EFL chairman Rick Parry says Karren Brady’s objections to a new independent regulator for football do not ring true as he urges Parliament to vote through “a once in a generation chance” to make positive changes to the game.
The Football Governance Bill reaches report stage today, which means it is being examined in the House of Lords. A third reading is likely to take place late in March before it goes back to the House of Commons, meaning it could be passed into law by this summer and have a huge impact on clubs such as Stoke City and Port Vale.
This is the result of Tracey Crouch’s fan-led review into football in England, sparked by clubs such as Bury and Macclesfield Town going to the wall - and Vale coming perilously close - at the same time as an outcry to a proposed breakaway European Super League.
Parry points to the fact that football hasn’t been able to solve its own problems, which in his case are topped by the financial cliff edge between the top flight and the rest. The EFL has called for a change in how money is distributed, including the abolition of parachute payments.
But the Premier League has refused to budge and lead critic Baroness Brady, vice-chairman at West Ham United, has claimed the introduction of an independent regulator to try to break the impasse would be expensive and harm the league’s competitiveness.
Parry said: “Nobody wants excessive cost and we certainly don’t want an overblown and over-bureaucratic regulator and we genuinely don’t think it needs to be overly expensive. This isn’t like regulating the banking industry or bookmaking industry, there are only 116 clubs being regulated and their accounts are very straightforward. There are only two lines that matter, one is media revenue and the other is wages. This isn’t a complex financial business.
“We don’t believe that the cost of the regulator needs to be excessive and when you see the amount of money that is being spent in the Premier League at the moment on legal challenges and challenges to governance that probably dwarfs the cost of a regulator. We don’t think that cost is an issue.
“The competitiveness of the Premier League is really the most interesting one from our perspective. You may have seen in the last week that Uefa produced its annual benchmarking report on all the major European clubs and what that said, which we’ve been saying for four years to anyone who will listen and to a lot of people who don’t want to listen, is that the Premier League is miles ahead of every other league in Europe.
“What Uefa has confirmed is that the Premier League is generating twice as much income as the Bundesliga and La Liga. Yet two weeks ago, the Bundesliga reaffirmed its commitment to sharing 20 per cent of its revenues with Bundesliga 2. We didn’t see howls of anguish saying they couldn’t compete with the Premier League therefore we can’t afford to share any money, they were meeting their obligations and doing the right thing for the German game despite the fact that they're 100 per cent behind where the Premier League is.
“For the Premier League to say, ‘We know we are making twice as much as everyone else but we can’t afford to share any of it,’ doesn’t really ring true especially when most of that money goes straight out on wages.
“One of the analyses we did for the Crouch review was to show that back in 2008/09, the Premier League was paying £560m more in wages than the other four major European leagues. By 2018/19 it was paying £1.6bn more. The gap had increased by a billion. Now they’re paying £2.2bn more than the other major European leagues – and it’s just that the West Hams and others are in their own arms race.
“The Premier League can still share money with us. Had they met our request for a 25 per cent share of media revenues, they would be giving us about an extra three to four hundred million. That would mean they are only £1.7bn better off than everyone else. They are still going to be massively competitive. That bit just doesn’t ring true at all.”
How has the Football Governance Bill changed?
The regulator is one of the key recommendations from a fan-led review about the future of the game, which was commissioned in response to six Premier League clubs - Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur - trying to set up a closed-shop European Super League amid a furious public backlash.
A key aim is to ensure the financial security of clubs at the centre of their communities.
A regulator will implement a new licensing system from the top flight down to the National League, requiring clubs to demonstrate sound financial business models and good corporate governance as part of an application process before being allowed to compete.
It has been claimed it will ‘guarantee’ fans a greater say in the strategic running of their clubs and help protect clubs’ heritage to stop owners changing names, badges and home shirt colours without consulting fans. It will require clubs to seek regulator approval for any sale or relocation of the stadium, with fan engagement a major part of that process and could have the power to block teams joining a breakaway league.
The EFL has maintained that has to be combined with a change to how the vast wealth at the top end of the football pyramid is shared.
The Bill, which had cross-party support, was held up when it failed to pass through Parliament before the Conservatives lost the general election last summer. It was reintroduced by Labour in October with three main tweaks.
It is being scrutinised in the Lords on Tuesday and next Monday and members have put forward amendments including the ‘financial growth of English football’, eliminating gambling advertising and the make-up of the independent regulator.
Parry said: “We are comfortable with the Bill proposed by the Labour Government. It’s a better Bill than the one we had from the Conservatives for three reasons – 1) it has the potential to deal properly with parachute payments, which are an enormous issue for our clubs, particularly those in the Championship.
"2) the most important thing for us is the state of game report, which will be the first proper independent economic analysis of the problems facing football, instead of us saying black and the Premier League saying white, an independent analysis is a very good thing and the Labour Bill means it will emerge more quickly than it would have done.
"And 3) that the league’s can’t contract out of backstop provisions in the Bill, which are there to give the regulator the opportunity to have a final determination of the redistribution of revenues in the event that the leagues can’t agree – and the leagues have been demonstrating pretty comprehensively over the last four years that they can’t agree.
"The Conservatives at the last minute introduced a clause that if the leagues decided, they could opt out of the backstop completely, which we didn’t think was a good idea at all and takes power away from the regulator.
“There has been a lot of pressure in the last month and you will have seen a lot of propaganda from the Premier League to try to make the Government make changes. They have made some relatively minor changes, clarifications of a variety of definitions, but nothing substantial. They have introduced a growth objective for the regulator because the Labour Government has been broadly saying that they want all regulators to have a growth objective, not just the football Bill.
“What’s interesting in football, and the point we’ve been making, is that it’s not a normal market, it is a sport and sport does require a regulatory framework. You can’t just increase the number of clubs infinitely like you could do with businesses and there does need to be a pyramid structure where at the top you have a winner. You don’t have that in a normal market.
“We’re all in favour of growth in football but it can’t mean just growth at the top and more money flowing into the Premier League. That is absolutely not what we would define as growth. What the Government defines as growth we don’t know yet.
“You will have also seen a lot about ‘light touch’ and Government is almost becoming defensive by saying this is definitely going to be a light touch regulator.
"The last thing we want is an abundance of bureaucracy and for the whole thing to be burdensome for clubs who are doing things well but the phrase we would much rather use is ‘right touch’. If the regulator doesn’t have the ability to be strong and step in when there are problems, frankly what is the point of having it? We’d rather they were a bit firmer and say the regulator would be targeted. Light touch implies standing back on everything.”
Why the EFL backs the Bill
The EFL believes that this Bill can help to ‘achieve sporting jeopardy without financial catastrophe’.
Parry said: “The reason the EFL is supportive is because we’re trying to make clubs sustainable and if you look at what’s happening in the game at the moment, it’s no great surprise because the trends have been there, but the challenges facing the clubs going up into the Premier League are enormous, just as the challenges are for those coming down.
“What we are trying to achieve is sporting jeopardy without financial catastrophe. Clubs should be able to rise and fall throughout the pyramid without busting themselves when they go up or come down. You will all be aware that for the second year running, there is every possibility that the three clubs who went up will come straight back down. That’s not great from the Premier League’s point of view because sterile leagues are not attractive. The danger from the Premier League’s perspective is that it will have an impact on TV valuations.
“In the Championship, parachute payments and the inability to compete with parachute clubs is a major issue for us. We’ve been banging on about it for four years repeatedly and the Premier League has said they’re not prepared to change them. They have got to a point where the impact on other clubs makes them absolutely the cuckoo’s nest in the Championship.
“They started off in 1992/93 relatively small and totalled £2.25m. By 2018/19 they totalled £265m and year-long parachutes are more than double the average turnover of a Championship club.
“It’s interesting that when Luton went up, which was a phenomenal achievement, their turnover in 2023 was £18m. The two clubs who finished above them in the Championship, Burnley and Sheffield United, each had parachute payments which were more than double Luton’s total turnover.
"That’s before you even start to add in the income they generate. It’s incredibly difficult for clubs to compete without behaving, as the Government’s white paper said, irrationally financially. It’s no wonder that clubs in the Championship are losing £15m or £16m in order to try to compete.
“The big challenge for us is fixing the problems, addressing the cliff edge between the Premier League and Championship properly. Our message has been that football isn’t capable of doing it, which is why we need independent regulation and a regulator with the powers to address the problem.”
What happens if the Bill does not go through?
There is opposition and an independent regulator was described by Conservative leader Kemi Badenoch as "a waste of money" - although the EFL has written to her saying that although she claimed she had "spoken to people in football", she hadn't spoken to anyone at the EFL nor taken their views on board.
Parry said: “If the Bill doesn’t go through, and we sincerely hope it does, we’ll pick ourselves up and keep going. The game is incredibly resilient. There are great things happening in the EFL, the Championship is having a fantastic season on the pitch, hugely entertaining. We’re delighted with the new partnership with Sky both in terms of the money provided and exposure. Clubs and owners are doing great things.
“The game will go on but this is a once in a generation opportunity to try to bring about change. Bringing about a change in the game with its current voting structure is virtually impossible. It does need that independent view of the facts and figures and then an independent body with the ability to do something about.”
While you're here, we have launched a new WhatsApp group to deliver the latest Stoke news directly to your phone. Click on this link, select 'Join Chat' and you're in. If for some reason you decide you no longer want to be in our community, you can leave at any time by clicking on the name at the top of your screen and clicking 'Exit Group', simple as that.
What do you think? Click HERE to join the debate