I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this debate. I thank him for giving me notice of it and asking whether I would like to participate, which I am pleased to do. All the Coventry MPs have been fantastic local champions of their football club in its plight. My hon. Friend the Member for Nuneaton (Mr Jones), who is a Coventry fan, is in his place and has also taken a strong interest in the matter. I will not seek to add anything to their local knowledge and expertise but will speak of my grave concerns about the governance of football in this country.
Coventry City is one of the worst examples of poor governance in football. It is right that the House should look at what has happened to Coventry City and resolve that it should never be allowed to happen again to Coventry or to any other football club. Very strong lessons have been learned. The hon. Member for Coventry South was absolutely right when he said that there is currently nothing to prevent what Coventry has been through from happening again either to that club or any other club.
The Culture, Media and Sport Committee looked at the ownership model under Sisu in its inquiry three years ago, when I was a Committee member. I was shocked at the time. We considered the case of Leeds United. I remember asking the chief executive of Leeds United whether he knew who owned Leeds United and he said he did not. He is now the chief executive of the Football League. The Football League did not require the public disclosure of the ultimate beneficial owners of a football club at that time and it does not do so now. It requires private disclosure, but not public disclosure. The Football League admitted during that inquiry that it has no resources to investigate properly who is the ultimate owner of a club. It largely has to take it on face value that the owner is who the club says it is.
There are many good reasons why we might want to know who owns a football club. We might want to know what other interests they have in the game or what other business interests they have in this country or around the world that might prejudice their ownership of the club. We have seen examples of very poor ownership at other clubs, including in the west midlands. In particular, the chief executive of Birmingham City was found guilty of money laundering in Hong Kong. He had to withdraw from running the club, but his son is still able to. There is no restriction on that. I know that a lot of Leeds fans are pleased to see anyone inject money back into their club, but should someone with fraud convictions in another country be allowed to take over the club? The Football League seemingly has no powers to intervene or else has a grave reluctance to do so.
The first lesson is that opaque ownership structures such as the Sisu model, where the investors sit behind a public face and no one knows who they are or what their real motivation or interest is, should never be allowed in British football. Fans should always have the right to know who owns their club, what their other interests are and what financial stake they have in the club and the facilities that the club shares. I do not think there has ever been an example of a club with that sort of opaque ownership model that has done well. The hon. Gentleman said he was concerned that the owners sought to strip the assets of the club and run it into the ground. Well, we may not know their motivation, but that is what happened and that is what it looks like. We are therefore right to be fearful and concerned about those ownership models.
The hon. Gentleman also touched on the fit and proper person test, which must be applied much more rigorously. He mentioned my private Member’s Bill in which I proposed giving the FA discretionary powers to oversee the regulation of that test. I think the FA should have subjective power to intervene and say, “We don’t believe that the owners of this club are upholding or intend to uphold the letter and spirit of the rules of the game.” I do not believe that would create a separate model just for football; in many ways it would follow the Broadcasting Act 1990, and there is an existing power for Ofcom regarding broadcasters in this country. Ofcom has a subjective power to interpret that Act and say whether it believes that an organisation holding a UK broadcasting licence is fit and proper to hold that licence and likely to live within the spirit and letter of the broadcasting code. I do not see why the Football Association could not be given the same power so that it could intervene when it feared that someone about to
acquire a club might not be a fit and proper person or, as in the case of Sisu and Coventry, where a club was being run so badly that it was against the interests of the game for owners to be allowed to continue to do so.
I completely agree with the hon. Gentleman that the way the Football League allowed Coventry City to be moved to Northampton was against the interests of the club and its fans. We must consider why that decision was made so easily, and why there was no intervention sooner.
The hon. Gentleman rightly touched on the football creditors rule, which I have long campaigned against. The Select Committee recommended its abolition, and Ministers have stood at the Dispatch Box in this Chamber and Westminster Hall and said that it has had its day and should go. During the Committee’s inquiry, the then chairman of the Football League said that there was no moral justification for the creditors rule, and the Coventry case is a good example of the problems it creates. The rule means that as long as football clubs pay their football debts in full when they go into administration, they can get away with paying as little as 1p in the pound or even less to other creditors, and local businesses lose out. Those local businesses will get nothing whereas a football club that is owed transfer fees, or a player, will see every penny they are owed. There can be no moral justification for that. Everyone should be in the same boat when a club gets into difficulty.
The Coventry case is a good example of that, and the hon. Gentleman was right to ask, “What is to say that Coventry won’t be in this position again in two years’ time?” The club could get into financial difficulty, turn to the stadium and say, “We owe you lots of money but we’re not going to pay you”. It could go into administration under the rules of the Football League and get away with paying virtually nothing back to the ground and other debtors they may have in the city. As long as it meets its football debts it can just carry on, and nothing can stop that happening. That is morally wrong and should not be allowed. The local community and businesses that support their club deserve decent recompense in such situations, as that would stop irresponsible behaviour.
Getting rid of the creditors rule will create a more responsible attitude between clubs. If a clubs gets into a position where another club owes it money, it will think about whether that club can afford to pay it back. It may want more disclosure about the finances of that club before entering into a financial relationship that might put it at risk, just as other businesses would do when trading with each other. In getting rid of the creditors rule, we are not looking to impose new draconian laws that deal with football club insolvency; we wish to abolish a loophole that football exploits for its own interests—I do not believe it is in the long-term financial interest of the game for clubs to be allowed to do that. Getting rid of the rule would help the Coventry case and be good for football in the long term.
Other hon. Members wish to speak in the debate, so I will draw my remarks to a close. Local Coventry newspapers have done an excellent job in promoting this case, and I have been happy to talk to them over the past couple of years. After a recent interview with the Coventry Telegraph, the owners of Coventry City said that I was wrong in my assertions and that they would be happy to discuss
them with me, but I have received no direct offer from the club for that discussion. I would be happy to discuss the issue, however, once they conduct their affairs not behind closed doors but in public. I would welcome and invite Coventry MPs to join me at that meeting, and the Coventry Telegraph and fans’ groups and anyone else who wants to come along. Let us have that discussion in the open. If the club thinks we are wrong in our assertions about the way Coventry City has been run into the ground, let us have that meeting in public and discuss the matter in detail. Under Sisu’s management Coventry City football club has been a disgrace, and that must never be allowed to happen again.
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