FOOTBALL INQUIRY – 5 November

Members present:

Alan Keen MP (Chair)

Christine Russell MP

Mark Field MP

Iain Duncan-Smith MP

Mark Hendrick MP

            Chair: If everybody is ready, we should make a start. Our first witness is David Conn, a top writer on football finance in the world of journalism. He gave valuable evidence to our previous inquiry four years ago, and I am sure that will be the case again. Thank you for joining us, David. I believe you want to say a couple of words before you begin.

David Conn: I just want to thank everyone for inviting me again. The previous inquiry was valuable and a strong report was produced. Obviously, these issues are, again, extremely important. Your inquiry comes at a time when they are being recognised more widely as being of central concern to football, if it is to grow as the business it is, with all the commercial activity and takeovers that that involves, and if it is to continue to have the profile that it does.  I have been covering this area for a long time, and I feel that it is now more accepted as a legitimate area for serious investigation involving serious issues. We used to have to persuade the world and football that these were serious issues into which we were entitled to inquire.

This inquiry is very timely. I have been hammering away at the issue for about 11 years. I have written two books and have produced a column for 10 years, six with The Independent and four with The Guardian. Basically, I have been investigating and, I hope, exposing financial disparities, inequalities, governance issues and what the state of football should be—I have mainly focused on this country. Therefore, I hope I might have some useful things to say to you.

I have not prepared an opening statement, because you know what you are most concerned with and you are seeing other people, so fire away and I shall do my best.

Mark Field MP: Thank you very much for coming, David. I have had a chance to read your books, and I must say that it is great to discuss some of these issues with someone who can consider them with a certain amount of perspective. It is perhaps easy in the current debate about foreign investment in, and ownership of, football clubs to forget that there was not such a golden bygone era—there were problems with a range of clubs being owned by dodgy financiers, with all sorts of shenanigans having taken place of domestic input. I am interested to hear your thoughts on foreign investment, as that is the subject on which I wish to focus, given its high-profile nature. We are being hit by the credit crunch and significant foreign ownership, so what is your perspective on how increased foreign investment—the large-scale investment from wealthy individuals, as well as from institutions, on occasion—in the Premiership will have an impact on the game and its financing, and on the nature of British football? The Premiership has become such an important global brand, and that has many accompanying financial implications.

Christine Russell MP: May I just ask a supplementary? Should there be a credibility test for these owners, to assess whether they really understand the game of football? There is a question mark about that, so perhaps you could incorporate the issue in your answer.

            David Conn: I shall address that last question first, while it is fresh in our minds. I believe that that is the way in which we should be heading. I know that your question tackles the detail, Mark, and I shall deal with the broader questions later. The issue is huge, because it contains so many different elements to pick through. Things have gone beyond the fit and proper person test. I was campaigning for such a test when the football authorities were still saying that it was impossible, illegal and impractical, and that I did not understand why that was so. I have dug out a piece that I wrote in February 2001, when the then major shareholder of Hull City was jailed for corruption and bribery offences—I did not even know that there was a criminal offence of bribery. He had been allowed to buy shares in Hull City while those investigations were hanging over him. I finished the piece by saying that surely there should be a test of whether these people are fit and proper. At that time, the FA was saying that such a test was impossible.

I will talk to you in more detail about that, but I agree that we have gone beyond saying, “Let us try to weed out criminals.” We are talking about the Forbes list taking over the top football clubs now—we are not talking about petty crooks who might try to nick the ground and sell it for housing—so we need to deal with broader issues about their credibility. Do they understand the game? Do they understand the history of the clubs? Do they understand the duties and responsibilities that come with being in charge of these institutions? I shall talk about that in proper detail, because I hope to have some interesting things to say.

            On the broader question about foreign ownership, I like your starting point. It might surprise some people to learn that I agree that there is a danger of false nostalgia. Whenever I have been involved in discussions about foreign owners, people have said that it is ideal if the club is owned by the local businessman. I have pointed out that such an arrangement is not an ideal, because the owners were hugely varied in the years when the clubs were owned by those people. Some owners were excellent: they invested, they were rooted in the clubs and they did a good job. However, it was mainly under the local ownership of clubs that serial disasters took place—people dying on the terraces; supporters being treated appallingly; and people having no respect for the heritage, history and culture of the clubs. That damning landscape culminated in events of the 1980s. I am glad that you made that point, because I have always covered the context and said, “This is where we were.” My argument has always been that this should have been a golden age that put all those problems right, and it is a great pity that those problems have been supplanted by new ones relating to over-commercialisation.

            That is my starting point. I do not have nostalgia for the old ranks of local businessmen who managed, often by Machiavellian means, to take over their local club and, often, served only themselves. I say “often”, because many of the people involved were decent, spending money and putting real effort into the clubs. I am on record as saying that in the course of investigating this issue, and the history and culture of English football, I have become a complete convert to the concept of supporter ownership of clubs—your inquiry’s remit covers that.

We need to get straight into the practicalities of whether it would work and, if so, how. I always point to Barcelona as the best example: it is a member-owned and great football club. It is an icon, and it has supporter ownership. It is not perfect, but the best way in which it has worked has been that when there has been mismanagement, the fans—the members—have been able to vote out the board and elect one that they believe will do better for them. On this great day for democracy, I thought that worth pointing out. I am also realistic enough to realise that supporter ownership will not happen any time soon, because clubs are commercial companies that have a ridiculously high value. Manchester United went for nearly £800 million, so supporters’ trusts will not be able to take over Premier League clubs any time soon—I am realistic enough to know that we have the owners we have.

            Interestingly, when certain issues are raised—foreign owners or the amount of debt, which was raised by Lord Treisman three or four weeks ago—headlines such as “Foreign owners: £3 billion debt” can seem alarming, but we need to get into the detail of both those themes. We need to know what kind of debt we are discussing and at which clubs, and the foreign owners are really varied. I do not know whether any of you saw this, but The Guardian got me to do an exercise on the Premier League and the credit crunch. I went through every club’s most recent set of accounts, which date from about mid-2007 and are now quite out of date. That was the first time I had done that exercise, and I was pleasantly surprised at what I found.

Let us just deal with the Premier League clubs. They are mostly owned by one very wealthy individual, and some of the owners, such as Steve Gibson at Middlesbrough, are English. I found that 12 out of the 20 had invested significant money into the club in shares—that is best kind of investment—or in soft loans. They could say that they are benefactors, because they are financially backing the clubs. We can talk about whether that leaves the clubs vulnerable if something were to happen. The question of what would happen to Chelsea if something were to happen to Roman Abramovich is a valid one.

To follow on from your first question about the comparison with the former owners—the English owners—one thing I found that might surprise you is that the professionalism and respect for the clubs and their heritage of many of the foreign owners is impressive. After the Abu Dhabi group’s initial mad flurry of talking in terms of fantasy football and buying every footballer whom they could think of, they impressed everyone at Manchester City with their very respectful approach and the fact that they have made an effort to understand the history and heritage. Because they are very wealthy and have been involved in substantial businesses, they seem to be bringing a professional business approach to the business of running a football club, in which they seem to see, like Randy Lerner at Aston Villa, that the supporters need nurturing and treating with respect. For many years, supporters were not treated with any respect, so that was a surprising finding for me. That is one broad answer.

I found 12 owners who had put money in. However, you could legitimately raise a concern about the takeovers where, instead of bringing investment—two very high profile takeovers, those of Manchester United and Liverpool, were my education into leverage buyouts—money is borrowed to take over the club, the club is taken over and that borrowing is then loaded on to the clubs. Manchester United are £667 million in debt as a result of the Glazer family’s borrowing to take over the club in the first place—a big chunk of it, more than £100 million, is still owed to hedge funds, because they have not been able to do the refinancing—and that is at 14 per cent. interest. That huge rate of interest is miles above that being paid by any other club. All the other clubs are paying relatively institutional rates of interest—7 per cent. or two per cent. above the base rate. I found from doing this exercise for The Guardian that Manchester United are the only club paying mad levels of interest.  The interest that accrued last year—they did not pay it all; they rolled some of it up—was £81 million alone.

Chair: How much did you say?

David Conn: £81 million in interest alone in 2007. The figure will be higher in 2007-08, because some of it was rolled up. Liverpool said that they were not going to do a Glazer, but it turns out that they pretty much have. They have not done it in exactly the same way, but they have pretty much done the same thing. Liverpool are £350 million in debt, but that is not all the cost of the takeover. The cost of the takeover was about £185 million. These guys say that they are buying the club to invest in it, but they borrowed the money to take it over and the club itself—the fans—then have to pay their interest on  an investment that they have made in the hope that the club will increase in value and they will be able to sell it at a massive profit. Following the credit crunch, the banking collapses and the economic downturn, your question is much more legitimate.

Mark Field MP: In fairness, is that a model that would apply to any company that they were buying—a leverage buyout model? I am not suggesting for one minute that the fans’ interest should be run roughshod over, but, in a sense, if one were buying a retail outfit, one would do exactly the same, and, effectively, the customers would be funding all the debt in future.

David Conn: My education in a lot of this has come through investigating football. If I was covering retail and was before the all-party group on retail, I would ask why we were allowing these leverage buyouts to put decent solvent companies into massive debt just to service the hedge funds that have taken them over. The model has a wider application, but that does not make it right.

            Christine Russell MP: You can argue that a retailer such as John Lewis, which is essentially employee-owned, is like a supporters-trust-owned club. But in the economic crisis is it doing far better than other large retailers on the market?

David Conn: Exactly. And now, for the first time, and after 10 years, there is some decent coverage for the building societies that did not demutualise, none of which, as far as I know, has collapsed—none of the ones that demutualised and became banks are independent businesses now. Football has always reflected the country and the times in which it operates, and these issues are of wider application, so the idea of a football club as a mutual model leads to that question. We have other successful mutual models, but, unfortunately, the questioning of leverage buyouts and the merits of mutual organisations are just not sexy, high-profile issues, although they should be. People should be much more literate about the different models that could be available.

Christine Russell MP: What impact do you think the credit crunch is having on the likelihood or otherwise of Liverpool getting their new stadium? Can you see the present economic set-up putting that back even more?

            David Conn: May I finish on the point about foreign owners, because we have got sidetracked on to the issue of debt? The high profile nature of the Glazer takeover of Manchester United and of the Hicks and Gillett takeover of Liverpool can give the impression that lots of these leverage buyouts were taking place, but they were the only two where the takeover loaded the club with debt. People say that West Ham must be vulnerable because of the credit crunch and Gudmundson’s exposure to Landsbanki, but he has put solid money—proper equity—into West Ham. According to the previous accounts—I know that they have no sponsor—they look sound compared with where they were before. The United and Liverpool takeovers were the only ones that I could see were leveraged in that way.

            Let me follow up your first point, Christine. I have tried to sift things through in that way, because I found that one cannot lump all the foreign owners together, as they have brought different things—two have brought their clubs into debt, but the others have not. I agree that we need to see a pride in English football, and in its clubs and institutions. That means that if they have to be for sale on the open international market, as it seems they must be, given that there is no way of stopping that process as things have gone too far, we need a sufficiently robust financial and regulatory framework in football. In other words, the question is: when an owner takes over, are they locked into what is considered to be a healthy system? In addition, as you said, we need to ask whether they understand the history and heritage of the club, their duties and responsibilities, and what people want from them as owners of a football club. We have some way to go on that.

            Chair: Before I call Mark Hendrick, may I say what I omitted to say at the beginning? I should remind people that the purpose of this inquiry is not for politicians to tell the game how to run itself; it is to provide a high profile platform for everyone in the game who cares about football, in the short-term and the long-term, to give their views and have a debate. At the start of your comments, David, you said you felt that we played our part four years ago, by starting the debate on this worrying subject.

Mark Hendrick MP: Many years ago, Brian Clough, said that he thought television would kill football. He did not want live matches to be shown at all, but that was a long time ago and live matches are now being shown. Football has become less the property of the fan who goes through the turnstile than of the fan who watches anywhere in the world—in that sense, it has become more and more of a business. As you say, it is run not by English millionaires, but by foreign billionaires. We have seen the globalisation of the game, although it is nevertheless concentrated within England and an English Premier League that is limited to 20 clubs, many of which are foreign owned. That globalisation is being played out just within England; it is not being spread around the world, although we have seen the Premier League wanting to play its matches elsewhere in the world. Is it not just a 21st century economic reality that that product is now available on a global basis? Should we not be proud of the fact that the matches are just being played in England, at least for the moment?

Like you, I believe in mutuals; I am a Co-op MP, and I was happy when we put through legislation to protect mutuals not long after we came into Government in 1997. Similarly, building societies are not now becoming banks, and we are now seeing that genuine ownership. There is clearly a need for fan input, so would you argue for greater democratisation by allowing fans on to boards, even if the mutual model that you might like to see, as I would, is not practical, given the economic nature of the modern game? How do you think we can best put forward English football and the interests of the English team, given the global nature of the Premier League at the moment?

            David Conn: On supporter representation, in a word, yes. The clubs are much more professional than they have been in the whole time that I have been covering football and these issues, and they are generally more responsive. Many of them, although not all, have fans’ forums, and they engage in consultation. Even if it is more of a commercial approach, whereby clubs treat fans as customers because they want to make more money out of them, they probably do more consumer research and, in general, they treat fans more as human beings than was the case 20 years ago.

However, there has been a barrier between giving fans that status and giving them full representation. It would be major progress on so many levels if it were a routine part of the English football landscape that every club has a supporter elected on to its board; anyone taking over a club—even the ruling family of Abu Dhabi—would know that that is what they are taking on. That is important, because supporters are everyone; we have gone beyond the years of stereotyping football fans as a bunch of hooligans. There are some marvellous football supporters’ trusts around, which are full of talented and committed people who would rise to the challenge. This measure would have to be resourced, but it should be resourced by the clubs themselves, in the same way that Barcelona have to run their members’ socio system and their elections. That would be a great progressive reform—it is not nostalgic and backward looking.

Iain Duncan-Smith MP: Would you suggest applying this further up in the Premier League?

David Conn: I would have it at every football club, at every level.

Iain Duncan-Smith MP: What about the management of the Premier League itself?

David Conn: I have not thought about whether there should be a supporter representative in the management of the Premier League. Do you mean that the Premier League would have a board—it has only two directors on it?

Iain Duncan-Smith MP: What about if the fans had the right to elect a member to represent their interests in the Premier League management, and the same goes for the Championship?

David Conn: I am answering that on the hoof, having not given the matter a great deal of thought, but, in principle, I do not see why not. The Chairman of the Football Supporters Federation, Malcolm Clarke, is on the FA Council, which is the governing authority—the law-making body. He is one of about 130—there are certainly more than 100—but the supporters have representation there.

            Iain Duncan-Smith MP: But, as we know, the FA is pretty toothless; it is run by the Premiership, in many senses.

David Conn: The difference is that the FA is the governing body. My argument is that it should be stronger and should have the power. The leagues are really there to organise the competition for their clubs. The question is: should the leagues have supporter representation or should they be organised by the clubs to manage competition? I am not sure, because I have not given it a great deal of thought, but, in principle, I would extend supporter representation as far as it could make the difference of reminding the game that it is a sport and that the clubs are clubs that exist for the fans and for the community.

Mark Hendrick MP: What about the England team?

David Conn: On the England team, to cut a long discussion short, I am in favour of UEFA’s proposal on home-grown players. It is not particularly strong, because it is for there to be eight home-developed players in a squad of 25. It applies in the Champions League now, and no one has really noticed. The Premier League would kick up a massive fuss if it were to be extended into English football, but, in fact, its clubs have been winning the Champions League under that rule. I think that there could be a stronger proposal—one for more than eight out of 25. There is a big issue as to whether players are home-grown—in other words, what country they are qualified to play for—or whether they are home-developed. If they are home-developed, it just means that kids will be nicked from all over the world—

            Iain Duncan-Smith MP: That is already happening.

            David Conn: Yes, it is. So, if we are going to legislate and regulate on this, we should do so. The Premier League applies its own bad practice and says, “You should not have a rule on home-developed players because we would do this or that.”

Iain Duncan-Smith MP: I have done some work on this. The point is that the Premiership has the worst record for home-grown players of all the European leagues—the next worst is probably the German league, but it is a quantum leap ahead of us. Surely this should be defined not in terms of squads, but in terms of who is on the pitch and the bench every match, because they are the ones who will play, whereas squads contain people who never actually make it to the first team. There may be some padding out in the squads to get the clubs past a figure, but they never put those players on the pitch—Arsenal is a classic example. Would you not refine the rule to make is slightly harder, by saying that every Saturday—or for every match that is played—a proportion of players on the bench should be drawn from the home country? The bench should not just be made up of players who came from west Africa or eastern Europe and have been nurtured through the academies, as is happening now.

David Conn: Yes. The aim is to get England-qualified players playing, but how can we achieve that, given that it is not happening at the moment? The Premier League says that the players with sufficient talent will come through, but I do not see that, because young players do not get the chance to play the game to improve to the point where they could hold their own in the Premier League. Is a club going to play a promising 18-year-old kid who is coming through when it could sign Dimitar Berbatov for £30 million? He is ready-made, having served his time elsewhere and having got 200 games under his belt.

            You people know a lot more than me about this, because, to be honest, when people start talking about whether something would be in breach of European employment law, I tend to glaze over a bit. I must confess that I do not know all the details, but I have been told that UEFA came up with the eight of 25 proposal—I know that Alex Phillips from UEFA is your next witness, so you should probably pursue the matter in detail with him—because it believed that proposal could get through the European Commission, as it has done. The Commission will live with that, whereas it has said that Sepp Blatter’s “six plus five” idea has no chance of getting through. Some very detailed work needs to be done on what would work in a footballing sense and in an employment sense. That work is not being carried out, because the Premier League and its clubs display great resistance to any interference with their complete freedom to sign ready-made stars who are 24, 25 or 26 and to sign kids from all over the world to put in their academies. I agree with the aim, but proper, detailed work needs to be done.

The same can be said of the fit and proper person test, because football often does not even have the debate. It has simplistic reasons for saying, “No, we cannot discuss that.” In this case, the reason is that any such proposal is against European law, so we do not even get to have a detailed discussion. The Premier League could take a detailed look at what the technicalities and intricacies are, and then come to a conclusion—if it had the will to do so and if everyone agreed that the aim is to improve the England team and to have more England-qualified players coming through—but people are not sitting round a table agreeing that there is a need to look into the issue.

Chair: May I ask you a personal question? We are all avid football supporters. I know that you support Manchester City, so have you had to struggle with or start to change your principles on these things because City now have more money than Manchester United?

David Conn: Oh that, I do not really struggle with City’s having more money than Manchester United. It might surprise you to learn that I have found the Abu Dhabi takeover weird, because I began all my work in football investigative journalism feeling that the way in which the game and its finances was organised was wrong.

The game has changed, because the Premier League clubs have been taken over by people who have a view to making huge sums for themselves by floating the clubs on the stock exchange. That is what was happening from the early to mid-1990s, and it instinctively felt wrong to me. On investigation, I learned that it was wrong; it was the first time in English football history that the shareholders/chairmen made serious money out of football. Football had not been something that was treated as a business, whereby people could just invest in it and make money out of it. I used to argue that floating clubs on the stock market was wrong for the clubs. Again, at that time, the Premier League and the clubs said that I was naïve and that I did not understand business. Now, not one club is left on the stock market—they all say that it is the wrong model for a football club.

Mark Hendrick MP: But David, is football not now a fashion accessory for billionaires?

David Conn: Yes, the situation has changed now. Most owners, for example, Abramovich and the Abu Dhabi group, are not looking to make money out of buying the club, although some are, for example, the Glazers, and Hicks and Gillett. The Abu Dhabi people will see the value of their investment grow, but they are not looking to make money of it. Keith Harris, who has done many of the foreign takeover deals, has said that clubs are trophy assets; that is why people are buying them. The trophy asset idea works in different ways for different people.

            Let me return to the Manchester City question. I felt that people were coming into clubs to make money for themselves and that that was totally wrong. That led me on to my journey into how football is financed and organised. One of the things that I subsequently explored started with Francis Lee’s takeover of Manchester City, which seems really homely now. The idea that Frannie Lee took over Manchester City sounds wonderful now; wouldn’t people prefer that compared with it being owned by the ruling family of Abu Dhabi? Frannie and his associates definitely had a plan to buy City cheap, float the club on the stock market and make lots of money for themselves out of the club and people’s loyalty to it, even though I am sure that, among other things, he wanted City to be successful.

I wrote several pieces in The Guardian about Thaksin Shinawatra’s involvement, which was appalling and makes the case for strengthening the fit and proper person test. Although that test is not the answer to all these questions, it needs strengthening. I found it difficult to accept that Thaksin Shinawatra owned my football club. People can have all sorts of issues about Abu Dhabi as a country—it is obviously not a democracy; the royal family made its money when oil was discovered there; and there are human rights issues to address in that country—and it depends how far one wants to go with these things. However, the Abu Dhabi group’s ownership of Manchester City is difficult to object to in terms of the respect that they have for the supporters, the club and its heritage; the curiosity that they have about its history; and the way that they are talking about building up the club on a long-term basis and not just signing everyone in a fantasy football sort of way. Again, that illustrates the contrast between the cosy local ownership of Francis Lee, which I, personally, found unsatisfactory in many ways, and these people, who seem to have a much broader perspective, despite never having been to Manchester before.

Mark Field MP: I want to pick up on an allusion that you made to the broader governance of the game. You rightly said that there is a sense in which football sees itself as a world unto itself. Understandably, as a Conservative, I do not necessarily think it right for politicians to be interfering, but significant amounts of public money, post-Taylor report and so on, have gone into the game. Clearly, this is something that a lot of our constituents feel strongly about. I have always been worried about the blaming of agents, because that has been too easy to do and they have been very useful scapegoats. In reality, clubs have colluded with agents—there has been a range of nefarious financial problems within our game—so do you think that the governance of the game is anything like strong enough? Do you think that there needs to be stronger regulation, not necessarily Government-led regulation? Does the game need a regulator that actually has teeth and respect within the game? Alternatively, do you feel that the free-market approach of clubs—just get out of our hair and we can carry on in this merry old way—will be sustainable?

David Conn: I have always strongly argued that there needs to be stronger governance and regulation of the game. The FA is the governing body of the game and it has not been strong enough. It has been bullied by the Premier League, which has been all-powerful. The situation has changed a little, in that the FA is regaining some of its stature, but I feel that it has always needed to be more robust. It needs to be more of a governing body, and there remains a need for much better, more enlightened and progressive regulation to enable the clubs and the game to be more progressive and enlightened. One of the key issues is how to encourage owners and clubs to be progressive, decent and enlightened—how to get them to treat fans properly, respect the heritage of the game and not land loads of debt onto clubs.

I do not know whether ticket prices come under the specific remit of this inquiry, but they remain a massive issue. Clubs are pricing out young people just to maximise the money they can make now from fans. Now, the average fan is my age; for some reason, 43 is the average age of a Premier League football fan. People who grew up in the 70s and 80s getting in for a quid became completely loyal. They have now grown up and they have just about enough money to go to matches, so the clubs charge whatever they like—40 or 50 quid a ticket.

This has happened to more than one generation of young people; ticket prices have risen during the 16 years since the Premier League was formed in 1992, so two generation of kids coming out of school having basically been priced out. The Premier League fans’ survey documents the fact that only 7 per cent. of fans at Premier League grounds are 16 to 24-year-olds. A few similar surveys were carried out in the 1980s, for example, at Aston Villa and Coventry City—I suppose it is sad to have this sort of information at one’s fingertips, but I have written lots of pieces about it—and the comparative figure was 23, 24 or 25 per cent. We all remember being in crowds of teenagers at games; football was a very important part of socialisation and social inclusion, because everybody went. Football was open to all ages and to all sectors of society, but now it is not.

That is a really important area, but the Premier League has never got to grips with it, despite making all sorts of promises. I would not go so far as to use the word “shameful”, but what happened after it scored its previous television deal, when it got  £2.7 billion over three years, was close. That figure was miles bigger than anyone was anticipating—it was a pleasant shock to the League itself. Richard Caborn said that now that it had all this money coming in from television, surely it could use it to subsidise ticket prices, but it did not do so.

This is purely about market forces: if clubs can fill the grounds, they can charge what they like, whereas if they need to work harder to fill the grounds, they might implement some concessions. It should not be dressed up like that if they believe in social inclusion—they have all sorts of schemes devoted to it, so they should not be excluding young people from the most important event that they host every week. There still needs to be the following: a stronger FA; stronger governance of the game; a more equal distribution of the money; and a less virulently conditioned approach in a number of different areas. We must also deal with the nitty-gritty regulatory bit about agents and legalities.

            Christine Russell MP: My last question to you follows on from what you were saying. One must give credit to some Premier League clubs, which are doing an excellent job on the social inclusion agenda and on tackling racism, and we need to pat them on the back. I have a broad, yet basic, question to ask. You have mentioned clubs perhaps not poaching, but bringing in youngsters in from west Africa and eastern Europe. Isn’t one of the reasons why they are doing that because so many obstacles are put in the way of our young people being able to play football? Shouldn’t the FA be doing more locally to encourage councils to open up their pitches to let youngsters play for free and to dip their hands in their pockets to employ a few football coaches? People face every possible obstacle, from “No ball games here” signs to a lack of affordable, accessible playing facilities. Is that not a relevant issue? It is ridiculously hard to kick a ball around here, whereas that is not the case in Ghana, Ukraine and so on.

            David Conn: It is definitely an issue, but I do not know whether it can be linked to the poaching of kids from elsewhere, because clubs are just going for them.

            Christine Russell MP: Well, I am saying that we are not developing our own youngsters.

            David Conn: I could not agree more, and I am strongly in favour of opening up council sports facilities. Young people get a lot of blame for hanging around, but I always ask: what are they wearing? The answer is that they are wearing a tracksuit and trainers: they are ready to play and to do sport. That is especially true of the boys. Taking part in sport is too expensive for people. I know that local councils are short of money, so the money would have to come from central Government, but if local sports facilities were to cost £2, £3 or £4, that might make a difference. I play 5-a-side with a group of 30-something and 40-something blokes, and we pay £4 each. That does not seem like much to us, but where I live the young kids do not all get together and organise themselves to play sport.

            Mark Hendrick MP: I grew up in Salford and, like you, I am a Man. City fan. I know that facilities need to be provided, but we just used to put two jumpers down in the park to make the goal and if we did not have a football, we would kick a tennis ball around.

David Conn: It is not the answer, but the price of sports facilities is an issue; such a lot could be done for young people and their social inclusion. They could be doing something that they enjoy and that most people regard as wholesome and good fun, as opposed to just hanging about. Given all the money in football and the public money that is available, local community sports facilities are lagging way behind.  

Chair: That shows how high the cost of living is in London, because when three of us play 5-a-side every Tuesday it costs us a fiver, plus 70p to get in.

One thing that has concerned us all since we started our first inquiry four years ago is the growing difference in the resources of the clubs, right through all the organised leagues. Have you thought about bringing in a rule that would restrict clubs’ expenditure on transfers and salaries—all expenses—to the revenue that they bring in from TV subscriptions, the sale of merchandise and gate receipts? That would stop people who have football as a hobby coming into clubs and giving them half a billion pounds to buy players. I know that Manchester City have just bought Robinho, but wouldn’t such a measure stop the growing difference in resources?

David Conn: I think it would. One broader context that should not be ignored—I know that you examined it in your previous report—is the continuing huge gap between the Premier League and the rest. There used to be a system of sharing the money much more evenly between the four divisions of the Football League, but in 1992, some clubs were allowed to break away from that system and keep all the money for themselves. No one has ever managed to claw that money back. Those clubs make a great deal of the money that they spend on community programmes and of the fact that they distribute down, but if parachute payments are taken out, the money involved works out to 6 per cent. of their massive television deal. To flip that figure round, they keep 94 per cent. of that money, so there is a huge gap between the Premier League and the rest.

You are asking whether the clubs should be allowed to spend whatever they like on wages, and that is such a complicated issue. If that expenditure was limited to a percentage of a club’s turnover, the club would clearly not go bust; it would not do a Leeds United. Do we take Abramovich’s money out of that? Do we not allow an owner to throw money in? I would agree with such a proposal, because I do not think that the Abu Dhabi group should take over City and suddenly £30 million to buy Robinho has come from oil in Abu Dhabi—that has nothing to do with Manchester City. I agree that owners should not be coming in and throwing money at clubs.

We could prevent that and say that every club can spend only 60 per cent. of its turnover on wages. That sounds responsible, and clubs would not go bust because they would not be overspending. However, the success of a football club would then be determined directly by how rich it is and how big its stadium is. United would win every time—they would have the most money to spend on wages—Arsenal would have the next highest amount to spend on wages and so on. It is bad enough having to read the Deloitte report, which is just about finances. Would it be satisfactory if one were to read it and to see exactly how the league would be determined the following season? Is there another way, such as the NFL model, which tries to equalise things more, of ensuring a truly equal and exciting competition? That question needs to be taken more seriously, but it has never been properly debated and investigated.

Chair: Thank you very much for giving us the benefit of your expertise and for coming all the way down.           

            Our second witness is Alex Phillips from UEFA. Thank you very much for coming quite a long way to appear before us, Alex. Iain Duncan-Smith secured an Adjournment debate on the six-plus-five formula. There is a slight difference between UEFA and FIFA on that, but perhaps Iain would like to start on that and we will move on to more general stuff afterwards.

Iain Duncan-Smith MP: How strongly does UEFA feel about the failings, which are particularly bad in the Premiership, less so perhaps in the other countries, to employ and use in first-team football home-grown players? Does UEFA feel that that is a problem or that it does not really matter?

            Alex Phillips: I have prepared a short statement, so I would like to deliver that first, if that is okay.

            Chair: Yes, it is.

Alex Phillips: On behalf of UEFA, I thank you for the invitation that you extended to our president, Michel Platini, to participate in this inquiry. I am happy to be present on behalf of UEFA.

I shall begin with two small caveats. First, UEFA will also make a written submission, so should anything I say diverge from that, the written submission will take precedence. Secondly, it is impossible for an organisation such as UEFA to have a policy position on all the different issues covered by the terms of reference of this inquiry of each of its 53 member associations. Therefore, any views that I might express will be my own unless I specifically state that I am outlining the policy position of UEFA.

            I wish to make three main points in this short introduction. First, UEFA’s view is that football is and should be a sport first and a business second; football is not a product. Obviously, people may say that football could happily be both a sport and a business, but what happens if there is a conflict between the sporting objectives and the business objectives? UEFA’s view is that the sporting objective should be given precedence in such cases, and the governance structures of football should reflect that. Football should come first.

            The second point on the governance structures is that our experience across Europe tells us that the only model that really works well is having one empowered governing body to develop and regulate football in each country. Interest groups and competition organisers, such as professional leagues, players’ associations and coaches’ associations, have to co-exist, must be involved and must be consulted on professional football issues, but, as happens with a state system, the governing body must ultimately govern and take the final decision—of course, such decisions have to be taken in a democratic, accountable and transparent way. In many countries, legislation empowers a single governing body to govern.

            My third and final point is that a clear and stable legal framework is essential for good governance in football and in any other sport. On both a European and national level, it is increasingly unclear where sport ends and business begins, and vice versa. That grey area leads to a large number of disputes, often based on competition law, which overburden the judiciary and often end in decisions that are wholly inappropriate for sport being taken. The purpose of competition law, as we understand it, is to give consumers more choice and lower prices; it is not to act as an appeal of last resort to allow athletes, teams or agents who have received sporting sanctions to challenge them.

            UEFA, the governing bodies of the other main European team sports— basketball, volleyball, handball, rugby and so on—and the worldwide sports movement are asking the European Union to provide some clarity in this area. That does not mean asking for an exemption to Community law or asking to be above the law; we are simply asking for guidelines on how the law should apply to sport. Without that guidance, governance will become increasingly difficult for sports bodies of all sizes, in all countries.

            Chair: Thank you very much. Back over to Iain.

Iain Duncan-Smith MP: UEFA’s proposal is for a number of people in a 25-man squad to be club-trained and association-trained players. Let us compare that with FIFA’s position of having “six plus five” inside the squad. Given what Michel Platini has said in the past—he has not pulled his punches in being critical of the Premiership—doesn’t UEFA’s position on this one, and your call for guidance, look a bit weak? Surely UEFA’s role should be to set out a strong position and then campaign to make that position a reality. It should not go seeking guidance from and asking the permission of Commissioners. Is that not the case?

            Alex Phillips: Well, UEFA fully supports and agrees with the objectives of the “six plus five” approach, which is the policy position that was adopted in Sydney. We are exploring all possible means within the limits of the law to achieve those objectives. Four or five years ago, it became clear that there were certain problems in European football—a decline in balance, which can be measured in all sorts of ways; the hoarding of players; declining investment in training; a risk to training systems; a declining identity in clubs; and declining performance of some national teams. Those same problems exist today and FIFA has identified them in respect of its proposal. The situation came to a head in 2003-04, so we decided to look into possible rules in order to address some of those problems.

As any responsible governing body would, we are trying to ensure that our rules are legal, having been under constant challenge in all sorts of jurisdictions on our rules. What does that mean? It means that the rules have to pursue legitimate objectives, and they must be reasonable and proportionate; the home-grown player rule was the outcome of that investigation. It is not a proposal but a fact, because the rule has been implemented in UEFA competition since 2006-07, when it specified four players out of 25. Last season the rule specified six players out of 25 and this season the limit is eight players out of 25. Of those eight, four must be trained by the club, and the other four must be trained either by the club or by another club in the same association. The core of your question is whether that goes far enough, and the answer is that we will have to see how it operates. The European Commission has said that it will examine it again in 2012. My personal opinion, like that of many people, is that it probably does not go far enough to address all those problems that I listed.

What are we doing? We are examining other additional—or, possibly, alternative—measures to achieve the same objectives. I shall give you a couple of examples, and I repeat that our provisions have to be legal. One specific proposal under discussion by professional football at the European level is to stop international transfers of players under the age of 18, with a small range of exceptions. That could achieve similar outcomes to the six-plus-five rule, but is more likely to be legally acceptable. A second proposal is to increase stability for young players up to the age of 18—and, ideally, up to the age of 21—so that they can stay with the clubs that have trained them. Why do we propose that? Because in a large number of European countries, clubs that are historically good at training young players are seeing those players disappear at an increasingly young age. People running a club and seeing their best talent disappearing at an increasingly young age with no proper recompense ask themselves what the point is of running an academy or a training centre. They could just go to Africa or somewhere it is much cheaper to take young players from and not bother training players at all. Those are two proposals that we are examining and that we believe could fly legally, but they are still under discussion. That is a very long answer, but I hope it is helpful.

Iain Duncan-Smith MP: Yes. The only thing that I wish to press you on is that your measurement of squads is very misleading. When I examined this matter the other day, I found that there is a big difference between the people who make it to the bench and those in the squad. There are people in the squad who will hardly ever play; they will play only in exceptional circumstances when a load of players are injured, ill and so on. It does not happen completely like that, but generally in the bigger clubs the squad is not representative of what actually goes on to the pitch to play. Surely the real way of getting at the clubs to make this proposal effective is to make it about a proportion of the players who get on the pitch—the team bench is the key, as per every match. I would not use your terminology, because the issue here is about players who are eligible to play for their country. The Premiership’s failure in that regard is the one startling issue that is constantly batted around here. The Premiership has the worst record of any major league in Europe on that. Those who are on the bench would be the key definition. Why does UEFA not want to focus on the bench, rather than the squad?

            Alex Phillips: That very good question was discussed in detail by all the different stakeholders involved in the consultation process that led to the creation of the rule—that includes associations, clubs, players, leagues and fans from across Europe. This does not have to be about the bench; it could be about the starting 11 or minutes played. We could use many different definitions. In the end, it was felt that the best and most legal way to achieve our objectives was to make provision in respect of a certain number in a squad, rather than a certain number on the bench or in the starting 11. If you, the politicians, are prepared to change European law to say that sport is different and that it is not like selling baked beans or shoes, and that this is how it is different, we could have a framework to introduce changes.

            Iain Duncan-Smith MP: I shall press you a bit more on this, because a lot of the comments one reads about the Premier League are pretty strong. I agree with all of them, because the Premiership is a disaster in the sense that it is so obsessed with the money side that it has completely lost sight of any obligation to produce any players for any of the British sides. The figures bear that out, because each year they appear to be getting worse. You say it is up to politicians, but they are not going to do anything about this until UEFA bangs on their door saying, “We must have a law change. We really need this.” It would then have to sit down with politicians. The general sense now is that UEFA does not really want to go down that road, and, as a result, there are differences between UEFA and FIFA.

            Alex Phillips: I do not think there is a difference between UEFA and FIFA on what we want to achieve. UEFA has been banging on the door for a number of years asking for a proper definition of why sport is different, asking why it is not just any other business and asking why the US—the most free market country in the world—has a detailed series of regulations that apply to sport but not to other businesses. We do not have such a system in Europe or in the UK. When the UK joined the European Community, certain commitments were made and certain fundamental principles agreed—freedoms in respect of workers and so on. Until those fundamental principles are changed, we are stuck within the legal framework that we have.

            Iain Duncan-Smith: Could you make it clear to us, right now, whether UEFA’s official position is that it would like to see the rules changed so that it could impose correct limits for clubs playing in all UEFA competitions that would ensure that home-grown players—people eligible to play for the national side—could play? Is UEFA’s official position that it wants the relevant laws changed?

            Alex Phillips: UEFA’s position is that the problems that I have outlined need to be addressed, as do others, and that a range of measures are available. We do not believe in focusing solely on a single measure. A range of measures should be permitted through a series of guidelines. Those need to be drawn up by the European Commission and the sports movement—not only football, but the other sports—to define why and where sport is different. Within that list of subjects, which would include all sorts of different things—disciplinary sanctions, the central marketing of rights and so on—one of the topics would be nationality issues. Such issues would include the composition of national teams. UEFA has to focus on the big picture, rather than on one issue.

            Iain Duncan-Smith MP: I hear everything that you are saying, and I am aware that lots of issues are involved and we could spend hours discussing them. However, we must deal with one specific issue: the representation of people who are eligible to play for the national side on the club benches. All I want to elicit during this wonderful opportunity that I have to question you, as the representative of UEFA, here in the Houses of Parliament, is confirmation that UEFA is prepared for, and wishes for, any rules that stand in the way of making those decisions to be changed, where necessary. That is all you need to say to us. That, of itself, would send a powerful message.

            Alex Phillips: I have told you UEFA’s policy position; the FIFA congress position was also agreed by UEFA. We agree with the objectives of the six-plus-five rule, which, as you say, is a nationality-based rule, within the limits of the law. We agreed to explore all possible means of achieving those objectives within the limits of the law. The rule is a means to an end; it is not an end in itself. It is an attempt to achieve certain policy goals, and we agreed with the aim of achieving them.

            Iain Duncan-Smith: So you agree with it?

            Alex Phillips: I have stated UEFA’s policy position.

            Mark Field MP: I want to know what you are saying the UEFA policy is. A cynic might suggest that UEFA is doing a lot of grandstanding to keep the smaller nations happy by talking about this nationality issue while realising that the power lies with the larger nations within the UEFA family. What really is the policy? You have suggested that it is all about law, but some of this law has been tested, not least the Bosman ruling, which, of course, opened the floodgates to many of these issues. I am not clear as to what UEFA’s underlying policy is on players. We talk about the various rules that have been put in place, but what underpins this idea? Is it the idea that there should be a level playing field? Is it the idea that Bosnia-Herzegovina should ensure that all of its players remain in their home country so that the national team can thrive?

            Chair: May I ask you something before you answer that, Alex? Is it not true that in the context of what we are discussing UEFA is not a governing body like FIFA? Am I right in saying that the nations are all affiliated to FIFA separately and UEFA has the governorship of the European competitions? I want to ensure that we understand what power UEFA has.

            Alex Phillips: UEFA was created by the European associations to be the governing body of European football. FIFA is the governing body of world football, and the FA is the governing body of English football. The same structure applies in many sports, whereby there is a national governing body, a regional or continental governing body and a worldwide governing body. Tasks are divided between those organisations, and that division must be decided upon by the organisations themselves. That is what is in UEFA’s statutes, so I hope that answers your question.

            Why else does UEFA exist? It also exists to organise competitions. We organise 15 competitions of all different types: amateur; professional; men’s; women’s: youth and so on. We also exist to be a governing body and so to regulate, promote and develop football across Europe. How that is done is, to some degree, within the discretion of UEFA, although, more importantly, the member associations and the other stakeholders—the leagues, the clubs, the players and so on—have a say. We have a legitimate interest in addressing some of the problems—the decreasing balance; the hoarding of players; the decline of national teams. How we do that is expressed in our rules and regulations and in our competitions.

Once upon a time, UEFA had a rule that said that only five foreign players could play in the starting 11 in UEFA club competitions, but that rule was abolished after the Bosman case. We have experience of implementing rules that are based on nationality. That was the policy position at the time, but it was proved to be illegal. Since then, along with other sports, which have also suffered from that decision and others, we have examined ways to try to improve our sport across Europe, within the limits of the law. That was what brought us to the home-grown player rule and to a club licensing system, which applies across the whole of Europe. It is what is now bringing us to the proposals to ensure that young players stay with their training clubs to give them stability during their training period. That is the position of UEFA. On specific areas, such as the ones listed in the terms of reference for this inquiry, I would be happy to give you the further position.  

Mark Hendrick MP: Thanks very much, Alex. A number of interesting points relating to nationality have been made during this discussion, a principal one being whether or not what nationality players are is UEFA’s business. The Bosman case got UEFA into hot water when the rules about the number of foreign nationals playing in a team came up, and it had a big impact on the number of foreign players playing in the Premier League. UEFA tries to get round it with the home-grown player rule, which does not look at nationality but relies on the fact that home-grown players are more likely to be from the nation in which the league is operating. That is a good and well intended idea, but clearly the trafficking of young players from abroad has got around it to some extent, as has been demonstrated by one or two Premier League clubs.

Trying to shift that a little, by shifting the age when players can be brought in, in that way, under the home-grown rule up to 18 or 21 is another step in the right direction. Do you see it as UEFA’s job to determine how leagues develop their national players so that they are eligible to play for their national teams or is that none of your business and it is down to the politicians, be that in the European Parliament, the Commission or the Council of Ministers?

            Alex Phillips: Well, it is UEFA’s business to develop football across Europe, but our approach is generally to delegate; it is an approach of subsidiarity. Let me give two examples, the first of which relates to the home-grown player rule. No country is obliged to implement this rule. It has not been implemented in England on a national level. UEFA implements it for its competitions on a European level; any club that wants to play in a UEFA competition has to comply with the rules of its competitions. Individual countries may have more stringent rules, and they are free to implement them. Outside the European Union there are nationality rules that apply; other more stringent forms of home-grown player rules have been implemented. There are obligations on players to sign their first professional contract with their training club. Such mechanisms evolve in different countries according to their history and culture. As a general principle, we would not seek to impose rules on national football bodies, and I cannot think of examples where we have done so in the past.

The second example relates to the club licensing system. Clubs need a licence to play in UEFA competitions. Some countries have also implemented club licensing systems at the national level because they want to improve governance nationally. They are not obliged to implement such systems and we do not force them to do so. The question of whether this is UEFA’s business does not really arise. Obviously, we try to stimulate good practice. If we think that there is good practice in one country, for example stadium management in the UK, we try to spread it to other countries. We try to develop and enable good practice.

            Mark Hendrick MP: So, in response to Iain’s question about you campaigning for what you want and what UEFA’s position is, you are saying that you want to give as much decision making to the subsidiary authorities in the different countries and if there are any legal changes and changes to the framework, you see those as coming from European law rather than UEFA.

            Alex Phillips: We would like national associations to have the power to implement the rules that they want. If a national association wants to implement a home-grown player rule, we want it to know that it will not be challenged under European law. We are going to implement it for our competitions anyway. As a principle, we have never adopted an interventionist approach at a national level, nor do we have any plans to do so. At the same time, we must take care to ensure that football across Europe as a whole is not developing in an unbalanced way. We must ensure that it develops healthily across the continent.

            Christine Russell MP: May I follow up that point by harking back to our explorations with David Conn on the excessive debt levels of some clubs? There is a correlation between those debt levels and buying success on the playing field. We need only consider the successes of Liverpool and Man. Utd in Europe over the past few years to see that. Does UEFA have a role in making recommendations or giving guidance on the financial management of individual clubs? Does UEFA have any sanctions? Is there anything it can do if clubs rack up these levels of debts?

            Alex Phillips: Sanctions are in place to deal with clubs that do not fulfil financial criteria as part of the UEFA club licensing system.

Christine Russell MP: Can you elaborate on that?

            Alex Phillips: Well, 10 years ago there was a discussion about salary caps in the media and in European football in general. UEFA created a taskforce to examine that, and the outcome was that implementing a salary cap in European football was not possible at that time, however, a club licensing system could be a good mechanism to help improve the financial position of European football. Six years later, after much consultation and elaboration, a club licensing system was introduced for clubs participating in the Champions League and the UEFA cup. That system has sporting, personnel, legal, stadia and financial requirements, so clubs have to meet certain financial criteria. Believe it or not, in some parts of Europe some clubs did not even have accounts, never mind audited ones. Raising standards in the different parts of Europe takes time. Now all clubs in our competitions have audited accounts that have to meet certain criteria.

That was the first version of the club licensing system, which has been upgraded for this season and involves some more stringent financial criteria. That is the backdrop. Every season there are clubs that qualify—I do not believe that this has so far happened to an English club—sportingly, in their national championship or national cup but are denied a licence to enter UEFA competition because they have not fulfilled those criteria, which include the financial criteria.

            Iain Duncan-Smith MP: I was looking at what Platini said a while ago, when he was quite rude about the Premiership. As I recall it, the cost of the Premiership’s salary base last season was about a third higher than that of the next country, Italy, whose base was, again, slightly higher than the others. There is a huge difference between what the Premiership pays in salaries and what others pay; they are more grouped together. Do you agree with him that the huge level of salaries paid out in the Premiership has distorted football in Europe? Perhaps I ought to quote what he said, just in case you were worried that you were stumbling across it. He said that it has distorted the balance of power in European football, tipping the odds permanently in favour of the richest English clubs. Is that UEFA’s official position or his personal position? Can the two be separated?

            Alex Phillips: If the president of UEFA is asked a question by a journalist, he will give an answer, in the same way as the Prime Minister will give an answer to a journalist, although it may not be the Government’s position.

            Iain Duncan-Smith MP: No, it is the official position of the Government if the Prime Minister gives an answer to a journalist. He may regret it, but it is the official position of the Government.

Alex Phillips: You just have to look at the numbers in the Deloitte report—I used to produce them, because I worked there for four years doing European analysis—to see that they are going in a certain direction. One need only look at the first graph as regards turnover and wages to see that, because the line is more or less the same. Looking at wages alone is not the only answer. Spain’s tax rate of about 23 per cent. is much lower than that of some other countries, so the wages figure alone is not enough to make a proper judgment. Having said that, wage levels are clearly higher in England now, and they were higher in Italy in the 1980s. Whether that has a detrimental effect on European football as a whole has to be judged over time, because these things come in phases. Five years ago, three Italian teams were in the semi-finals of the Champions League. Three years before that, three Spanish teams were in the semi-finals of the Champions League. It is hard to make that systematic link between cause and effect—between expenditure on salaries and on-field performance. One country has to have the highest expenditure on salaries in Europe, and that country happens to be England at the moment.

            Iain Duncan-Smith MP: So the answer to my question is that Platini is right to say that this has distorted the balance of power in European football. Do you agree with your president?

            Alex Phillips: I would need to study the figures and discuss this within the context of the comments that he was making.   

            Iain Duncan-Smith MP: So, what you are saying is that he answers questions without necessarily making reference to the official position of UEFA.

            Alex Phillips:  I am not saying that.

            Iain Duncan-Smith MP: Believe it or not, I am not trying to trip you up because I happen to agree with him. My concern is that we get a strong comment from him, but UEFA’s position seems somewhat different. Do you ever match these two up?

            Alex Phillips: He is a politician. He speaks openly—

            Iain Duncan-Smith MP: He is not a politician, if you don’t mind my saying.

            Alex Phillips: I was about to finish that sentence by saying that that is what makes him quite different from many politicians. He is a football fan first and foremost. He has no need for money or fame beyond that which he already has. He is genuinely motivated by football, so he expresses opinions, although they may not always have been discussed or agreed by the Congress or the Executive Committee—the decision-making bodies. He has a decision-making power as the President—

            Chair: I don’t mean to get you off the hook, but I must begin to draw this session to an end. Iain said that he agrees with Mr. Platini, so please give him our very best wishes. It is obvious from his comments that he cares about the whole of football, including grass-roots football and football as we all look upon it. We probably agree with him that it is all the decision making in between that makes it difficult.

May I finish by asking a particular question? We asked David Conn whether it would not be better to even up the competition in English football. Would it not be better to restrict clubs’ expenditure on salaries, transfers and so on to the revenue they earn, rather than have benefactors come in and buy the best players in the world by giving a gift to a club? That is one thing that corrupts the competition. One other way of addressing this matter would be through a contribution from UEFA, because the top four get into the Champions League every season and it is difficult for other clubs to get into that top four, partly because of the heady prize money that UEFA gives the clubs. We understand that each of the clubs that get into the very final stages receives £30 million. That corrupts the competition the very next season in the Premiership. What are the pressures on UEFA? Could some of that money be given to grass-roots football, rather than given straight back to the clubs that get into the final stages?

Alex Phillips: An amount of money from the Champions League is issued to the top division professional clubs that do not get into the Champions League specifically for youth development. Some clubs in the Premier League receive 50 per cent. of the cost of their academy from the Champions League. Perhaps that is not well communicated, but it is a fact and we are talking about some €43 million a year. So, some redistribution takes place from the Champions League towards the clubs that are not in the 32 in the final group stage.

Secondly, it is easy to blame the Champions League, Europe or UEFA for national problems. Every country does that, but the fact is that the figures in the Deloitte report show that the financial returns from the Champions League are a relatively small proportion of the revenue of the clubs. Money from the Champions League accounts for between 10 and 20 per cent. of the revenue of the big four in the Premier League. Even before one takes the Champions League into account, those clubs are earning, on average, three times as much as the other 16 clubs in the Premier League. The fact that they receive Champions League money on top of that exacerbates the situation, but it is not the core problem. Revenue distribution does affect competitive balance, but it is only one factor among many, and it is certainly not the sole solution.

We face a more difficult problem in that we have to give balance on the national level and the European level. If we give more money to Rosenborg to help them to compete with Manchester United, the other Norwegian clubs would say that we are unbalancing their national competition because the same process of concentration is replicating itself on the national level. We have to find a balance between the two levels. We are in a pyramid system involving national competition and European competition, and we have to find a balance between the two.

Chair: Thank you very much for coming all this way to talk to us, Alex. We will be putting your views into our report. We are not trying to tell the game of football how to run itself. I hope that when our report is produced, which will probably be in February, the media will play the biggest part in carrying on the debate so that we can continue to look after football, because we all care about it.

            Our third witness is Kevin McCabe. Thank you very much for coming, Kevin. I know that you have strong views, particularly on one issue to do with football governance. It is worth my mentioning that as this is an all-party group, not a Select Committee, you have no parliamentary privilege, so anything you say is open for other people to complain seriously about. We have met before, and you stimulated us to give our time again to examine football four years after the last report—somebody else also pushed us. We give a lot of our time, in addition to performing our ordinary parliamentary duties, and to a certain extent, we tend personally to suffer the expenses.

I know that you are busy man, being involved not only in football, but in many other things. I believe that you would like to make an opening statement. I know that you have your own particular interest in football governance—or the lack of it, as you may describe it—but we would like to get your views on, and hear about your experience of, the other issues that you have heard us discuss today.

            Kevin McCabe: Thank you for inviting me along. I suppose that the discussion would be more specialised if I were to address you on what I consider to be the lack of adequate governance at FA Premier League level. I have no comment to make specifically about the Football Association or Football League. The experience from which my own club has suffered demonstrates clearly that a reorganisation and restructure is required to ensure that the nation’s and the world’s principal sport—football—is governed in a much better and fairer way at its very top level.

Some people may not know too much about Sheffield United. I would not say we are a typical club, but we are a big club that can justifiably say that we can hold our own among the top 20 in the nation. Historically, we have always played the higher percentage of our games in the top division. After a barren period of 12 or 13 seasons, when we worked hard and created a new business model that suits our pride and desire to serve the community and the city of Sheffield, we got back into the Premier League at the end of season 2005-06. Our relegation from that league was, in many ways, due to the inadequacies and lack of proper governance of the sport for which the FA Premier League had responsibility. That is a most firm belief of mine having been, at the end of the season, the innocent party who suffered as a result of that governance.

Although the party that breached the rules should not have done so, on four or five occasions it was undoubtedly within the powers of the FA Premier League, had it been properly governed, to have righted the wrong—I think that is the right expression—and to have ensured that the sporting injustice that occurred was properly compensated. I am not talking about in moneys and terms, because Sheffield United is a club that believes in the sport rather than purely in the commercial side of the business of sport. My opening comment does not go into details of our recent arbitration with West Ham, which is still in process, but it could have been avoided. If it had have been avoided, a sporting injustice would not have seen Sheffield United relegated in May 2007.

Chair: Are we able to ask you questions in detail, or would you be unable to answer them because negotiations are going on?

Kevin McCabe: If I do not feel it is appropriate to answer because of the arbitration process, I shall not answer.

Chair: So we can ask you the questions and you can refuse to answer them if you wish. Mark will ask the first one.

Mark Field MP: I have a lot of sympathy with the situation in which you have found yourself. What are Sheffield United looking for now? Is it financial recompense? Could the rectification of the situation involve Sheffield United’s restoration to the Premier League, even though we are 18 months on from the original situation? What are you realistically seeking to do to try to turn back the clock? And how are you looking forward from the club’s point of view?

Kevin McCabe: Regrettably, Mark, I do not think that we can turn back the clock. A season and a half has gone by since our relegation and it would be difficult, although not impossible, to reinstate us. We have been determined not to be pushed aside over what we clearly thought were principles behind the sporting injustice. Thereafter, we have tried to address the monetary loss associated with relegation, and we are now going through the process of obtaining financial compensation.

Mark Field MP: I wish to ask you about the related matter of the practical operation of the parachute payments system. I am not sure whether you were involved with the club back in the early 1990s, which was the previous occasion on which you dropped out of the Premiership. Do you work on the presumption that you are going to get promoted again within a certain period? How does the situation affect the salary relationship with players and all the other areas, including hospitality? How do you go about utilising the two years of the parachute payment, while looking further into the future?

Kevin McCabe: It is difficult, and a lot of this depends on the aims and aspirations of the football club that receives the parachute payments. In their forward planning, clubs need to recognise that they can get relegated. One of the key ingredients of the FA Premier League, and, indeed, of the Football League, is that it is a points-based competition. We only ever play for one thing every week between August and May—points. Success and failure comes down to points earned. If a club gets relegated, in order to achieve success again it has to climb out of the Championship, which is a tough league.

Clubs have to budget carefully, but in sport that is very difficult. You may have players on Premiership wages because they got you there or because you purchased players when you were in the Premiership. You may have conditions in the contracts of those self-same players that reduce salaries and the like when you get relegated, but this is professional sport and there is no finer demotivator of footballers than saying, “I am sorry lads, you have gone from X to Y.” You may be receiving parachute payments and your forward budgeting may take account of the possibility of relegation, because that is part of the game and of its excitement, but they do not really compensate. If you deduct the amount that you are legally able to deduct from players, you get demotivated players and you may get relegated again, rather than achieving your aim and ambition of getting promoted back again. There is a fine balance to be struck.

Mark Field MP: I do not want you to give away any commercially confidential information, but what sort of dent does being out of the Premiership make on hospitality?

Kevin McCabe: Heaps. It is very damaging. We term Sheffield United a big club—it gets 25,000-plus attendances in the Championship and 31,500 in the Premiership—but when you get relegated there is not the same demand for boxes. The price of executive boxes or executive dining pretty much halves. People take advantage of your predicament; you have to take advantage of the fact that they will still support you, but it costs money.

Iain Duncan-Smith MP: May I take you back through the process of the inquiry? I agree with Mark, because many of us have a lot of sympathy for the predicament in which Sheffield United found themselves at the end. I am sure this is the same for most of us round this table, but I, for one, have never fully understood how these incredibly complicated calculations about Tevez ever worked. Given that it has taken Manchester United ages to unravel them and we are still not certain that they have fully unravelled all of this process, it makes things obscure. The big decision taken was not to dock West Ham points, but to fine them. Do you think that everybody who gave evidence and everyone involved in trying to establish the circumstances of this case subsequently was as open and clear as they could and should have been, or do you think that, at any stage, some of the evidence about the Tevez affair was carefully hidden away from the scrutiny that was needed at that time, leading to the judgment that they were right not to have docked West Ham points? Do you feel in any way shortchanged because there is evidence that has not yet emerged as it should have done?

Kevin McCabe: One questions why evidence that has subsequently been forthcoming in our arbitration with West Ham was not forthcoming at the time of the first inquiry, when the FAPL appointed an independent commission. If certain witnesses had been asked to attend and make their own statements, I suspect that different outcomes would have arisen from the first independent commission. I am always perplexed as to why that was not the case. I am also perplexed as to why the Premier League, which brought the inquiry against West Ham—when they pleaded guilty to the breach of the rules—did not make every effort to ensure that the panel recognised that this is a points-based competition and therefore the rule breach committed by West Ham on the field should have been a points-deductable offence. I am perplexed as to why, in so many respects, the panel was encouraged to instigate a financial penalty and not a points deduction. As we have got into the case, as Sheffield United has needed to do, we have found out more that perplexed us ever further as to why the FA Premier League did not properly govern this breach of rules at the very early stage.

Iain Duncan-Smith MP: I just want to get this clear in my mind. If the inquiry into the decision was to be held again, do you feel that had the evidence been there and had the Premiership been open as to its decision, with the possibility of a points deduction being on the table, that decision would have been about points deductions?

Kevin McCabe: I can only use the word “might”. With that evidence, the independent commission might well have come to a different conclusion: a points deduction rather than a financial penalty.

            Iain Duncan-Smith MP: That has cost you significantly as a club.

            Kevin McCabe: It has cost us our position in the Premier League; we had fought for 12 or 13 seasons to get back to the top flight and to lose our place on a sporting injustice makes this not about financial compensation; I am a great believer in sport and the roots of football, so we have had no alternative but to seek financial compensation. If the injustice had been properly put to rights, we would have been reinstated.

            Iain Duncan-Smith MP: Why do you think the Premiership behaved like this throughout this process? Why has it not been so keen to get to the nub of the truth and then to apply sanctions, as necessary, against the particular club?

Kevin McCabe: I have had to deal with the FA Premier League as a result of this dispute, and my observation is that it is undermanaged; it hides behind setting up an independent commission to look towards penalising a club that has breached the rules and believes that that alleviates its responsibility to govern the game. It is a corporation earning £1 billion-plus in revenue. One gives credit to the Premier League’s commercial prowess, but it does not seem to have balanced that against the competitive nature of football—the sport that it governs. Those are perhaps some of the reasons why we have ended up where we are. We have eventually had to fight the club that committed the breach of rules, rather than get justice through the governing body and the league in which we play—the FAPL.

Iain Duncan-Smith MP: Do you think that it was keen not to arrive at a decision that would have led to a points deduction? Was that an issue for the Premier League? Alternatively, do you think that it was open to such a possibility? Do you think that it deliberately made its mind up before it started the process? Was the last thing that it wanted to do to end up with West Ham going down because of a points deduction?

            Kevin McCabe: Obviously, we were not at the independent commission. The world of football probably gossips more than Parliament, so there was always a recognition that West Ham would be deducted points because the world of football recognised what had happened by then. It is only subsequently, having read the minutes of the hearing, that one finds that the presentation by the FAPL to make sure that the panel were aware of the severity of the breach of rules, which influenced the competitive balance of the field of play, should have pushed to the panel to a points deduction not a financial penalty. Some 20-odd clubs are in the Premiership, so the FAPL has a duty to represent all of them and the balance between them. The decision could only have been a points deduction, because that is all we ever play for. It has always perplexed me as to why that was not the principal point addressed to the panel of the independent commission—this is a points-based competition, so the penalty for those who have breached the rules must surely be a points deduction.

            Mark Field MP: Sheffield United had struggled back up into the Premiership for the first time in 13 years. You may feel that this is a question that you do not necessarily want to answer, but if Everton, Aston Villa or a club that had been more regularly in the Premiership had been in your position, do you think that the Premiership might have acted somewhat differently?

            Kevin McCabe: Yes.

            Chair: Do you know whether Manchester United have paid any money for Tevez yet? Have they paid a transfer fee to anybody?

            Kevin McCabe: It is very convoluted. There was a transfer of Carlos Tevez to Manchester United and a fee was paid, but…

            Mark Hendrick MP: Although we have not been introduced, Kevin, I have seen you several times at Deepdale for the North End games, so welcome to Westminster. One of the things that we have been discussing today is the way in which global finance and globalisation is affecting the game. I note that you have investments in clubs in Belgium, Brazil, Australia, China and Hungary. Much of our discussion revolved around how English millionaires used to finance the game, but now foreign billionaires do. Do you see Sheffield United getting much more into the global business of football? How much do you feel that football has been taken away from the fans, in particular the ones who walk through the turnstiles as opposed to those who watch football as a global product on the TV? What are you doing to address this in terms of your interest in clubs, how you see that interest and corporate social responsibility towards those fans?

            Kevin McCabe: As a kid who is born across the street from Bramall Lane, I understand the culture of the Sheffield United supporter and the city the club represents. There are two clubs in Sheffield, but I shall not mention the other one. I understand the importance to the communities that resides within the confines of the area of the stadium, the area of our academy and so on. We have a social responsibility to employ and to work hard to consult. We must ensure that whenever we create a new job at Bramall Lane or a new job associated with our academy, those in the vicinity have the opportunity to work for us. We take that very seriously, and we are very proud of our roots. In other words, we do not wish to lose the history and heritage of Sheffield United.

Because of how football has evolved over the past 20 years—since the evolution of the Premier League and slightly before—we also recognise that if we want to compete at the best level, which is the Premier League, we cannot ignore the benefits of some of the continental players who have set our game alight in the Premier League and made successful the privileged top four or six. That is one of the reasons for taking part of our football infrastructure abroad. We not talking all about investments but about co-operation reached with clubs in Brazil and Australia, and investments in clubs in Europe—only one club—and in China. We are deliberately saying that although we cannot afford to pay whatever Manchester City paid for Robinho, we believe that an affiliation with a club in Australia or Hungary would provide an opportunity to nurture one or two youngsters who could then come across to play for Sheffield United, if they are qualified.

One of our wings at Sheffield United deals with ensuring that we can attempt to match the best and be a top 10 club in the Premier League, but we recognise that we cannot do it by spending £30 million on a player. If we follow our approach, we will remain sure of what we come from and what we—the people who are responsible for managing and owning the club—have to leave as a legacy so that it continues on as a top-class football club.

            Mark Hendrick MP: What about supporter involvement and the fans?

            Kevin McCabe: On supporters’ clubs, it is, in some respects, disappointing that we don’t get that many supporters who join the club, but we have a great affiliation with two supporters’ clubs. We are in contact with supporters generally, and the club recognises that Sheffield is not the UK’s wealthiest city so our desire is to ensure that a big stadium of 33,000 is as full as it can be. We look at pricing initiatives relating to tickets for fans who sit in the more comfortable seats, we target people for family tickets, and we have special initiatives for children on certain match days when we know that the opposing team will not bring many supporters. We are always cognisant of the fact that we represent a city, a community and supporters, and we do our utmost to price accordingly. We cannot charge what others may be able to charge in London or Manchester.

            Mark Hendrick MP: We have been discussing the governance of football and of clubs. What input and what democratisation can fans brings to that process in terms of decision making at the club?

            Kevin McCabe: Again, it is a case of talking to fans. I have colleagues at Bramall Lane during the week, because many fans congregate around the club or the academy where the players train every day. We listen to them—it is as simple as that. Our board meetings have a section when we debate what is right for the community and the supporter. We pick up from that how we should change things. We have to listen to complaints, and I assure you that football clubs receive many complaints. Football clubs are really owned and controlled by supporters, not by conventional corporate owners. We do not overlook them, although we cannot oblige and comply with some of the requests.

            Mark Hendrick MP: Would you allow the fans to elect a representative on your board?

Kevin McCabe: I suppose that has been a topic for discussion. We have not done it at Sheffield United. I can say to every fan that the board already contains fans. We do not have an international board; we are already fans.

            Mark Hendrick MP: We have been examining the contrast between owners of clubs who have been more interested in the business and others who have been more interested in the heritage, history and tradition of the club.

            Kevin McCabe: Well, that’s us; we are interested in history, heritage, making the club better and ensuring that is passed on. We are fans on the board, so we pretty much understand.

            Chair: Before I ask Christine to come in, may I point out that the fans at Middlesbrough chant Steve Gibson’s name at every game? They understand that he is a local man who cares as much as they do. I understand how supporters feel and I hope that your supporters at Sheffield United have the same regard for you as Middlesbrough’s do for Steve Gibson. We have too much to worry about with those who have come into the game, no matter where from, for money rather than to look after the club.

            Kevin McCabe: My wife doesn’t have that regard; she shouts sack the board.

            Christine Russell MP: I was going to ask how you go about recruiting young players. I think that you have probably answered that in reply to Mark’s question, although you might want to expand on that. How many foreign players do you have in your lead squad?  What problems would you have if either FIFA’s six-plus-five proposal or the alternative UEFA proposal was introduced? What impact would that have?

            Kevin McCabe: Oddly enough, it would have a positive impact on Sheffield United. As I have said, we have gone international in recognition of our desire to be a top 10 Premier League club. That is a clear aim and aspiration. If the rules were changed so that clubs had to have a certain, high percentage of local lads—by local, I mean United Kingdom nationals—that would suit us down to the ground, because we have a top-class football infrastructure running from the age of six through to professional level. I would love to believe that it could occur, but I am not sure how it would be achieved.

            Chair: You may have heard me ask David Conn and Alex Phillips about a concern, particularly in our report four years ago, about growing inequality and therefore the damaging of fair competition. I asked about the theory that if clubs could spend only their revenue on players’ salaries and wages, that would prevent benefactors from coming in and piling half a billion pounds into buying players such as Robinho. Could you comment on that and on the other issues of inequality?

We have always understood—this has always been the case since I have been watching the game—that the clubs from big cities have bigger crowds and therefore have always won more trophies than clubs from smaller cities. Sheffield is divided between two clubs, so the supporters have been divided between them, because I know that they do not support both sides—I know that from my experience of the supporters in this place. Even though you have a very successful company—you are a very successful businessman—I am sure that you want football to be played in as even a competition as possible. What do you feel about the growing inequalities? How should we combat them?

            Kevin McCabe: Sheffield United are back in the Championship. Sadly, when we are in the Premiership, we go into games against Arsenal, Manchester United, Chelsea, Liverpool and so on knowing that we are going to lose. That is sad for football, is it not? That was not the case when Sheffield United played those same teams 20 or 25 years ago, when the difference between the teams was narrow. Manchester United were still built on local talent or youngsters from Northern Ireland, such as Georgie Best, who had been with them since the age of 16. It was a much more level playing field then. In our most recent season in the Premiership, we did not expect to win those games. In the Championship we go into every game knowing that we can win, whether we are playing a team near the bottom such as—

            Mark Field MP: Charlton, Barnsley or Nottingham Forest.

            Kevin McCabe: Any of those teams. We played Doncaster Rovers a month ago. I didn’t go, but my son Simon went and he tells me that we were lucky to win. Every game is competitive, and that is what we desire as fans. The games have tension, emotion and real competition and you are never sure who is going to win. If a system could be devised to reflect what was around 25 or 30 years ago, when an Ipswich Town or a Blackburn Rovers, Aston Villa, Derby County or Nottingham Forest won the top division, it would be great. I do not know how that can be achieved, because in life, in business and even in sport it is difficult to buck the market.

That is the dilemma. How can we put in place a structure that would work? In Australia, where Sheffield United has an affiliation with a club, a salary cap is in place. Clubs are allowed two marquee players—if someone sponsors the player they can have a special player that may cost half a million pound a year, whereas the other players may earn £50,000 a year. America’s system is not dissimilar. It is very difficult for the country that instigated football and has seen it grow so immensely over 120 years to change. If we have decided that this is the right way to go and blended international skills in this top league, and also in the Championship—we must have four or five players who are non-UK and/or Irish—it is difficult to adapt and change the situation. I do not know how we do that.

            Chair: I wish I knew which journalist said it, but because of the growing inequalities someone wrote that we now have the Premiership, the Championship, the sinking ship and the abandoned ship. That highlights the problems that we face nowadays. Our previous report recommended that the TV receipts should be shared out slightly differently. Instead a difference of about £250,000 between each place in the Premiership, the money should be shared out more equally. I asked you specifically about whether clubs should be restricted to spending merely their revenue. That would still benefit Manchester United, Arsenal and Liverpool against the rest. But at least in the old days, when they were the only inequalities, Nottingham Forest and Derby still had a chance to win, whereas now a club such as Manchester City can buy the best players in the world just like that, and that tips the balance further and further away. If Sheffield United were playing other clubs in the Premiership and they could spend only the money they took, you would always finish second to Manchester United but you would not get beaten every time. Do you think that is one way of preventing inequality from reaching a ridiculous extent?

            Kevin McCabe: If you could do it and if you based things on a percentage of revenue. But Sheffield United have revenue that does not directly emanate from what happens on match days at Bramall Lane; we have the biggest quantum banking suites in Sheffield; we open a brand new 160-bed hotel next week, which will generate a lot of revenue. Would that revenue count towards what we could expend on players? It is difficult to come up with a formula that suits all clubs.

            Chair: I would include hospitality, prize money for winning championships, TV receipts and so on in the revenue. The gifts provided by Abramovich and the new Manchester City owners can tip the balance completely in one direction, because people cannot compete against them. Chelsea have two elevens that they could put out every week and beat most sides.

            Mark Hendrick MP: May I ask Alan’s question the other way round? Alan has called it gifts, but I would call it new investment. I have watched 40 years of purgatory at Manchester City, so it is welcome investment. Are you opposed to that type of investment?

            Kevin McCabe: I cannot be opposed to that. I am not considering the recent example of Manchester City, where most of us in the game think an obscure amount of money has been paid for the club. Let us suppose that we were able to bring into English football players who excite. Arsenal’s recreation will have had no English players apart from young Theo Walcott, but the way they have blended young players that they have brought through, albeit from the continent, and super new players, such as Thierry Henry, that they have bought, has made the game more attractive. They have probably inspired other clubs, such as Sheffield United, to try to copy their system. To some extent, Manchester United have done that differently in the past, with the nucleus having come from their academy added to a sprinkling of quality players such as Eric Cantona—they are slightly imbalanced now with Carlos Tevez, Berbatov, Ronaldo and so on. I cannot object to someone gifting money to try to buy success, because it would be a lack of privilege if we were to prevent that.

Football is a game, but it is a game that is so appreciated and exciting as a business that if someone wants to gift or invest that amount of money, I say let them do so. My only caveat is that those people must better understand, or adapt in order to understand, what the game in England is about, because they can never really own the club. The club is history and heritage for a community and for a town or city. Gifting or investing to make the team better must be balanced with understanding, because the last thing we want for any club is an owner who quits and leaves the club in utter disarray. This must be a question for your inquiry; there must be a fear that someone who does not understand the culture and therefore the responsibility that they have towards the club they control—rather than really own—is dangerous.

            Mark Field MP: As you will have gathered, quite a lot of today’s conversation has been about nationality and overseas players. You referred at the outset to the various stakes that Sheffield United has in other clubs outside the UK. Is that a common situation outside the big four? Is there is a reciprocal arrangement in that young players or players who are out of favour in the first team squad are loaned out to the overseas clubs to gain experience.

            Kevin McCabe: We own Ferencvaros, the form club in Hungary; it is a great, traditional club. Two of our young academy players are playing in their first team to gain experience, which is good in terms of broadening their education—their experience of the world and their football experience. One or two of our older players—our continental players—are playing their too. We believe we can loan out players to Ferencvaros for them to gain experience and come back better players. Rather than play reserve games, they can play in front or 12,000 or 15,000 people. Conversely, as we develop our academy system over there, their best talent can come across here, as happens in Arsenal’s model in Africa and in France.

            Chair: I don’t know whether you realise what a great history Ferencvaros has. The parliamentary team played the Hungarian Parliament on Ferencvaros’s ground and the Hungarian Prime Minister played against us—they beat us. Then they came over here and beat us again.

            Kevin McCabe: They have a supporter base who care as much as that of any English club.

            Chair: You have had a bad experience of football governance in the Premiership. Are you not frightened that it could get even worse if the majority of clubs are owned by people from other parts of the world who do not understand the culture of our football? As you have said several times, the culture is very important. Are you worried that 12 or 15 sides might eventually be owned by people who come into the game for money and glory, rather than as a result of the culture of football? You obviously cared about that from childhood upwards. Are you worried about that growing domination?

Kevin McCabe: If the governing bodies at the top adapt to the changing ownership of football clubs, the governing bodies will be the ones who dictate what those owners can do and how they can do it. Strong governance should, thus, pretty much protect. Corporations that may initially be UK-owned often become internationally owned, and I am not sure that governance works in that regard. It is all about governance; we are talking about a sport, so why can’t better structures be put in place? Why can’t we have stronger boards that combine the commerciality and pure business of the FAPL with those who understand and represent the sport both at supporter level and at player and manager level? The two cultures can work on the same board, and that should create the governance arrangements to suit whichever league we are in, particularly the Premier League.

            Christine Russell MP: Do you think it is wrong that foreign owners can come in and saddle our football clubs with massive debts? Should addressing that be part of the governance arrangements?

            Kevin McCabe: It is a dilemma. I am not sure how Manchester City are structured, but if we are talking about loans given by a corporation or an individual in the middle east to Manchester City, it is about what qualifies as a loan as against the worth of an investment.

Christine Russell MP: I was thinking more of the position at Liverpool, where two American owners have massive debts with an American bank that has just been bailed out by George Bush. They came in with all these promises to build a wonderful new replacement Anfield, but that looks less likely to materialise today than it did a year or two ago. Should there not be some basic rules governing the game; should those not say, “Sorry, but that is unacceptable.”?

            Kevin McCabe: Let us return to practicalities. If Sheffield United designed a new 60,000 seater stadium and wanted to move away from our natural home, we would have to get a major wedge of debt. In theory, if the debt is associated with the stadium, the business plan would make provision for crowds of 60,000, conference facilities, executive boxes, restaurants and the like. You could then put forward your plan so that you could afford the massive debt and repay it over 25 years. In the context of what we are looking for in football, and in an England with better stadiums and facilities, and, thus, bigger crowds, the debt is no bad thing. I cannot comment on individuals or the strategy for the likes of Liverpool or even Manchester United, but it is easy to misconstrue what debt means. If the debt is just associated with throwing money at footballers, it is dangerous. If the owner is overseas and he gets fed up because the money does not buy him the success that he believes it will, as he does not understand the culture of our game, that can be dangerous. If the debt is associated with something positive that is for the medium to long-term, for example a new stadium, properly structured debt is acceptable. 

            Chair: Many people, particularly journalists, have complained that the Premier League has too much power over the FA, even though it is called the FA Premier League. Has that been a growing problem? Is it now beginning to be corrected? We have heard strong statements from UEFA today saying that Platini looks at football as it has always been. We know that he changes his position, but, like you and I, he understands that football has a special culture, which the Premiership has tended to move away from. Sepp Blatter has also made strong statements in the same way. Looking in from outside, it seems that the FA is beginning to exert a bit more pressure. Do you think that that balance is being redressed slightly? Do you think that the Premier League was getting too powerful and will now fit into a whole different culture with the FA—

            Kevin McCabe: I sense that that is the case. The FA appears to be getting to grips with working its association with the Premier League—I hope that is the right way of putting it. It seems that the tail has wagged the dog, and I think that the dog is beginning to recognise that it must begin to exercise its authority. The people at the helm know what they are doing and they do recognise that they have a duty to the grass-roots of football and not just to the elite.

            Chair: Would you like to add anything by way of a summary? May I thank you very much for your contribution and for spending your busy time by coming to help us put a report together? We hope that the media and the people governing the game will take notice of it. I hope that the FA, the Premier League and the Football League give us their opinions too before we put our report together.

            Kevin McCabe: It is a pleasure to be here. Given what has happened to Sheffield United and our being an innocent party, I can hope only that we will begin to get a restructure of the governance of the FA Premier League that prevents something like what happened to us from ever happening again, because football is too important to the nation and it is too important to households and supporters generally. My comments are all for the good of the sport. We must accept commerciality and the business that is attached to football now, but it must never overtake the sport itself. That is why governance must be improved, because currently there are inadequacies spoiling it.

            Christine Russell MP: May I ask a final question? You have had recent experience of both the Championship and the Premier League. Alan mentioned that we are hoping to interview the football authorities. Is wearing your Championship hat any different from wearing your Premier League hat from a general governance point of view?

            Kevin McCabe: The Football League is more mature—it is as simple as that. I am not involved in any of the committees—my colleagues do that work—so I am not overly experienced to comment, but my knowledge tells me that the Football League is more mature. It has been around a lot longer, so it is fairer. I could perhaps think of a couple of examples. By golly, the Championship is a better league to play in for a club that wants to get promoted, because it is more competitive. Although there may be some dull games, every Saturday afternoon the two teams are fighting to win and you are never sure who will prevail. The Championship has many ingredients and that is why it is getting better support than has been the case over the past 20 years.

            Chair: I’ll have the last word. I have always said that politicians should not be allowed to run the country, let alone football, but a politician has been running the Football League. All credit to Brian Mawhinney—

Kevin McCabe: A strong man.

            Chair: He is bringing about a revolution in football governance. If you had been in the Championship when you felt you were done down, the team that was in the wrong would have had lots of points deducted.

            Kevin McCabe: Compared with the Premier League, there is a much closer harmony in the Football Leagues between the authorities who govern. In the Premier League, the guys who govern tend to rub shoulders only with certain clubs.