An Independent Regulator for English football: a beautiful game changer?

On 23 April 2024, the Football Governance Bill (the Bill) had its second reading in Parliament, with a view to introducing a new Independent Football Regulator (IFR). The Bill follows a fan-led review conducted in 2021 - which emphasised the necessity for governance, ownership, sustainability, and fan engagement reform - and a subsequent White Paper and Consultation Response (issued in February and September 2023, respectively).

An Independent Football Regulator

Professional football in England is overseen by several entities, such as the FA, UEFA, and FIFA, but calls for an independent regulatory body have grown louder in recent years, driven in-part by financial issues facing a number of clubs - over 60 clubs have been put into administration since 1992. The proposed IFR, funded by a levy on clubs, aims to protect financial soundness and resilience of English football while safeguarding its heritage. If introduced, the IFR would have authority to gather information and enforce compliance, but it would not have jurisdiction to impose sports-specific sanctions like points deductions typically associated with Financial Fair Play (FFP) breaches. 

Club licences

Under the current proposal, clubs would need to secure a licence confirming compliance with IFR requirements. Initially, clubs must apply for a provisional licence, and the IFR will grant a full operating licence if:

• a club's financial resources are appropriate for the activities of the club
• a club's non-financial resources are appropriate for the activities of the club
• the level and quality of fan engagement is adequate.

Once licensed, clubs would have to submit financial plans, annual declarations, publish corporate governance statements, and carry out regular fan consultations. The IFR could also impose additional licence conditions, including those relating to debt management, financial reporting, and risk management. However, the interrelationship between the IFR framework and UEFA's FFP regulations is not yet well-defined, and it remains to be seen how the systems will interact with one another. 

Ownership tests

Should the Bill pass, prospective new owners or officers of a regulated club would have to apply to the IFR for a determination of their suitability, considering factors such as: honesty and integrity, criminal convictions, regulatory actions, financial soundness, and history of holding positions of responsibility. Incumbent owners and officers would have to notify the IFR of material changes in circumstance, and the IFR would have the power to order an individual to cease being an owner if deemed unsuitable.

Other powers of the IFR

If introduced, the IFR would have recourse to the following powers:

• Approved Competitions - The IFR could preclude regulated clubs from fielding teams in competitions not recognised as having fair and open competition, or that threaten the sustainability and heritage of English football. 
• Revenue Distribution - The IFR could require specified competition organisers (such as the Premier League) to enter into mediation with the English Football League to determine matters such as the distribution of broadcast revenue. However, if this proves unsuccessful, the IFR would have the power to make an ultimate determination.

• Investigatory Powers and Information Gathering - The IFR would be empowered to perform warrant-backed 'dawn raids' if there are reasonable grounds to suspect an infringement and will be able to compel clubs and competition organisers to provide information. Non-compliance, provision of false information, or obstruction can incur financial penalties up to 10% of total club revenue as well as public censure. 

Enforcement and sanctions

In the form currently envisioned, the IFR would prioritise advocacy over enforcement and be precluded from imposing sporting sanctions, such as points deductions, on clubs. However, the IFR would have access to a suite of cautionary 'yellow card' responses, such as issuing warnings and censures, and more severe 'red cards' responses such as:

• Disqualification powers regarding owners and officers - Likely reserved for cases where individuals fail the new owners' and directors' suitability tests or in scenarios involving severe breaches.
• Holding senior management accountable for compliance - Certain roles will carry defined responsibilities for ensuring adherence to regulations. In situations where infringements occur, financial penalties may be imposed on those identified as responsible, alongside censure statements.

• Suspension or revocation of a club's operating licence - Clubs competing within England's top five leagues must satisfy conditions regarding: financial stability, non-financial resources such as corporate governance, and fan engagement in decision-making processes. Persistent severe breaches could lead to suspension or revocation of their IFR issued license.

Competition appeal tribunal 

If advocacy proves unsuccessful, stakeholders will be able to appeal directly to the IFR or launch an appeal with the Competition Appeal Tribunal (CAT), which will be the final arbiter of unresolved disputes. To appeal to CAT, appellants must demonstrate that the IFR's decision was irrational, procedurally unfair, or illegal. However, decisions that have the most significant implications for a club, such as licence revocation, can be reviewed by CAT based on their merits. 

What comes next? 

The Bill was at the committee stage, however, due to an impending general election Parliament was dissolved on 30 May 2024 and the Bill was not passed. On 17 July 2024 the King's Speech, delivered as part of the State Opening of Parliament, confirmed that the newly elected government intend to introduce a bill establishing an independent football regulator – but it is currently unknown as to whether the government will significantly diverge from the formulation of the previously mooted Bill. 

As this legislation advances, club officers and owners must closely track the development of the IFR's powers and rules. The proposed punitive measures grant wide-ranging enforcement capabilities that could significantly impact non-compliant clubs. From financial penalties and censures, to disqualifying owners and revoking licenses, these sanctions carry serious potential consequences. Navigating this new landscape requires a comprehensive understanding the IFR's remit. Seeking legal counsel at an early stage may prove crucial for stakeholders aiming to steer clear of expanded enforcement measures.