Coventry City Football Club

Jim Cunningham Excerpts

Tuesday 2nd September 2014 Commons Chamber

[Mr Jim Cunningham (Coventry South) (Lab)]

May I first take the opportunity to thank Mr Speaker for granting me this debate? I also thank the hon. Member for Folkestone and Hythe (Damian Collins), who has been very helpful over a long period and has made some very interesting proposals to reform the Football League. In fact, he has proposed a Bill and I thank him again for allowing me to put my name on it. I also thank my right hon. Friend the Member for Coventry North East (Mr Ainsworth), who, like the hon. Member for Folkestone and Hythe, has been pushing for some changes to the practices of the Football League, particularly in relation to Coventry City football club. Both of them deserve a little recognition for the work they have done in this area.

My aim in this debate is to raise two key points. The first is the latest situation with Coventry City football club, and the second is what the story has shown us about the future of football governance and the need for urgent reform.

Two weeks ago saw a major development in the saga of Coventry City football club, with the announcement that the club is finally to return to Coventry after a year at Northampton. It follows a decision by the Football League that the club should pay Arena Coventry Limited, the stadium owners, just over £470,000. The club and ACL have agreed a two-year deal, which can be extended until 2018. Coventry will play their first game back at the Ricoh this week and I offer them my best wishes. Obviously, we want Coventry to win, to say the least.

We are all very pleased that the club is coming home. It is good news and nobody wants to be a killjoy. The supporters in the city are obviously very happy about the situation. I thank all those who played a part in making the breakthrough happen. However, in my opinion there is a distinct danger that, because Coventry City have finally returned to the Ricoh, it will be thought that it is a case of problem solved, but that is not true at all: it is only a short-term solution. The past few years have shone a harsh light on the realities of football in this country and exposed many problems. Although the most immediate problem has been resolved, we must not disregard the deeper, underlying problems that have been exposed.

Let us be clear: Coventry City football club should never have been moved to Northampton in the first place. That the Football League allowed it to happen was disgraceful and demonstrates that it is simply not fit for purpose.

The first criticism is that Sisu Capital Ltd and, subsequently, Otium Entertainment Group have prompted doubts that they are fit to own or run a football club. They have clearly not acted in the best interests of the club and have had a total disregard for the supporters, the wider supply chain in Coventry and, of course, the people of Coventry itself. In my opinion, they wanted to bankrupt the Ricoh from the start, and even went to the lengths of seeking judicial review when they were unsuccessful and the Ricoh had survived as a result. They could not care less about the club itself, and see it purely as some sort of cash cow. How can we feel confident that the same thing will not happen again in two years’ time, or even sooner, if the agreement breaks down for some reason? Therefore, although I am happy to see the club return, let us remember that we are not seeing a demonstration of good will and responsibility.

My second main criticism concerns the role of the Football League in this saga. I believe that it has simply not shown leadership and has not proved an effective governing body. It has finally taken notice and told the club to pay back some—not all, of course—of the money owed. Where was the Football League a year ago, when negotiations were at a standstill? Where was it when Sisu stopped paying rent? Where was it when Sisu called for judicial review, saying the council had acted unlawfully by keeping the Ricoh afloat? It was only in June that the judge threw the case out, and Sisu said that the ruling “removed any prospect” of its long-term return to the stadium.

The Football League has been conspicuous by its absence throughout. It can take little credit for intervening at this late stage. Its chief executive, Shaun Harvey, has made an incredible statement:

“When The Football League Board gave its consent to Coventry City playing its matches in Northampton, it did so with this outcome in mind.”

He went on:

“While we understand that the Board’s decision led to a significant amount of dissatisfaction amongst Coventry supporters, we would not be where we are today without it. On this basis alone, this very difficult decision has now been justified.”

I find that astonishing. How can the move to Northampton have been the reason for the return to Coventry? It is as though he is claiming that the Football League had some sort of master plan all along and knew from the start that this would happen, which I find very hard to believe. Quite simply, the Football League has not shown any leadership on this issue and has waited an unacceptably long time before intervening. This situation could have been dealt with years ago before it ever reached such a conflict.

Several problems therefore need to be addressed. The Select Committee on Culture, Media and Sport published a report back in 2011 that outlined some of the reforms that are needed. I will not go into them in detail, as we have raised them on many occasions, but I want to give an idea of the sort of reforms that I believe are needed to protect clubs such as Coventry in the future.

First, we need reform of the Football Association, the leagues and their structures. For example, we do not believe that the current board membership is conducive to a democratic and well-functioning system. Secondly, we need an independent regulatory body with a licensing system that will ensure clubs live within their means and protect their long-term futures, avoiding short-termism and speculative spending. Supporters Direct have been making strong proposals in this area, and they are well worth considering.

Thirdly, we need to abolish the football creditors rule. We have already discussed it at length in the House. It is indefensible: if a club goes bust through irresponsibility, only the interests of players and other clubs are protected, not those of local businesses or the taxman. This is outrageous, and it encourages recklessness. Fourthly, we need to make drastic changes regarding club ownership. It is almost comical how weak the fit and proper person test is. We need a far higher and more consistent bar.

Fifthly, I am very keen to make it easier for supporters groups to establish trusts and to encourage supporter ownership. I am open to considering incentives for supporters groups to run a club and to reinvest profits back into the club. I would mention Supporters Direct’s call for a community-owned sports club scheme, creating a special status and incentives for clubs owned by their fans. The proposal is very much worth the Minister’s attention. Those are just a few of the reforms that might help to prevent what has happened in Coventry from happening again, and that might help to re-establish the central importance of supporters in football.

We cannot keep seeing such disputes and disasters again and again. Coventry is not an isolated case. We could discuss Brighton, Wimbledon or Portsmouth, to name a few. Owners are changing the identities of clubs such as Cardiff City and Hull City on a personal whim. Nearly 100 times, clubs have collapsed because of overspending and bad management. The Football League is not up to the tasks of governing, ensuring that there is proper management and ensuring the future of clubs.

What action might the Government consider taking? The Select Committee report was clear that the Football Association was in need of urgent reform. The Committee urged the industry to take the opportunity to reform itself and said that, if it did not, there should be legislation. The football authorities made proposals for reform, but they simply did not address the key problems. The then Minister for Sport, the right hon. Member for Faversham and Mid Kent (Sir Hugh Robertson), wrote to the Committee agreeing with its recommendations and describing them as “much needed”. He continued:

“I have already been given drafting authority by the Parliamentary Counsel, and my officials have started working up a draft Bill and supporting documentation, should football fail to deliver. This Bill will reflect the conclusions of your report.”

I therefore want to ask the Minister at what point the Government changed their mind. Why has there been such a U-turn? There was hope that the Government might take on board the reforms that were suggested by the Select Committee, but that hope has dwindled. Finally, I ask the Minister whether there is any hope for legislation in this Parliament or in the future.

--- Later in debate ---

[Mr Bob Ainsworth (Coventry North East) (Lab)]

I thank my hon. Friend the Member for Coventry South (Mr Cunningham) for securing this debate. I think that he and I would be agreeable to the kind of proposal that the hon. Member for Folkestone and Hythe (Damian Collins) made: to use him as part of a cross-party assault on what has gone on in Coventry, which is an indication of the wider and very dangerous disease that exists within our national game.

It is good news, of course, that the Sky Blues are playing in Coventry again. It would be amusing if it was not so offensive to see the Football League clamouring to take some credit for that decision. It has shamelessly sought to do so, but it deserves no credit whatsoever for the fact that Coventry City are coming back to play in the city of Coventry. The people who deserve the credit are many, but the Football League is not among them, I am afraid. The fans have to be congratulated, having organised a pretty effective boycott of the alternative home venue. They have attended away matches, but starved the club of attendance and support at Northampton, and they have done so in a fairly effective way. They must be congratulated for organising that boycott. Many different organisations, the Sky Blue Trust among them, have come together to help the boycott, but the fans in general deserve our congratulations on the campaign they have kept up most effectively.

The people of Coventry in general deserve congratulations and credit for the fact that the football club is coming back to the city, because they have never, with very few exceptions, been conned by the spin and the lies put out by the football club’s owners, Sisu Capital, about what it has been doing and why it has been doing it. The people of Coventry have seen through this pretty clearly, and it has been impossible, despite strenuous efforts and all kinds of expertise being employed, for the football club’s owners to get a grip on public opinion locally. It has singularly failed in that regard. In itself, that is indicative of the kind of people they are and the problems they bring on themselves.

Generally speaking, football clubs are fairly well-supported organisations, whereas local authorities and councils are not usually that well thought of, but I have to say that the council has not come under any real pressure as a result of this dispute, because the people of Coventry have seen through the nonsense and the spin they have been subjected to.

[Mr Jim Cunningham]

As the House and most politicians will appreciate, this shows the level of support that the people of Coventry, particularly the fans, gave. Tell me where it is possible to get 8,000 people demonstrating in a city on such an issue. It is utterly amazing to see 8,000 fans demonstrating. Not only that; there were thousands of them doing it week after week. I therefore agree with my right hon. Friend that if anybody pushed for this, it was the fans and the people of Coventry. We agree 100% on that.

[Mr Ainsworth]

I think that they have been the main agents of this partial victory.

Other people who deserve congratulations include the Higgs Charity, which has an interest in the stadium and has been steadfast in the face of intimidation and attempts to distress and bully it. I have got evidence that the Football League effectively joined in that bullying. This local children’s charity has stood fast and refused to get out of the way of Ms Joy Seppala’s ambition to get the Ricoh Arena on the cheap. That was its only crime—it stood in the way of that ambition to gain control of the stadium on the cheap, for next to nothing. We have seen a well-funded Cayman Islands hedge fund seek to take on, intimidate and distress both the trustees and a well-thought-of local children’s charity to achieve its ends, and it has failed to do so. All strength to their elbow for the tenacity shown in resisting that pressure!

Coventry city council, too, should be congratulated. Labour and Conservative councillors have stood together, and I have been able to detect no politicking. Nobody has been point scoring. The entire council—the Labour majority and the Conservative minority—has stood shoulder to shoulder to resist this attempt to gain control of the city’s asset provided for by the taxpayer at great expense. Officers of the council, some of whom have been traduced by this appalling organisation, were congratulated on their work by the High Court judges in their judgments in complete condemnation of what the football club had done. The councillors have done a tremendous job and the council deserves to be congratulated.

Local journalists should be congratulated, too. The hon. Member for Folkestone and Hythe (Damian Collins) talked about the Coventry Telegraph. It has a first-class local journalist, Simon Gilbert, who has brought straight, unbiased reporting to this issue, which has done great credit to him personally, to his newspaper and to journalism in general. He should be congratulated on his in-depth reporting over a long period.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)]

I thank the hon. Member for Coventry South (Mr Cunningham) for securing this important debate, and I thank him and others for the valuable contributions they have made this afternoon.

As I have said before, the preservation of football clubs up and down the country remains a matter of great importance to me and to the Government. We debated this issue last October in my first few weeks—days, even—as the new Minister for sport. Since then, the Football League and I have maintained a close interest in the resolution of this unfortunate dispute involving Coventry City football club and the return of Coventry to the city. Football clubs remain a very valuable part of local communities, and every care should be taken by all owners and stakeholders to protect their long-term financial futures.

It has therefore been very sad to see Coventry City football club beset by serious financial trouble in recent years. I know the Football League appreciates that its initial decision to allow Coventry City to temporarily relocate to Northampton was not a popular one with Coventry supporters. Although understandably difficult for supporters to accept, the temporary tenancy at Northampton Town’s Sixfields stadium was deemed to be necessary by the Football League to ensure that Coventry could continue to take its rightful place in the football league in the short term.

Allowing the club to play in Northampton has at least ensured that Coventry was capable of playing its home matches in the league while all parties maintained their efforts to resolve the ongoing disputes. The recent case of Rotherham United demonstrates that the continuation of a club’s presence in the football league at another stadium can be a positive step towards a long-term solution. I am therefore delighted to hear today that the club and stadium owners have agreed terms to get Coventry back playing within the city this season—imminently, in fact—at its home ground.

I pay tribute to the hon. Member for Coventry South, the right hon. Member for Coventry North East (Mr Ainsworth), my right hon. and learned Friend the Member for Kenilworth and Southam (Jeremy Wright), my hon. Friends the Members for Nuneaton (Mr Jones) and for Folkestone and Hythe (Damian Collins) and others who have worked tirelessly with loyal supporters. I shall think of them all when Coventry plays Gillingham at the Ricoh Arena this weekend: it will be a special evening indeed.

There is a great deal of focus on the amount of money in the top tiers of football, but I recognise that many clubs competing in the lower divisions operate on a very different scale. Coventry’s problems are rooted in several years of financial issues that unfortunately are ongoing.

The evidence given to the Culture, Media and Sport Committee by the Football League’s chairman acknowledged that debt is the

“single biggest problem for football.”

I share his belief that if football clubs ensure that their debt is genuinely sustainable, transparency of ownership, supporter buy-in and co-operative ownership will be much easier to deliver.

I share the frustrations of supporters and hon. Members at the football authorities’ slow progress in implementing some of the long promised and much needed reforms to the game, a key part of which is improved supporter engagement at club level.

The football authorities must find ways to improve supporter engagement beyond the customer relationship and recognise supporters as an integral part of clubs’ success. That is why my Department is working very hard on Supporters Direct’s proposal for an expert group on the barriers to supporter ownership in football. We hope to launch the group in the near future. It will include representatives from across football, relevant professional experts and representatives from a variety of supporter-owned clubs and supporters trusts. I am pleased that the proposal retains support across football’s authorities, demonstrating a critical continuing commitment to supporter engagement within the sport.

Supporter representatives on boards and better engagement could and will in many cases lead to fans being better informed about a club’s activities, such as its financial standing and the identity of its owners, and to their being genuinely consulted, as they should be, as part of the club’s decision-making process on matters of real importance, whether financial or cultural. I look forward to the expert group’s recommendations on how more help can be offered to supporters now and in the future.

Having said all that, I must acknowledge the progress made by the football authorities in introducing new rules in recent years, such as a strengthening of the owners and directors test, which has been mentioned and about which I shall say a little more in a moment, as well as a new means and abilities test that requires proof of funds from prospective new owners, an early warning system with Her Majesty’s Revenue and Customs on tax returns, transfer embargoes, salary caps and the adoption of financial fair play principles across the 92 professional clubs.

Club insolvency has been declining, but it has remained a common problem in recent years. At the same time, TV revenues and match attendances are as high as ever. The implementation of financial fair play principles should lead to responsible spending by clubs and, as a result, I hope, fewer incidents of club insolvency at the top of the pyramid. The strong intention is that the financial fair play regulations will remove the need for football to rely so heavily on the football creditors rule in club insolvencies.

The football creditors rule has been mentioned by all hon. Members who have spoken.

Governance has also been mentioned by many hon. Members. The hon. Member for Coventry South queried whether the Government were doing a U-turn on their governance plans and I assure him that we are certainly not doing that. Governance is essential; it is the foundation of everything and of all good structures. Without decent governance a structure has no chance of surviving; there will be no chance of there being the strength to support a massive structure. It is very important to me personally. I want the football authorities to do what they need to do. A start has been made: there are smaller boards; there is a new licensing system to deal with financial matters; and various changes have been made on supporter engagement, with the introduction of supporter liaison officers. But I want much, much more to be done. I have regular meetings with the football authorities, and I will continue to raise these issues as a matter of urgency, saying that we need to see progress. If progress is not made, we of course have the option of legislation—we always have that option.

[Mr Jim Cunningham]

I do not doubt the sincerity of what the Minister has said, but this has been going on for a number of years. Has she set a deadline? A number of organisations are looking at football in general terms, but does she have a deadline when she will say, “Look, we have not seen enough progress, so we are going to do something about it”? Across the House, we all think that something has to happen. This is not a reflection on the Minister, because she has not been in her post for very long, but we are reaching the point where a deadline needs to be set, in order to get some real action from the Football League.

[Mrs Grant]

I have robust and candid conversations with the football authorities. I agree that we need to see some more progress. Some has been made, but we need more. I will be meeting them on Friday, and I will certainly relay to them what has come out of this debate and the crucial need for us to start to see further progress on a number of matters.

The issue of ownership was raised by all hon. Members in the debate and, in particular, by my hon. Friend the Member for Folkestone and Hythe. Again, I reassure him that the football authorities really do take club ownership very seriously, which is why the owners and directors test applies to all clubs in the Premier League, Football League and Football Conference, and in the three leagues below.