New regulator established to oversee English football

A new regulatory body has been established after English football proved unable to regulate itself.

A new regulator is to be established by the UK government to oversee the elite men’s football (as soccer is commonly called in the UK) game. A Football Governance Bill was tabled on Tuesday this week to establish a new Independent Football Regulator (IFR) as a new public body with operational independence and accountability.

The move has been a long time coming and is a result of dysfunction within the game. While the top-tier English Premier League is one of the planet’s most popular and commercially successful sporting competitions, over 60 clubs throughout the English league system have gone bust since it was established in 1992. The financial power of the Premier League is widely seen to have distorted competition and driven unsustainable business practices as clubs scramble to be one of its elite 20 members at all costs.

Elsewhere, an owners and directors test applied to those wishing to purchase clubs throughout the 92-member league system and below has failed to prevent a succession of dubious owners buying clubs and running them into the ground.

European Super League

Calls for reform, and even full-blown reviews of the game, have got nowhere for years, but the catalyst for this historic change was the attempt in April 2021 by six of the Premier League’s leading clubs to break away and join a European Super League.

That would have wrecked the entire English game, and the huge backlash persuaded the government to set up a wide-ranging review chaired by MP Tracey Crouch. Crouch ensured a wide range of voices were consulted, and deserves much credit for driving a process which brought all of those voices together into a single proposal for reform. That call was first set out in a White Paper, A Sustainable Future – Reforming Football Club Governance and after extensive further consultation the bill was tabled this week.

There had been worries that a strong lobbying campaign by the Premier League arguing that regulation was not needed would succeed in kicking the bill into the long grass. But events in recent months seem to have persuaded the government to press ahead. In what seemed to be a bungled attempt to prove it could regulate itself, the Premier League fined two of its member clubs, Everton and Nottingham Forest, for breaches of spending rules. While the clubs had indeed breached the rules they themselves voted for, the way the cases were handled did more to prove the League was not capable of regulating itself effectively.

Financial redistribution

The final straw looks to have been the failure to agree a financial redistribution deal with the lower leagues after 10 of the 20 Premier League clubs voted against a settlement the government had been urging the game to conclude.

The Bill runs to 130 pages, and is currently being pored over by all sides of the game. It’s a historic move to regulate a game that is not just a business, but a business with deep roots in the nation’s psyche. Both the country’s main political parties support it, which means a fast passage into law is likely even in the current challenging political times. A second reading is expected within four weeks, and work is already underway to establish a shadow regulator’s office and to appoint a regulator so work can begin as soon as Royal assent is granted.

Amendments will no doubt be tabled but what’s clear is that the game’s inability to regulate itself has finally led to change. Rearguard actions are still being fought, with critics – who include many of the biggest club owners – muttering darkly about “unintended consequences”. The phrase was used by MP Mark Eastwood at an All Party Parliamentary Group on Football meeting in the Houses of Parliament on Tuesday night, which was addressed by Sports Minister Stuart Andrew and Tracey Crouch MP.

Those “unintended consequences” are framed as a possible threat to the competitiveness of English clubs at the top level. But many suspect the consequences some in the game really fear are those that are intended. The phrase has been deployed to spread fear of change, but as Crouch pointed out bluntly in response to Eastwood, regulation has not prevented businesses in a number of industries being very successful.

We’re among those taking a look at the detail of the Bill, and we will cover how this new regulator operates in the coming months and years. To begin, a summary of some of the main points.

Three objectives

The IFR will have three primary objectives:

  • to protect and promote the financial sustainability of individual clubs;
  • to protect and promote the financial resilience of English football as a whole;
  • to safeguard the traditional features of English football that matter most to fans and communities.

The IFR will not be legally permitted to act outside these objectives, and every action it takes must advance one or more of those objectives. It also has a duty to consider a number of secondary outcomes that are not its direct responsibility. These are:

  • sporting competition;
  • the competitiveness of regulated clubs;
  • investment into English football.

Seven “regulatory principles”

Seven “regulatory principles” are set out in the Bill, a move intended to recognise the unique nature of the football industry. They are:

  • efficient and expedient – using its resources in the most time and cost-effective way;
  • participative – proactively coordinating, cooperating, and constructively engaging with clubs, individuals at clubs, and competition organisers;
  • proportionate – any requirement or restriction imposed on a person should be proportionate to the benefits which are expected to result from that requirement or restriction;
  • football context-specific – acting in a way that recognises the specific context of association football and the fact that clubs are already subject to rules, restrictions and burdens by virtue of their membership of competitions;
  • tailored but consistent – applying regulation consistently, while still ensuring requirements are appropriately tailored to a club’s specific circumstances;
  • senior management responsibility – where appropriate, recognising that the individuals responsible for making decisions at a club (senior managers, other directors, and owners) ;should be accountable for the actions of the club and its compliance with regulatory requirements;
  • transparent – acting as transparently as reasonably practicable.

Required licence to operate

Regulation will be carried out through a licencing system, with every club in the top five tiers of the men’s game required to obtain a licence in order to operate. The IFR’s powers, as set out in the Bill, will be:

  • Introducing and enforcing statutory, strengthened owners’ and directors’ tests to ensure a club’s custodians are suitable and protect fans from irresponsible owners.
  • Enhancing financial regulation to improve the financial resilience of clubs across the football pyramid, ensuring that clubs take sensible financial decisions and risks are mitigated so they do not jeopardise the club’s future.
  • Placing fan engagement requirements on clubs and requiring clubs to comply with heritage protections.
  • Requiring clubs to seek approval if they propose a sale or relocation of their home ground.
  • Preventing English clubs from joining breakaway or unlicensed leagues.
  • Introducing a backstop power to intervene in the distribution of broadcast revenue where necessary (subject to certain thresholds being met).
  • Establishing a ‘Football Club Corporate Governance Code’.

The IFR will prepare and publish, within three years of becoming operational and then every three years thereafter, a State of the Game report that will offer “a broad assessment of the financial health, market structure and economic issues in the football industry”.

It will also publish “detailed and practical guidance on its regulatory regime, to support industry understanding and compliance”. And it will submit an annual report to the Secretary of State on its activities every year, which will be available for the public to see.

The approach of the IFR is to be “proportionate and adaptive”, and it will take a “participative approach” to regulation, taking an “advocacy-first approach to enforcement wherever possible”.

The Bill has been welcomed by the English Football League, which runs the four tiers below the Premier League, fan organisations, many individual clubs and politicians of all parties. Over the next four weeks, as detail is digested, there will no doubt be discussion and even minor disagreement over particular points. And once the Bill passes, as now looks inevitable, the business of making it all work in practice will begin.

There will be twists and turns in the road, but this week ushered in a historic change. It will be fascinating to observe how the new regulator proceeds, and how this extraordinary industry deals with the detail that arises. We will be keeping you informed, and drawing the lessons that could apply elsewhere.