Football Governance Bill reintroduction as clubs must prepare for new regime

The Football Governance Bill (134 pages / 6.9 MB) will establish the Independent Football Regulator (IFR) for the elite men’s game in England. The bill was introduced in the House of Lords on 24 October.

A previous version of the bill was originally tabled in March by the last government but ran out of time to pass through parliament ahead of July’s general election. It followed a fan-led review of football governance, with the UK government confirming in 2022 that it would legislate to establish the new independent regulator to oversee clubs in the top five tiers of the English Football League (EFL). The government previously cited shortcomings in the current model of industry self-regulation as a factor in the case for reform.

Now a “strengthened” version of the proposed legislation has been introduced in parliament. The Labour government made some changes to the bill “to properly redress the balance, putting fans back at the heart of the game, taking on rogue owners and crucially helping to put clubs up and down the country on a sound financial footing”, said culture secretary Lisa Nandy. 

Sports law expert Gabrielle Armstrong of Pinsent Masons said, “Whilst there are some important changes to the bill – in particular, bringing ‘parachute payments’ within its scope – the bulk of the bill remains unchanged. Football clubs need to continue preparing for the new regime announced earlier this year, as regards the licensing conditions and corporate governance standards they will need to meet, among other things.”

The IFR will still be provided with “backstop powers” enabling it to impose a financial settlement if the Premier League and EFL cannot reach an agreement on a new funding deal for the redistribution of broadcast revenue. This deal is poised to promote fairer funding distribution down the football pyramid. 

Under the new draft bill, the IFR’s backstop powers will be expanded to include parachute payments when deciding on how much the Premier League should redistribute - this was excluded from the regulator’s scope in the earlier draft. Parachute payments are worth tens of millions to clubs when relegated from the Premier League but are a contested topic with the EFL and Premier League at loggerheads. The EFL continues to push for the payments to be scrapped in a bid to level the competitive playing field, resulting in a greater share of the profit generated by the Premier League. 

The last government’s draft legislation included a requirement for the regulator to consider the “foreign and trade policy objectives” of the UK government when taking decisions over club take overs. This proposal, considered controversial and met by concerns about government interference in the regulation of clubs, is omitted from the new bill, potentially signalling more independence for the IFR. 

There are also new clauses providing that clubs may be compelled by the IFR to improve fan engagement, with IFR powers demanding “effective engagement” on changes to ticket prices. Clubs will also be required to be transparent and publish any action they take in regard to equality and under-representation. 

Duties to be imposed on clubs by the bill include not joining any prohibited competitions, such as the failed attempt in 2021 to create a European Super League. Clubs must avoid selling or relocating home grounds without IFR approval and cannot go into administration without IFR approval. Material changes to a club crest or main home shirt colour will only be permitted under the legislation after a club has taken “reasonable steps” to secure support for the changes from a majority of fans.

New duties are not only imposed on clubs - the five top tier leagues also face new obligations under the bill. A league will have a duty to notify the IFR if it becomes aware of a risk to the financial soundness of a club or of English football more generally. The IFR must also be made aware if a league suspects a club to have breached a competition rule relevant to any IFR functions, as well as a duty to notify the independent regulator before imposing any sanction on a club for such a breach.  The IFR must also publish a ‘state of the game’ report, but it is not yet clear how far this may go in scrutinising the finances of individual clubs.

The IFR will be given broad and robust powers to investigate and enforce compliance with requirements of the bill. This will include the ability to issue financial penalties of up to 10% of a club’s revenue or the suspension or revocation of a club’s operating licence.