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Coventry City Football Club

Volume 569: debated on Tuesday 22 October 2013

I thank you, Mr Caton, for presiding over our debate, and I welcome the Minister to her role. I was greatly helped by her predecessor, the right hon. Member for Faversham and Mid Kent (Hugh Robertson), and I can only hope that she is as capable and willing as he was. I pay tribute to him for the job that he did as Minister with responsibility for sport.

Over the past 18 months, the most vicious and destructive battle has been waged at Coventry City football club. Sadly, it has not been about football; it is a fight for land and property. The Ricoh arena was built and paid for by local and national taxpayers and a highly thought of local charity, the Alan Edward Higgs Charity. It was built to create jobs and economic activity in a deprived part of the city, and because the football club was not financially capable of building it itself. The club’s hedge-fund owners and its boss, Joy Seppala, want the stadium, the freehold and the surrounding land, but they do not want to pay more than a pittance for it, and have moved the club out of the city and nearly destroyed it in order to achieve that.

Part of the club was put into administration seven months ago. The owners have repeatedly claimed, through solicitors and direct statements, that the company owed rent to the stadium but had no assets. Documentation has now come to light that shows that to be untrue. Since 1 June 1995, this company, now in liquidation, has owned the club’s rights, title, and assets, all its playing staff, its good will, and the right to play in the league. Why did the administrator, Mr Paul Appleton of David Rubin & Partners, fail to discover that? He claims that he spent thousands of hours conducting his investigation. He possesses the full powers of an officer of the court. He is supposed to have ability. He charges more than £300 an hour. Despite protests from bidders, creditors and me, as MP for the local area, he sold the company that was in his charge without finding out what he was selling, thereby ensuring that the owners were the successful bidders. I ask the Minister why those who put companies into administration are able to avoid scrutiny and loss, at the expense of creditors, by choosing their own administrator. Now the appalling error has come to light—let us call it an error—can we ensure that an independent liquidator is appointed to look at the situation in Coventry?

Let me ask about the role of the Football League in this sorry tale. It told me that it acted to prevent another Milton Keynes Dons by changing its rules. I asked representatives to put that in writing, and they e-mailed me saying that the Football League board would not allow the club to move away from Coventry without demonstrating a clear plan to return within a prescribed time frame. The Football League then allowed the club to move to Northampton. Did the club show the league a plan, as it said it would require it to do, before it agreed to the move?

The Minister’s predecessor asked the league that question for me. My hon. Friend the Member for Coventry South (Mr Cunningham) and I went to see him in July, and he agreed to write to the Football League on this and other issues. Has the current Minister received a reply to that question?

The Football League has admitted administrative errors in the registration of players, but it has refused to say for how long that error continued, or to give any details of the error. With the new evidence about the structure of the club coming to light, will it look again at that decision? Will it give us the detail of those errors that it admits it made? That would show a little good will to the Sky Blues fans who feel that the league has let them down badly on this issue. Will the league uphold the conditions that it said that it had placed on the club when it returned the golden share to it?

Finally, and most importantly, I want to talk about whether we can get the club back to Coventry. This lunchtime, there was a small demonstration outside Council house. Fans are understandably desperate to see the club back in Coventry. Joy Seppala admits, however, that she is not interested in football and is not a fan. She is interested in her investors and describes herself as the shepherd of other people’s money. She says that she is £60 million down. She claims she was not involved in the catastrophic decision to buy the club in 2007. If I were a Sisu or a Sconset investor, one of her sheep, I would ask questions about that, but she says that she wants a return for her investors.

It is repeatedly claimed that a new stadium will be built near Coventry. It is said that it would cost around £25 million—nothing like the Ricoh arena. As Joy Seppala cannot get the fans to go to Northampton, it is estimated that she and her organisation are losing at least £3 million a year for at least the next three years as a result of playing their home matches in Northampton. If we add the £25 million to the £9 million probable losses from the club’s current course of action, that is £34 million. If she wants, as she has said, the stadium, the surrounding land and the freehold of that land, why does she not make a bid? Why is she incapable of making a bid of around £34 million? If she made a bid of that magnitude, she would be getting a casino and a conference centre thrown in for nothing, but she has not made that bid, and she will not do so. The question is why.

I thank the right hon. Gentleman for giving way and commend him for securing this debate. Many of my constituents and I are long-term supporters of the Sky Blues and are absolutely devastated at what has gone on. Does he not agree that, in regard to having a successful football club in Coventry, the club must own a greater stake in the Ricoh arena if it is to make the business viable, wash its face, and give us the sort of success that we are looking for, bearing in mind the council tax payers in Coventry and the money that they have put in? Does he agree that all parties need to get round the table, and that it is imperative that Sisu look to open negotiations with Coventry city council?

I broadly agree with the hon. Member for Nuneaton (Mr Jones); I have never disagreed with him. In the past, under previous leadership, perhaps members of Coventry city council have not agreed with that line. However, if the club needs to own its stadium, it needs to pay for it, does it not? Does it expect the stadium to be given to it for nothing? That is what I am asking, because I believe that what we are looking at is an attempted land grab. Figures such as £7 million are being floated by Sisu’s fans for a stadium that cost more than £100 million to provide. Property markets have gone the way that they have, and the economy is not in the same condition as it was, so people will make a loss, but to float derisory figures such as that is an indication that there is an attempt at making a killing at the taxpayer’s expense.

I am glad to hear my right hon. Friend speaking with such passion on an area that we have not seen him taking an interest in at all for many, many years. Where he and I would utterly agree is that we want to get the club back to Coventry. That means that we have to create a new sense of good will between the various parties that, at the moment, are locked in the most antagonistic struggle that I have seen in many years, and that I have certainly never seen in Coventry before. It cannot be just one-sided—there are always two sides. I ask him this: does he really think it helps to get the atmosphere that we want, and to get the club back, when he launches these bitter personal attacks on Joy Seppala on one side, as opposed to seeing—

My hon. Friend the Member for Coventry North West (Mr Robinson), by saying that I have paid no attention to this area in the past, provokes me into letting people know that he was the steward of the club. His stewardship may have been part of the reason why I was silent in the past, but I am relieved of that responsibility now that he is no longer connected with the club, and I am free to speak on a matter that concerns a major business in my constituency.

I am not “bitter” about Joy Seppala. Most of the things that I have said, she has said herself on the record. I am bitter about the Football League, which has allowed this to happen. I think it is outrageous and unforgivable that it has done so, and its governance of our national game needs to be looked at because of what it has allowed these owners to get away with.

I will not give way, because I have agreed to give my hon. Friend the Member for Coventry South some time to speak, and I need to try to finish up, if I can.

I was asking why, if this is not a land grab, the owners are not prepared to make a reasonable offer. If they did, nobody would be happier than me, the fans and those who were outside Council house today. However, I fear that that will not be the case—that the owners will not make that reasonable offer, and that we will not get our club back until Joy Seppala tires of her losses and sells up. I sincerely hope that I am wrong.

I ask the Minister, what is it that attracts this kind of owner to our national game? Is it time to look at the special insolvency regulations that football enjoys, and to legislate for good governance, as the Football League is proving in this case to be incapable of taking decisions in a consistent way? Or maybe even more radically, but even more productively, we should, in the end, look at the Bundesliga model of fan ownership, instead of the ownership model that applies in this country.

I will call you to speak now, Mr Cunningham, because I understand that both Mr Ainsworth and the Minister have agreed to your making a contribution. Obviously, we want to hear the Minister’s response to the debate, so if you could be as brief as possible, it would be very helpful.

Thank you very much for calling me to speak, Mr Caton. I will try to be as brief as possible, because I understand that this is a short debate. I thank my right hon. Friend the Member for Coventry North East (Mr Ainsworth) for allowing me to speak in it, and more importantly I congratulate him on securing it.

There have been a number of debates on this issue—what has happened to Coventry City football club? I will not go back over those; I think that my right hon. Friend has made adequate representation and adequate queries over a number of debates. However, I would like to pick up on one or two points.

The first thing that people have got to understand, and the people of Coventry certainly understand it, is that the site of the stadium was derelict for more than 40 years because there was an old gasworks on it, and at the time the conventional wisdom was that there would be a long period before the site could be cleaned of fumes and that sort of stuff. So, it took a long time and if I remember correctly—I am sure my right hon. Friend will put me right if I do not—to clean that site up before it was even built on probably cost about £16 million. I may have got that figure wrong, but I cannot be too far wrong. So the site lay derelict for many, many years.

We had representations over the years from Coventry City football club, because originally there was talk of siting it where Coventry airport is now, at the Baginton site. That never got off the ground, but eventually the present location—the Ricoh arena—was looked at and decisions were made about the location of the arena, but more importantly it was part of a regeneration scheme for the whole area, if I remember correctly. So we have to put these things in context.

I accept that a lot of sharp practices have gone on; there is no doubt in my mind about that and I will not repeat them here again today. However, I have always taken the view that we can deal with those sharp practices separately. The most important thing is to get the club back to Coventry. That is my view, and I have always taken the view that the best way to do that is through conciliation. In fact, I have said on one or two occasions that the only way to deal with the situation is probably to get an independent arbiter.

I am not necessarily impressed by the present liquidator, if people want to call him that, and by the way he has handled things, but that is for another time. It is more important that we get some sort of consultation going. It can be led by an arbiter or anybody, but somebody who can try to resolve the situation.

The second point is that my right hon. Friend and I certainly met the Minister. The Minister certainly wrote to the Football League, but I do not know the outcome. I hope that this Minister will tell us today.

This situation goes a lot broader, because to deal with the situation at Coventry we have to look at the Football League and consider some sort of regulation or some legal framework. It has had a free hand for many years now. We have seen what has happened to other clubs up and down the country. That is not satisfactory. The fans have been taken for a ride by some of these football clubs and some of these football owners, and it is about time that the Government stepped in.

The problem is not just with Coventry. I am aware that almost every football club in the country has its own problems. I believe that what has happened in Coventry has been exceptionally inadequate, but there are a huge number of cases of poor football governance. It is clear that what has happened in Coventry is not an anomaly. The institutions of our domestic football governance are inadequate and out of date, and they need to be seriously reformed.

The Culture, Media and Sport Committee launched its report on domestic football governance in December 2010, publishing it in July 2011. It was very clear that the Football Association was in need of urgent reform; that the leagues, particularly the Premier League, have too great an influence over the decision-making processes of the FA; that the game has seen increasing commercialisation; and that there is a distinct lack of financial regulation, which has led to significant financial risks being taken by football clubs. Indeed, billionaires seem to treat football clubs as investment accounts or assets; they are not, and they should not be treated this way. The Select Committee urged the industry to take the opportunity to reform itself and said that if it did not, there should be legislation. Football authorities made proposals for reform but their proposals simply did not address the key problems.

What needs to be addressed is the fact that the structure of the FA leads to too much responsibility being delegated away from the main board and towards committees, which are dominated by the Premier League and Football League. We need proposals that are far-reaching; we need improved financial stability and reform of the licensing model. We need to ensure that membership of the main board, council and influential committees is fully representative, and balances different interests; and we need to improve the way supporter engagement operates at club level. When will the Government accept that the time has passed for the industry to make its own reforms?

Something must be done now. We have a situation where, in a way, we have practically a civil war in Coventry, between the fans and the owners. That cannot be allowed to continue. We need to get somebody independent to look at that, but more importantly to deal with the situation in Coventry and to prevent it from happening in the future we need to look at the Football League and do something about it.

It is a great pleasure to serve under your chairmanship today, Mr Caton. I congratulate the right hon. Member for Coventry North East (Mr Ainsworth) on securing this important debate. The contributions that he and others made have been valuable, powerful and emotional.

There is no doubt at all that the preservation of football clubs up and down the country remains a matter of great importance. I assure all hon. Members present and the right hon. Gentleman that football governance and the collective determination to improve the way that our beautiful game is run continue to be extremely important to the Department for Culture, Media and Sport.

Will the Minister ask the Football League, because it has been complicit in the problem, whether it can mediate in the dispute around getting Coventry City back to where it belongs, which is in the city of Coventry? I say that as a Leyton Orient fan, against which Coventry City will be playing in three hours’ time.

I will deal with my hon. Friend’s latter point first. At the end of my speech, I was going to wish luck to Coventry City against Leyton Orient, but that sentiment still holds and I am aware that the teams are playing tonight.

The Football League is involved. I know that the right hon. Member for Coventry North East has been in touch, that it wrote to him today and that it is keen to chat with him. I also know that the organisation had a fruitful and positive discussion with supporters on Friday 18 October. I hope that important dialogue continues.

It is sad that the famous name of Coventry City football club—the Sky Blues—can be added to the list of football clubs, including Leeds United, Portsmouth and Crystal Palace to name but a few, that have suffered serious financial difficulties. It is worrying that more than half the Football League’s 72 clubs have been insolvent at one time or another over the past 10 years. At the same time, however, match attendances and TV revenues are higher than ever. If football today is that popular with supporters, advertisers and broadcasters, we must ask why so many of our clubs are faced with the prospect of not owning their grounds, why they are carrying such high levels of debt and why there are so many sporadic changes in ownership. Coventry City, unfortunately, is the case in point.

When the Football League chairman, Greg Clarke, gave evidence to the Select Committee on Culture, Media and Sport, he stated that debt is

“the single biggest problem for football”.

He believes that if football clubs can ensure that any debt is genuinely sustainable, transparency of ownership, supporter buy-in and co-operative ownership will also fall more easily into place.

I have probably had only 10 to 12 working days in this new job, which is not an awful lot, but I have already had considerable dialogue with football authorities. I am looking forward to getting stuck in, to dealing with the issue and to helping and working with them to drive through much more quickly the much-needed reforms to the game.

I need to make several points and I am running out of time, so I will not.

The three key areas where we need real progress are the licensing system for clubs, the introduction of empowered—that word is important—and balanced boards and improved supporter engagement at club level. My Department continues to urge the football authorities to introduce full transparency around club ownership. The licensing system should set out stricter criteria both around owners being fit and proper and around the requirement to have clearly defined business plans for how they will safeguard clubs’ futures. Taken together, those would provide greater clarity for clubs’ supporters.

Having said all that, the football authorities deserve some credit for the rules introduced in recent years, including an early-warning system with Her Majesty’s Revenue and Customs around tax returns, transfer embargoes that help to curb club spending, a new means-and-abilities test and a strengthened owners and directors test. I also welcome the fact that the football authorities and all 92 professional clubs have now adopted the financial fair play principles, the implementation of which should lead to reduced spending by clubs and, I hope, fewer incidents of club insolvency. We hope the licensing model being developed will strengthen the relationship with fans, who should be better informed about a club’s activities, such as its financial standing and owners’ identities. Supporters should be consulted as part of a club’s decision-making process.

I am also pleased to hear that the Football Association is setting up a new separate implementation body, the football regulatory authority or FRA, to oversee the implementation of on and off-field regulatory policy. The new club licensing system and the financial rules that underpin it will be key to ensuring the long-term sustainability of clubs, but further detail is required from the football authorities on the content of the licence and the new FRA’s role in monitoring and enforcing FA rules and regulations.

I want to attempt to respond to several of the issues raised by the right hon. Member for Coventry North East. Regarding the activities of the administrator and the liquidator, I genuinely suggest that he discuss such matters with the Football League, hopefully in the not-too-distant future. If he is not satisfied with what he hears, he may have to take independent advice.

The right hon. Gentleman also asked, as he had done outside this Chamber, whether my predecessor, my right hon. Friend the Member for Faversham and Mid Kent (Hugh Robertson), received a response to a communication that he apparently sent to the Football League in July this year. I have spoken with officials and I understand that no letter was sent, but a conversation may have taken place. I will certainly look into whether that conversation happened and what the outcome was and get back to the right hon. Gentleman.

Regarding supporter ownership, owning football clubs is a challenging and risky business, but fan ownership has seen several successes abroad. It is for the football authorities to agree what works best for this country, but there is a place for all types of ownership. Supporters will always have the best interests of the club at heart and I am delighted that AFC Wimbledon, Brentford and Exeter City are now owned or part-owned by their fans.

Finally, the right hon. Gentleman mentioned the club returning to Coventry, a topic which is important to him and others. The Football League wants Coventry to return to its home city and will do what it can to assist in that process, but the matter is also one for the owners and administrators.

I genuinely hope that Coventry City’s issues are resolved very quickly. I want to see the club return to the city as soon as possible and be given the chance to regain its position in the league. Notwithstanding the points penalty imposed at the start of the season, the team is playing like a top-six side and doing well. Coventry City is a great club—no disrespect to Leyton Orient—that does not deserve to be in its current position and I wish it well.

The stark reality is that many clubs and companies will experience periods of financial difficulty, with some enduring the pain of administration. The focus for the football authorities, however, must be on doing all that is possible to avoid clubs ending up in this dreadful position. The Government’s hope and expectation is that, following the Culture, Media and Sport Committee’s inquiry, recommendations are pursued and the football authorities will be able to make such changes themselves.

My Department will continue its dialogue with the football authorities in the coming months to ensure that the necessary action is taken to deliver these important governance reforms, but if they do not, the Government have made it very clear that we will look to introduce legislation.