MPs debate football finance and creditors rule

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An MP has today tabled a bill in Parliament calling for total transparency on club ownership and an end to the “football creditors rule”. The Football (Financial Transparency) Bill has been introduced by Damian Collins MP who sits on the influential Culture, Media and Sport Select Committee.

Collins said: "I believe that it is important that we take a stand and do our bit to clean up football in our country and give our fans a proper say and stake in how their clubs are run."rn

If passed any club playing in the top four tiers of English and Scottish professional football would be required by law to identity its owners. Clubs would also have to reveal any “outstanding creditors”, who owned their stadium, and training ground.

The Conservative MP's Bill would also place a legal imperative on clubs to declare any “third party stake” in their players. This aims to prevent a repeat of the 2006 Carlos Tevez-Javier Mascherano case. The Argentinean pair moved from Brazilian side Corinthians to West Ham United but it emerged that both players’ “economic rights” were owned by third party companies.

The Premier League fined the Hammers £5.5m in April 2007 but chose not to dock the club any points. Tevez subsequently played a major role in keeping the Hammers in the top-flight, much to the chagrin of relegated Sheffield United. In 2008 the Premier League introduced its own rules barring third party ownership and Collins’ Bill would enshrine this in law.

Football creditors rule

The Bill would also put an end to the controversial football creditors rule which requires clubs to prioritise football debts ahead of those from outside the game. This means a club that has gone into administration can continue to pay its players and other clubs in full while small businesses and non-football contractors might receive a tiny fraction of what they are owed.

Her Majesty’s Revenue and Customs challenged the rule at the High Court in November 2011. Lawyers representing HMRC called the football creditors rule “the ugly side of the beautiful game” and called for it to be overturned. The Premier League and Football League dispute this and argue that the rule is fair and necessary. Mr Justice David Richards’ verdict is expected in the next few weeks.

Speaking in the House of Commons, Collins said: "I believe we should be concerned when communities have to stand by powerless when their club is stripped of its assets and left drowning in a sea of debt it can never hope to repay. I believe we should be concerned when taxpayers lose millions in unpaid taxes when clubs go into administration, and when local businesses are left out of pocket and at risk of financial failure as a result.

"I believe that we should be concerned when, in a global game, millions of pounds are passing in and out of this country to buy clubs and players and we cannot be sure of the source or destination of that money. I believe we should be concerned when players can effectively be trafficked around the world under the control of the third-party interests who control them."

John Mann MP's (Lab) said the Bill was "a very worthy proposal" and suggested its scope be widened to include non-league outfits: "Far more non-league clubs have gone into administration, and a considerable number have been liquidated. rn

"Whether in Worksop, Halifax, York, Wrexham, Crawley, Salisbury, Boston or Lincoln, non-league football across the country has been plagued by the problem of people buying clubs, asset-stripping and attempting to develop the land. It is a fundamental problem." This was agreed and the Bill will get its second reading in Parliament on Friday 27th April.

Collins’ Bill is what’s known as a 10-Minute Rule. While this type of Bill rarely passes into law – the last time this happened was in 2002 – they serve a very useful purpose in drawing media attention onto a specific issue.

The Football (Financial Transparency) Bill asks: “That leave be given to bring in a Bill to require a football club playing in the top four tiers of English and Scottish professional football to disclose the identity of its owner, the identity of the owner of its home playing ground, training ground, any intellectual property associated with the club or a third party stake in its players and the identities of outstanding creditors; to require all creditors of a football club to be compensated equally should the club go into administration; and for connected purposes.”

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