend’s team is experiencing now. When Reading was well run by the Madejski family, Brighton were at the bottom of the league in very much the opposite scenario, and Brighton are now enjoying the other side of the pendulum. We have probably the best type of ownership. It is a fantastic model that everyone should try to emulate. Does my hon. Friend not agree that the lottery of ownership—the pendulum that went from, when I was young, Brighton having to sell their ground and play in Gillingham, to Reading now experiencing the problems that they are experiencing—is what we need to change with the regulator?

That is absolutely the case. My hon. Friend highlights the history of his club in Brighton. In the ’80s and ’90s when the future was unclear, it was down to the owners. Too much, unfortunately, is down to, as he mentioned, the lottery of ownership. Brighton and Hove is now a well-managed club. I think we can have many such positive stories across the country, including a positive story, and a positive outcome, for Reading, but the question about football governance and sustainability affects all of us in this room today.

The hon. Lady is making a passionate speech and has done a great job of bringing us all to this Chamber. I lived through Reading’s trials through my stepson who is a season ticket holder— obviously, my first love is for the Whites in Salisbury. Does she not recognise the fundamental challenges of disturbing a market that contains one of our greatest national assets, which is the premier league? I feel quite torn and anxious about the scope creep of any regulatory intervention, although I accept that the core of what she says has a lot of merit.

I always appreciate my fellow Treasury Committee member’s comments on the correct regulation of markets, but I would argue that football clubs are not simply a commodity and football competition is not simply a market. If we were to accept that view and for the sake of argument say, “Let’s treat the competitions as a market”, I would argue that we have severe market failure when over 50 clubs have gone into administration in the last four decades. The externalities of that market failure are borne too much by the fans sitting in the room with us today.

I congratulate my hon. Friend on securing this debate. We do not have competition right now. In the premier league, the three promoted clubs are almost certainly likely to go back down to the championship. The disparity of money and funding means we are losing what is the best part of English football: competition. If we really want competition, we have to make the money go down the pyramid more fairly.

I agree with my hon. Friend. Parachute payments skew the financial incentives in the game. I also agree that we do not have the full competition that would allow clubs to play their best game, which is what we fans want to see.

Why does all of this matter? It is about the community at the end of the day. Some might say it is only a game, but for many of my constituents the importance of our football club stretches beyond the game and into the community. Reading football club’s community trust is run by volunteers. It supports young people and promotes social inclusion and participation in sport. In many of our most deprived communities across the country, it is the local club that sets a model for aspiration.

Constituents always tell me how important Reading FC is to them and how important it has been to their families going back generations. Just the other day I received an email from a fifth generation Reading fan. One constituent wrote to me:

“Reading was and is a family club”—

a club in previous years awarded family excellence status. Yet it is at risk of not being around for the families of tomorrow. Working with fan groups—some are here with us today—since my election last year, I have seen at first hand how motivated those volunteers are by this common cause. Fans want to see a competition for points; they do not want a competition to the death.

While Reading is in exclusive talks with a new potential buyer, we need to ensure that the same story is not repeated anywhere else, so I am delighted that the Government are bringing the Football Governance Bill through Parliament to create an independent football regulator. I will be meeting the shadow regulator in a few weeks to ensure that they have a full picture of what has happened at Reading, and what can happen when absent owners neglect their clubs. I encourage all Members to do the same. We need a right-touch regulator that helps us to build a football pyramid with strong foundations, and we need a football regulator that can pass the Reading test, so that fans elsewhere do not have to go through the problems that Reading went through.

Order. I remind hon. Members that they should bob if they wish to be called to speak. There are 29 Back Benchers wishing to catch my eye, so the speech limit will be a minute and a half. If you have to make an intervention, I respectfully request that it be very short. Remember that making an intervention may mean that you are not called in the debate, so please be considerate to colleagues. I will call the first Front Bencher at 2.28 pm.

It is a pleasure to serve under your chairship, Mr Turner. I pay tribute to my hon. Friend the Member for Earley and Woodley (Yuan Yang) for securing this important debate and for eloquently setting out many of the governance and sustainability issues in English football.

English football is central to the social fabric of Britain and is one of our greatest exports. It is more than a sport; it is the beating heart of our local communities. I agree with Bill Shankly: some people think football is a matter of life and death, but I assure you it’s much more serious than that. Each week, fans come together to back their club and create a shared sense of identity. The social impact of local clubs goes far beyond the pitch. In my totally unbiased opinion, there is no better proof of that than Luton.

Luton Town FC is at the heart of our town and has worked for years in partnership with local charities. The Luton Town Community Trust, which was founded in 2008, is a charity dedicated to delivering community service to people across Luton and Bedfordshire, using the power of football to make a positive impact in sports, education, health and social cohesion.

The club is at the heart of the town, and the fans are the heart of the club. Throughout the ups and downs of Luton Town FC’s journey, it has been the fans who stepped up to fight fiercely to protect our proud Hatters heritage when reckless ownership threatened to tear it down. The fan-led 2020 consortium bought out the club from further mismanagement after it went into administration in 2007.

We all know that Luton’s promotion in 2023 was historic, but that promotion was a springboard for further exciting prospects for our town. There are detailed plans for the Power Court site, which will be the new home of Luton Town FC. It will transform Luton’s economy by directly contributing between £100 million and £250 million per year and supporting between 900 and more than 1,100 jobs.

It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate my hon. Friend the Member for Earley and Woodley (Yuan Yang) on securing this important and timely debate.

For places like Great Grimsby and Cleethorpes, football is more than a game; it is the beating heart of our town, a source of identity, pride and belonging. Grimsby Town FC is an institution. It was formed in 1878 in the Wellington Arms on Freeman Street, and Blundell Park was built in 1899; one of the original stands is still in operation. Through the Grimsby Town Foundation, the club has generated more than £4 million in social value, supporting education, mental health and opportunities for young people.

For too long, the football pyramid has meant that clubs up and down the country have faced uncertainty through bad ownership, financial mismanagement and an unfair distribution of wealth. It has left many on the brink. I welcome the Football Governance Bill’s intent to address those long-standing issues. Introducing an independent regulator to protect clubs ensures financial sustainability and puts the focus back on the heart of decision making.

I commend David Artell and his team for their fantastic recent form—they have had seven games unbeaten and are pushing for the play-offs. We must ensure that our clubs and community assets are protected for future generations. I will end by saying: up the Mariners!