Contribution
My Lords, Amendment 57 is in my name and that of my noble friend Lord Parkinson, and I will speak also to Amendment 70. In Committee, we talked at some length about the importance of parachute payments, with my noble friend Lady Brady really bringing home how important they are to clubs. For promoted clubs that know that there is a big threat of being relegated for the next season, they give them the confidence to invest in new players and build the strength of the club. They are able to make that financial commitment only because they have the security of parachute payments behind them. Likewise, any clubs in the bottom half of the table, when we get to this stage of the year, are looking over their shoulders: were it not for parachute payments they would not be looking to make investments in the January window but thinking more about selling rather than recruiting players.
As mentioned on previous occasions, the fundamental reason that the Premier League is the most popular and richest league in the world is because every game is competitive. If we look at other leagues, whether it be in Italy, Spain, Germany or France, we tend to find two or three good teams and a lot of other teams which are, if it is not too unkind to say so, also-rans. A lot of games, as a result of that, are just not competitive in the same way, whereas we know that in the Premier League, every single game is competitive and capable of a surprise. That is because the bottom clubs invest in players to make it competitive, knowing that they have that safety net there. It is that that ultimately brings in the big bucks, in terms of the rights bids that fund the whole game: broadcasters around the world want to know that they will have good games week in, week out, and that is what parachute payments allow.
It is probably put best by Paul Barber, the well-respected Brighton & Hove CEO and deputy chairman: the relative comfort that parachute payments provide to Premier League clubs, especially those newly promoted, means that owners are more willing to commit funds, knowing that if the worst happens and relegation occurs, clubs have support to adjust to a very different reality.
I am aware that the Bill does not require the regulator to consider parachute payments. I know the Minister has made this point before, and we understand it, but the fact does not negate the risks. That is not to say that the current system of parachute payments is not without faults—no one is saying it is perfect—but it is true that every major league club has a similar parachute-type mechanism in some shape or form. That is why we feel the need to ensure that parachute payments are not part of the regulator’s remit, as in the original Bill put forward by the Conservative Government. It is very important.
On the tiny chance that the Minister does not accept Amendment 57, I have also tabled Amendment 70 as a compromise. Amendment 70 states that if the regulator does include parachute payments within the scope of revenue distribution, a final proposal cannot abolish them entirely. The intent is to give a greater degree of certainty that parachute payments will not be disregarded in their entirety. It acknowledges the regulator’s right to consider them if it believes it is necessary, while also ensuring some level of security.
Competition organisers would be able to propose a reduction in parachute payments if they so wish, but could not do away with them altogether. This is fundamentally important to clubs, which often invest with three-, four- or five-year business plans. That is of course exactly what we would want reputable, well-run clubs to do. We want them to invest on the back of a certain set of circumstances and economic conditions and not expect some major parts of that—namely, the parachute payments—to be potentially withdrawn mid-way through.
I believe that this is in keeping with the Government’s stated intentions and I know the Minister does not envisage parachute payments to be abolished. If that is the intent, why not give us greater guarantee of the fact by putting it in the Bill? Although I would prefer parachute payments not to be considered at all, I am under no illusions as to the parliamentary arithmetic. Therefore, in the likely event that they are to be included in the Bill, we have tabled Amendment 70 as a sensible and measured compromise that does not deviate from the Government’s stated policy.
On the small chance that the Minister does not accept my Amendment 57, I hope that she will find herself able to accept the compromise that we have put forward in Amendment 70. I strongly urge her to look favourably on such an amendment in the spirit of consensus, which I know noble Lords in this House respect. If she is able to accept Amendment 70 or give an undertaking for Third Reading, I will not divide the House on Amendment 57 but, unfortunately, if she does not accept what we think is a very sensible compromise, we will have no option but to divide. I beg to move.