Newcastle United Football Club: Regulation

Motion made, and Question proposed, That this House do now adjourn.—(Jo Churchill.)

Madam Deputy Speaker, I must start by declaring an interest: I am a Newcastle United fan. [Hon. Members: “Hear, hear!”] Thank you. When I raised this with the House authorities, I was told I did not need to declare it as I “derived no real benefit” from it. I would dispute that. Supporting Newcastle United has brought me great joy, and a sense of belonging, shared purpose and community, as well as the opportunity to watch the beautiful game at its beautiful best in that cathedral to football, St James’ Park. But it has also brought me deep despair and disappointment, particularly in the last few years. I also wanted to present myself in my Newcastle team shirt today, but I was told in no uncertain terms that that was not allowed. Instead, I have settled for a Newcastle Libraries T-shirt with our city on it.

Newcastle United is at the heart of the city. Unlike Liverpool or London, we have only one professional football team and we are united in our support. And what support it is! Hon. Members may recall that, back when we had regional development authorities and investment in our regions, the One NorthEast tourism slogan was “Passionate people, passionate places”. Well, the passion of Newcastle is football. We have consistently high attendances—some of the highest in the league until recent times—and the economy of the city is influenced by the success on the pitch. If we are winning, we are singing—and spending. If we are losing, the gloom hovers over all our heads like individual storm clouds. It is part of our culture.

Anyone who moves to Newcastle—and we certainly have an unparalleled quality of life, so I recommend that everyone does so—will find it an open, welcoming and warm city, but whereas elsewhere people might get away with talking about the weather, in Newcastle they will need to know how the Toon are doing. It is part of our mental wellbeing—90 minutes spent at the Gallowgate end would be enough to convince anyone of that—and this is true not only in Newcastle, as my hon. Friends—and fellow fans—the Members for Gateshead (Ian Mearns) and for North Tyneside (Mary Glindon) can attest. They would have liked to be here today.

Football is the lifeblood of many cities, particularly in the north, and that remains the case despite changes that have seen money, not fans, become the driving force of football thanks to the creation of the Premier League and billions of pounds from Sky Sports. While I will speak mainly about Newcastle United football club, its finances and its owner, much of what I say applies to football as a whole.

Since 2008, Newcastle United has been owned by Mike Ashley, who also owns Sports Direct, House of Fraser and several other retail businesses. In July last year, I presented a petition reflecting the concerns of fans groups, such as If Rafa Goes We Go and the Magpie Group, and that caught the attention of Mr Ashley, something which I had been unable to do as the MP for St James’ Park, despite writing to him to ask for a meeting. It is testimony to the power of Parliament that, after announcing this debate, I was able to meet Mr Ashley on Saturday. I committed to Mr Ashley that I would make no personal attacks on him—I will not avail myself of parliamentary privilege to do so—and I say to all the fans that personal attacks on Mr Ashley or his employees are wrong and hurt our cause.

I shared with Mr Ashley my concerns about financial transparency and funding, and he was passionate in his defence of his investments and in saying that he has not taken any money out of the club other than, he said, short-term funding on a temporary basis. That, he said, was in contrast with the period prior to his ownership. He also emphasised that he had made it clear the club must stand on its own two feet and can spend only the money it generates. Well, to put it diplomatically, we disagreed. The meeting was open, frank and robust, with strong views on both sides, and I hope to continue the dialogue. Indeed, this debate is part of that dialogue. It has to be, because I have still to receive a reply to my letter of last year in which I raised several critical issues that I have also raised in correspondence with the Secretary of State for Digital, Culture, Media and Sport and the previous Sports Minister, the hon. Member for Chatham and Aylesford (Tracey Crouch).

Mr Ashley said that the club can spend only what it is generates—a form of austerity economics of which those on the Tory Benches could be proud—but Newcastle United needs investment to reach its potential. Earnings have been hit by uncertainty and the bad feeling between fans and the owner, but even if we accept what he says, how are we to know what income the club generates? As the Secretary of State said in his letter to me, clubs are treated as any other private business and must submit accounts to Companies House. I am not an accountant, but I have an MA in business administration, studied corporate finance and worked in business for 20 years. However, I have looked at the NUFC accounts and cannot work out what is going on.

Faith in Newcastle’s accounts has not been helped by comments made by Mr Ashley at the Housing, Communities and Local Government Committee last December, when he said:

“People cheat. That is what businesses do.”

He also said:

“Accountants are able—this is their job, by the way—to move the numbers about pretty much at will.”

That seems to be what is happening at Newcastle. Mr Ashley’s ownership of the club passes through four separate companies: Mash Holdings, St James Holdings, Newcastle United and Newcastle United Football Holdings. In addition, dozens of other companies are associated with the club and Mike Ashley, and managing director Lee Charnley has more than 30 other directorships. Newcastle United’s accounts do not include a cash flow statement, although having one is a requirement of reputable accounting. All that seems designed to make it harder to follow the money and see what income is being generated.

I hope that the Minister will agree that that is unacceptable and that she will commit to ensuring that the following income streams can be identified. First, TV payments. These should be more than £123 million, but they are not reported separately. Secondly, merchandise. Mr Ashley turned the club shop into a Sports Direct shop, but the revenues from Sports Direct do not go to the club. Thirdly, player sales. The way in which the purchase and sale of players is booked and amortised is in itself arcane. Newcastle United is consistently reported as having one of the lowest spends on players in the English premiership, and many estimates indicate the club has actually made a profit on player sales overall during Mr Ashley’s ownership. Does the Minister agree that we should be able to calculate that sum?

Fourthly, advertising. Sports Direct hoardings are all over St James’ Park and, yet again, we do not see the revenue in the accounts. Finally, land sales. Next to St James’ Park is an area called Strawberry Place, which Mr Ashley allegedly purchased from the club for less than it was worth—we do not know, because the price is not visible. What we do know is that Strawberry Place is being developed for student accommodation. Selling the land stopped any further expansion of the stadium, and fans believe that the profit from the sale of that land will not benefit the club, but how are we to know? There is also an issue about land and property apparently sold to companies called Project J Newco No.39 and Project J Newco No.40, which appear to be connected to Mr Ashley, but there is no evidence of any payment.

Has the hon. Lady seen Deloitte’s “Football Money League” report? It seems to identify some of those incomes, such as £27 million for match day, £143 million for broadcasting and £32 million for commercial, figures that we can only dream of for Walsall football club.

I appreciate the hon. Gentleman’s interest in Newcastle United, and I have seen the figures in Deloitte’s report, which make Newcastle United the 19th richest club in the world. My concern is that those figures should be reported visibly for all clubs, particularly in the Premier League, where there is so much money going around.

Mr Ashley appears to be able to move assets between his privately owned companies at will, despite the club being a historic cultural icon and the other companies being of somewhat less reputable status and longevity.

We do not know what income the club is generating and whether that money is being used on the club. What is certain is that this transfer window, like the last one, is closing without money being spent on players or training facilities. Mr Ashley’s principal investment in the club has been in the form of loans, rather than equity—presumably to protect his financial exposure. Those loans are interest free, which is good, but as loans they can be called in if needed, so the sustainability of Newcastle United depends on his other businesses being successful.

That leads me to Mr Ashley’s business practices more generally. The BEIS Committee likened them to a Victorian workhouse, with employees being paid below the minimum wage. A “Dispatches” investigation found employees were publicly shamed for talking, spending too long in the toilet or falling ill, and lived in fear of being fired. Now Mr Ashley says that he is going to save the high street. Forgive me for being somewhat cynical, having seen how he has saved Newcastle United.

Newcastle United is an asset to our city, a cultural giant in our lives. I explicitly pay tribute to the fantastic Newcastle United Foundation, which uses the power and passion of football to do great work across the north-east and is, in part, funded by the club, although again that funding is not transparent. The Premier League also uses some of its vast wealth for the benefit of local communities, at least what can be spared from expenditure such as its £5 million farewell gift to departing executive chairman Richard Scudamore.

I congratulate the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) not only on her outfit, but on securing this wonderful and important debate. I was wearing black and white shoes this morning, and I thought I might have had to declare some sort of interest. I understand the reasons behind her sartorial elegance this evening.

Before I respond fully to today’s debate, I will acknowledge that the search for Cardiff City football club’s Argentine striker Emiliano Sala, and his pilot David Ibbotson, had to be called off this afternoon. We offer sincere condolences to their families and friends at this deeply concerning time. It has been a difficult few days in the game.

I thank the Minister for what she has said, and I echo her comments. I was at St James’s Park to see Cardiff City last week. It must be a terrible time for the family and friends, and for Cardiff City fans.

I turn to the points that have been raised in this debate. Newcastle United are 17th in the premier league, with some uncertainty about the manager and no signings so far in the transfer window, but last week they had a good win in the FA cup. I would like to say that not all football clubs are feeling that pain, but there others at the bottom of the premier mix, including Cardiff, Fulham, Burnley, Huddersfield, Southampton and Crystal Palace. I have to declare an interest when it comes to Southampton, which is very near to my constituency and has many fans. I also understand the impact on the economy when they are not winning.

I am surprised not to see the hon. Member for Strangford (Jim Shannon) here, because we are talking about football—I am surprised not to be interrupted by him. My hon. Friend the Member for Walsall North (Eddie Hughes) spoke about the love and affection in north Walsall for the football club there. I was in that area recently to visit a local school, and there was huge affection for the club. The area has so much to look forward to with the Commonwealth games. It is not all doom and gloom.

I have to confess that I am here under slightly false pretences. I came to take part in a debate about a fantastic football club that wears black and white stripy jerseys and black shorts, only to discover that it was Newcastle United, not my own Halstead Town football club. The passion that the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) displayed for her local team is matched by the passion I display for mine, and I am grateful to have the opportunity to take part, briefly, in this debate.

I am not sure it is in order for the hon. Gentleman just to mention a team because they play in black and white like Epping Town.

I thank my hon. Friend the Member for Braintree (James Cleverly) for reminding me of the importance of the grassroots. We had an important debate earlier in the week about facilities and what the grassroots mean to football up and down the land. We need to make sure we protect our stadiums and our future stars.

The Government wholeheartedly agree that football should absolutely be supported and that fans have every right to ask questions about those who run their clubs. We saw protests at Bolton earlier this week, and at Blackpool and Charlton in recent times. Such protests demonstrate the discontent that can exist when fans believe that the ownership is not working in the best interests of the club at all times. Over recent years, the Government have invested significant time in finding ways to improve the relationship that fans have with their clubs. We want to see owners working with fans and seeing them as an integral part of their clubs’ successes, and I want all fans to see that, up and down the game.

The Government’s expert working group on football supporter ownership and engagement, which reported in 2016, resulted in an important rule change in football. All clubs in the top four divisions must now ensure that there is open dialogue between the owners and senior executives and the fans on the matters of most importance to the running of clubs. These meetings must now take place each season, and they are leading the way in enabling fans to be better informed about their club’s financial standing, future plans and other matters of real importance to them so that they can help to set the agendas.

Last summer, the Government took a further step in listening to fans’ concerns when we asked the FA to carry out a comprehensive review of the ownership of football clubs and stadiums. The intention of the review is to learn why many of our clubs have become separated from the ownership of their homes, so that going forward we can advise clubs and fans on how they can work together to protect these important community assets.

The Minister will know that I was very involved in Coventry in my previous life. It is not necessarily about whether the club owns its stadium—in fact, in Coventry, it is the council ownership that has protected the stadium for football—but whether the owners really have the fans at heart. There have been many cases in which they have not, which is why we need a review of the structure and of how fans engage, not only in Coventry and Newcastle, but in Torquay.

Absolutely, and I thank my hon. Friend for making that point. His interest in this goes back some time—[Interruption.] My hon. Friend the Member for Bury St Edmunds (Jo Churchill) behind me raises the importance of Bury Town to Bury St Edmunds. These clubs really do matter to our communities and, as I said, that was very much the focus of the debate earlier in the week.

When it comes to club ownership, the football authorities have been progressive in recent years. They have needed to be to react to the huge investment and interest that there now is across the world in owning our football clubs. In our top four football leagues, the rules now require public disclosure of the ultimate beneficial owners of all clubs, with the full chain of ownership disclosed to the relevant football authority. The current owners and directors test has been strengthened, and it bears favourable comparison with that expected in corporate circles.

New owners have to meet the Premier League or English Football League board and provide detail on the sources and sufficiency of the funding they have in place. Clubs must submit information on their financial structure, any proposed investment and a business plan demonstrating that all liabilities can be met for the next 12 months, and clubs must submit independently audited accounts each season. If these are not filed at Companies House, clubs should take steps to ensure that they are. Clubs must also continue to work with Her Majesty’s Revenue and Customs over any tax owed. Together with the adoption of fair pay rules, the financial state of football clubs in this country is better now than at any time in the last 20 years, but I take the points made by the hon. Member for Newcastle upon Tyne Central about income streams, shop sales, player sales and the other wide-ranging issues she raised, and I will be happy to send her a fuller response afterwards. I want to reassure her, however, that we are not complacent.

We could possibly wish good luck to every team that plays in black and white. That is not in order, but there we are.