Fact sheet - financial distribution backstop mechanism
Updated 25 October 2024
Applies to England and Wales
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The Bill provides a backstop mechanism which will allow the IFR to intervene in the distribution of revenue as a last resort. The mechanism can only be used to determine distributions across the top 5 divisions of the men’s English football leagues.
Triggering the process
Either the Premier League, EFL, or the National League, as the leagues in scope, could apply to trigger the backstop mechanism if at least one of the following conditions is met:
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there is no distributions agreement in place between the relevant leagues
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there has been a material reduction in the relevant revenues received by the relevant league
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there has been a material change in circumstances affecting the relevant revenue
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5 years has passed since the last agreement was entered into
After a valid application, the process can only be triggered if the IFR has reasonable grounds to suspect that its ability to deliver its objectives (for example, around financial sustainability and resilience) would be jeopardised if the process was not triggered.
Mediation
Once the process is triggered, the leagues involved will need to appoint a mediator to facilitate the negotiation - if the leagues cannot agree on a mediator, the IFR will appoint one with relevant experience and training. If the leagues are unable to reach an agreement during the 28 day time period permitted for mediation, the process moves on to the final proposal stage.
Final proposal stage
In the final proposal stage the IFR would form a committee from its panel of independent experts.
This committee would have an opportunity to set out the parameters of the proposals and the issues they expected them to address. This may include, among other things, an explanation of how a proposal will promote the financial sustainability of relegated clubs (where the Expert Panel determines this is a relevant question to be addressed). Both parties would make a final proposal. The panel would choose the proposal that was most consistent with its financial sustainability and resilience objectives whilst also taking into account the impact on investment, club competitiveness, sporting competition and the commercial interests of both parties. Further, a proposal must not reduce ‘parachute payments’ for at least a year after the distribution order is made (where this is a relevant consideration).
Following this, the committee would make a legally enforceable order requiring the parties to comply with its decision. If the panel determine that neither proposal is consistent with its sustainability and resilience objectives it can terminate the process. It would then be up to either the Premier League, EFL, or the National League to apply to retrigger the process.