Impact assessment

Fact sheet - changes from the previous Football Governance Bill

Updated 25 October 2024

Applies to England and Wales

Financial distributions between leagues

Under the measures in the new Bill, parachute payments will no longer be excluded from consideration as part of the backstop. All aspects of relevant revenue (either broadcasting revenue, or other revenue specified by the Secretary of State) should be considered to give the IFR the ability to effectively safeguard the future of the game. To exclude any relevant aspect of revenue from consideration by the IFR would restrict its ability to meet its objectives to protect and promote the financial soundness of individual clubs and of English football as a whole.

The Expert Committee can only include parachute payments within scope of the backstop if it determines they are relevant to the financial sustainability of the football pyramid.

In the event that they are included in scope, new requirements will ensure that relegated clubs will not risk their financial sustainability:

• for a proposal to be successful, it will need to ensure that the future finances of relegated clubs are appropriately protected
• parachute payments cannot be reduced within a year of the distribution order coming into effect to allow impacted clubs to plan accordingly

Including parachute payments in scope will not mean they are abolished, just that the IFR will be able to consider all aspects of relevant revenue to achieve the best possible outcomes to safeguard the future of the game. 

Separately, as a result of the measures in the updated Bill the Regulator will now have the ability to terminate the distributions process should it determine that none of the proposals it receives from the leagues is consistent with its sustainability and resilience objectives. It would then be up to either the Premier League, EFL, or the National League to apply to retrigger the process.

The previous Bill set out that the backstop cannot be triggered unless the current distributions agreement has been in force for at least five years, but allows the leagues to agree a time period between themselves which supersedes the five year limit.

The option to amend that time limit has now been removed to provide legislative certainty.

Strengthening fan engagement provisions

The measures in the updated Bill will set new standards for fan engagement in decision-making, strengthening the measures in the previous Bill. For the first time, clubs will now be required to have an effective framework in place to regularly meet and consult a representative group of fans on key strategic matters at the club, and other issues of importance to supporters. The new Bill also explicitly requires regulated clubs to consult their supporters on ticket prices as well as any proposal to relocate their home ground, prior to the IFR giving approval.

The Bill has been updated so that the Regulator can consider whether it requires that the consulted representative group is elected by other fans. This change is intended to avoid situations where a club selects specific individuals without considering or consulting the wider fanbase to avoid appropriate accountability or challenge.  

While fan engagement requirements already existed in the Bill, it will now be explicit that the requirement continues to apply in the event that a club enters into administration to ensure better transparency with fans. This is alongside a standalone duty for all regulated clubs to keep fans updated, as far as they are able, as to developments in the relevant insolvency process

These new, strengthened measures will ensure clubs engage meaningfully with fans and give them a greater voice.

Equality, diversity and inclusion (EDI) reporting

Clubs will now be required to publish what action they are taking on EDI as part of their corporate governance reporting. This was recommended by the Fan-Led Review and is in line with other governance codes. It is anticipated this will help improve transparency, accountability and decision making at clubs.

Owners’ and directors’ tests

There was previously a clause requiring the IFR to have regard to the government’s foreign and trade policy when approving takeovers, which has been removed.  This removal makes it absolutely clear that the IFR maintains its operational independence from the government when testing the suitability of owners.

Reviewing the competitions in scope of the IFR

It is important to ensure that the competitions in scope of the IFR remain under review and that this scope is based on evidence.

The Secretary of State can amend the competitions in scope of the IFR in the future through regulations. The Explanatory Notes for the new Bill clarify that the Secretary of State will keep any regulations, and whether it is appropriate to use any regulation-making power, under review on an ongoing basis. This includes whether additional competitions should be specified, such as women’s football competitions. 

As part of this consideration, the Secretary of State will be required to carry out a review, and publish and lay before Parliament its findings, before amending the competitions in scope of the IFR in the future. For example, this would include carrying out a formal review before expanding the scope to include the lower leagues or the women’s leagues.

Timing of the State of the Game report

The timeframe under which the IFR must produce the first report is being shortened from within three years of the Bill receiving Royal Assent to within 18 months of the competitions in scope being specified. This will ensure the report informs the Regulator’s approach from as early a stage as is possible.

The timeline for subsequent reports has been increased from at least every three years to at least every five years. This will encourage the IFR to take a more long-term outlook, will help to reduce industry costs, and better align with timelines for existing industry processes (for example, commercial agreements). The IFR does still have the discretion to publish subsequent reports sooner than five years if it considers it appropriate.

The Bill also now requires the IFR to consult the FA, the specified competition organisers, and any other persons it considers appropriate on a draft ‘State of the Game’ Report, prior to publishing the final report.

Licensing changes

There are some minor changes regarding the licensing regime. This includes allowing the IFR greater flexibility to ensure clubs meet the threshold requirements through non-financial discretionary licence conditions. 

The Bill has also been amended to more clearly constrain the IFR’s ability to limit a club’s spending through discretionary licence conditions related to a club’s financial resources threshold and the systemic financial resilience objective. It is now made clear in the Bill that the IFR will not be able to require a club to reduce expenditure in a specific area. Rather the club will retain the ability to determine what areas they limit/reduce overall expenditure to satisfy the condition.

Consultation

In consultation requirements throughout the Bill, the IFR is no longer required to consult if amendments are minor, in order to reduce the burden on stakeholders.

The Bill also now includes a provision for pre-commencement consultations. This will allow the IFR to rely on consultations the shadow football regulator has undertaken prior to Royal Assent and is aimed at reducing any potential delays to the setup of the Regulator.

Expert panel, internal reviews and appeals

The new Bill includes a series of small changes to the way the IFR’s Expert Panel and internal review mechanism will operate. These small changes are designed to mitigate the risk of overburdening the Panel, and the impacts this could have on resourcing and timely decision-making.

Changes include:

• Removing the cap on the maximum number of members of the Expert Panel, giving the IFR the flexibility to adapt in the event of high workload for the panel.
• Removing the requirement to use the Expert Panel for certain enforcement decisions, instead leaving it to the IFR’s discretion- for example, this will allow more routine or straightforward decisions to be taken by the IFR’s enforcement team.
• Clarifying that the IFR can decline a request for internal review in certain circumstances (for example, where there is clearly not a case for an internal review or the request is vexatious).
• Empowering the IFR to recover the costs associated with carrying out an internal review directly from the person who requested the review, if the review is unsuccessful. In exercising this power, the IFR will need to consider the financial resources of the person it is seeking to recover costs from. This should disincentivise speculative review requests, while not limiting access to justice or imposing unaffordable burdens on smaller clubs.  
• Tweaks to the decisions subject to appeal, so that certain decisions by the IFR “to approve” are now captured as reviewable decisions in Schedule 10, rather than only the negative (“to not approve”) per the previous Bill. This includes approving a stadium sale, stadium relocation, and the appointment of an administrator.

Set up of the IFR

The Bill now sets out a staged constitution for the legal establishment of the regulator, allowing greater flexibility in the event there are delays to the set up of its Expert Panel. In the initial period, which starts when the Act is commenced and runs until the CEO has appointed the full Expert Panel, the Regulator consists of only the Board. Thereafter, once the full Expert Panel has been appointed, the Regulator consists of both the Board and that Expert Panel. 

The new Bill now also allows for flexibility in the membership of committees of the Board, in that committees may include persons who are not board members (for example, senior regulator staff).

Rules

The Bill now excludes Schedule 4 from the Regulator’s general rule-making power. This prevents the Regulator from making rules that clubs must follow to meet their threshold requirements (which should instead be done only through attaching discretionary licence conditions on a club’s licence).