UK Football Governance Bill approaches biggest test in parliament

The bill has recently completed its scrutiny by committee in the House of Lords and is now set to face votes on a number of amendments at report stage in the coming weeks.

The biggest issues for the government are likely to be amendments watering down the new regulator’s powers, and an amendment which some see as a blocking tactic designed to take the bill into parliament’s lengthy hybrid bill procedure. However, if it can overcome this, it is likely to become law within months.  

What will the bill do?

The bill will, for the first time, subject the multi-billion-pound self-regulated football industry in England to a strict regulatory framework set down in law and overseen by an independent state regulator - the Independent Football Regulator (IFR).

The new legislation includes a licensing regime requiring clubs to satisfy the IFR that they have sound corporate and financial governance in place that provides financial stability; all backed up by potential penalties of up to 10% of a club’s revenue.

Clubs will also be subject to a new test and process for the IFR to approve the appointment of their owners and senior officers as suitable persons to run the club. This is also aimed at ensuring financial stability of clubs. There is a requirement for clubs to consult fans on certain decision too, including changes to their home ground, home shirt, or club badge. Larger clubs will also be required to hold elections for the appointment of official fan representatives.

The new legislation further includes an arbitration process which allows the IFR to intervene and impose a settlement if the Premier League (PL) and English Football League (EFL) are unable to reach a deal on the redistribution of a portion of PL broadcast revenue to the EFL. This may include how that revenue is distributed in the form of “parachute payments” to clubs relegated from the PL.

However, the bill is only a framework piece of legislation. Under this framework, the IFR’s first job will be to exercise its new powers to write detailed rules and guidance, following some consultation with clubs. The rules and guidance are likely to run to hundreds of pages, spelling out the precise requirements on finance, governance and other issues that clubs must meet. The government must also make regulations specifying which leagues will fall under the legislation initially. Its stated intention is to cover the top five tiers of English men’s professional football, consisting of the PL, the Championship and the other three divisions of the EFL.

How has the bill progressed in parliament so far?

On 15 January, the bill completed its committee stage in the House of Lords. This proved to be more eventful than most expected.

Even though the bill is almost identical to the previous Conservative government’s version, which could not be completed before the July 2024 general election, the Conservation opposition took many by surprise by opposing most of the bill’s pivotal principles.

Although this led to some headlines suggesting problems for the bill, in practice it served only to delay the bill by requiring a few more weeks to complete the debates, because by convention, the lords do not vote on any amendments in committee stage. The debates have served to indicate, though, what the key issues are likely to be for the government when the bill faces votes on amendments at report stage.

Are reported problems with the bill likely to materialise?

There has been a lot of media interest in some of the claims made in the Lords about the negative impacts of the bill, which are hard to see being borne out in practice.

An often-repeated claim has been that UEFA may ban English teams from its competitions as the result of perceived government interference in the running of football. There is little evidence to support this. Whilst UEFA has stated that it does not want to see government interference, the government has given assurances that it has discussed the bill with the FA and UEFA, and they have raised no objections. The government has also pointed to legislation on similar matters in Italy and Spain, which UEFA has not objected to. If UEFA did have objections to the bill and was planning any sanctions, it would be odd that it had not made any public statement by now to press for changes.

Some concerns have also been raised that the new owners test may require some current owners to sell their clubs. This is unlikely, though it is possible that we may see some impact on the ownership of clubs in the next few years. The new test in the bill develops the tests already applied by the PL and EFL to date, but the more significant changes are likely to emerge in the long term, as we see more in the guidance and overall approach from the IFR to how it applies the test in practice.

It is also important to bear in mind that the bill is focussed on the application of the test to new owners purchasing a club, rather than owners already in place. However, it is possible that some current owners may find themselves subject to the IFR applying the test, if new information raising concerns about their suitability comes to light in the future.

What next for the bill?

The bill will see its first major test with votes on amendments at the Lords report stage in February. The outcome of votes is difficult to predict in the House of Lords, because no single party holds a majority and not all peers attend regularly to vote. Typically, a non-government amendment requires a broad coalition of support that crosses party lines in order to inflict a defeat on a government bill.

The debates in committee suggest that there are two major issues on which the government will face its biggest test with votes at report stage.

The first is an expected series of Conservative amendments seeking to preserve self-regulation and water down the powers of the IFR or put a “sunset” date on its powers so that they will expire unless reviewed and re-approved in parliament after a probationary period. It looks unlikely these amendments will succeed, as support for them during committee stage was largely confined to a small number of Conservative peers.

The second is a Conservative amendment which some Labour peers have described as a “wrecking” tactic designed to block the bill. This would be an amendment stating explicitly that it is the PL and EFL that will fall under the new legislation, rather than leaving this to be determined in government regulations. This is significant because it may have the effect of taking the bill into parliament’s hybrid bill procedure, which applies to legislation considered to target private interests as well as dealing with matters of public interest. That could add a year to the parliamentary timetable, or it could lead the government to withdraw the bill and start the parliamentary process again. There was some evidence in committee of support for this going beyond party lines, including the support of the influential cross-party Delegated Powers and Regulatory Reform Committee, but that may not be enough given the wide support the bill has in the Lords.

When is the bill likely to become law?

If the government can get the bill through the Lords report stage largely unscathed, it should be plain sailing for its remaining stages in parliament. The government’s large majority is expected to ensure the bill speeds through all its House of Commons stages.

With swift progress, the bill could pass as early as May. The PL and EFL will be watching the timing closely, because if the bill passes before the end of the 2024-25 season, the government may be able to apply the new arbitration process immediately, so that a settlement on the distribution of broadcast revenue can be imposed going back to the start of the 2024-25 season.

The rest of the regulatory framework in the bill will need to be supplemented by more detailed IFR rules and guidance it will consult clubs on, before it can be brought into force fully. The IFR is expected to be up and running swiftly with this major work programme for its launch, but it is likely to be late 2025 or 2026 before that work is complete for the new framework to come into force. It is only then that clubs will need to start demonstrating their compliance when applying to the IFR for their new licenses. However, given the major changes to their regulatory landscape that are coming, clubs should lose no time in reviewing their readiness and taking steps to prepare now. In addition to smoothing the path to compliance, this will enable them to engage fully with the IFR in its consultations this year when it seeks views from clubs on the guidance they need.