October 5, 2023
In 2019, the government highlighted fundamental problems with the current state of English football club financing, corporate governance and self-regulation. In its White Paper in February 2023, the government proposed new regulation focused on protecting the financial stability of football clubs, to be administered and enforced by a new independent regulator. All clubs in the top five tiers of the English football pyramid would need a licence to operate. The legislation would establish four threshold conditions for the licence – appropriate financial resources, suitable owners, fan interests and approved competitions – and the regulator would set out detailed licence conditions for each club, proportionate to the club’s circumstances, under each of the conditions. There would also be new owners’ and directors’ tests to measure fitness and propriety, source of wealth and, in the case of club owners, robust financial plans. The regulator will monitor and enforce the licence conditions.
On 7 September 2023, the government published a summary of responses to these proposals and its own response to the key themes raised. Most respondents agreed with the need for reform and welcomed the proposed new regulator. The government restated its position that the evidence shows that many clubs are in a financially precarious state and a number have gone out of business. As to the need for a new regulator, the government has stated its view that an existing football governing body would not be sufficiently independent from club influence to act as regulator. However, the new regulator would collaborate with existing bodies and may delegate certain responsibilities to them. To avoid concerns of over-regulation, the government confirmed that the regulator would have a tightly-defined scope focused on financial sustainability, and that its approach to regulation would be targeted, proportionate and risk-based.
The government has now responded to a House of Commons Culture Media and Sport Committee report on football governance published in June 2023. In the report, the DCMS Committee made several recommendations. These include a recommendation to appoint the regulator in shadow form before the end of 2023 and ensure new legislation giving statutory powers to the regulator are included in the upcoming King’s speech. The government responds that a formal regulator transition team operating in shadow form would require a Second Reading of a Bill to have taken place but, in the meantime, it encourages football authorities to implement some of the reforms of its own accord before the regulator is established. The government agrees with the recommendation that the licensing conditions on fan engagement should be set independently of the Premier League Fan Engagement Standard to ensure a substantially higher level of fan engagement. As to the recommendation to ensure that equality, diversity and inclusion measures are included in the proposed code on football governance, the government points out that the regulator’s primary focus will be on club financial sustainability, systemic stability of the football pyramid and protecting club heritage.
Finally, the committee urges the Premier League, the English Football League and the FA to urgently reach agreement on sharing a higher proportion of revenue with clubs down the football pyramid, before the regulator’s appointment. The government’s response, as set out in its White Paper, is a strong preference for football-led solution to this issue without regulatory intervention except as last resort. Powers to intervene if an agreement is not reached will need to be carefully designed.