Impact assessment

Fact sheet - licensing regime

Updated 25 October 2024

Applies to England and Wales

The Football Governance Bill will establish a licensing regime with all clubs required to obtain a licence to lawfully continue taking part in competitions specified by the Secretary of State.

There will be 2 types of operating licence: provisional and full. This two-stage structure recognises the importance of a transition period for clubs to familiarise themselves with the system and raise standards where necessary.

Clubs will first apply for a provisional licence, where they will need to provide some basic documentation. This includes a strategic business plan detailing financial information such as costs and sources of funding, and a personnel statement detailing the club’s owners and officers and their job roles. To obtain a provisional licence, clubs will need to demonstrate they are ready, willing, and able to comply with some core, baseline requirements - duties on all regulated clubs, and the mandatory licence conditions (see below).

By engaging appropriately with the IFR and providing the necessary documentation, most clubs should be able to readily demonstrate this. The provisional licence will allow a club to continue operating while making progress towards meeting the higher standards required for a full licence. A provisional licence will apply for a maximum of three years initially, with the opportunity for extension if required. 

In order to obtain a full operating licence, a club will need to satisfy the statutory test. This includes continuing to meet the freestanding duties, meeting the mandatory licence conditions, and meeting the  higher, club-specific standards across three threshold requirements (financial resources, non-financial resources, and fan engagement). In addition, if any of the club’s existing owners and directors have been found unsuitable by the IFR and are still in post, it cannot grant the club a full operating licence. 

Clubs will only need to initially apply for a provisional licence. Then, before the end of the provisional period, the IFR will assess a club for its full licence - the club will not need to actively apply for this. The ongoing approach to real-time monitoring and supervision of clubs will mean that once clubs are granted a licence, they will not need to re-apply for or renew their licence periodically. This should help minimise regulatory burden on clubs.

Provisional licence

Clubs must meet the following criteria to obtain a provisional operating licence.

Satisfy the IFR that it would comply with the “duties on regulated clubs” by:

• not playing in competitions that have been prohibited by the IFR
• notifying and obtaining the IFR’s approval before selling or relocating from their home ground or using their ground as collateral for a loan
• establishing the support of a majority of a club’s domestic fans before changing the crest and home shirt colours, as well as obtaining FA approval before any changes to club names
• keeping fans informed, as far as possible, of any developments in insolvency proceedings if the club is in administration
• providing an up-to-date personnel statement to the IFR identifying a club’s owners, directors and senior managers and their roles and responsibilities within the club
• informing the IFR of any material change in circumstances affecting the club that is relevant to the IFR’s functions
• gaining the approval of the IFR prior to the club appointing an administrator.

Satisfy the IFR that it will comply with the “mandatory licence conditions” by:

• submitting a financial plan to the IFR, detailing the club’s funding, revenues, financial risks and mitigations
• publishing a corporate governance statement showing how they are applying the Football Club Corporate Governance Code (this will set out corporate governance best practice for football clubs and will be published by the IFR following consultation with the FA and other relevant stakeholders)
• consulting a representative group of fans on issues of importance to the club such as club heritage and business priorities
• submitting an annual declaration to the IFR, including any material changes in circumstances or compliance over the past year

A provisional licence will allow the club to continue playing in the specified competitions for a fixed period of up to 3 years initially, with the possibility for the IFR to extend beyond this where necessary. Before the end of the provisional period, a club should reach the standard required to pass the test for a full licence.

Full licence

Clubs must meet the following criteria to obtain a full operating licence.

1. Continue to comply with the duties on regulated clubs and the mandatory licence conditions (described above).

2. Meet the “Threshold Requirements” - these principles are set in statute but what is required of each club to satisfy them will vary depending on the club’s specific circumstances. The IFR will provide further detail in guidance.

• Appropriate financial resources - the quantity, quality and availability of financial means to enable the club to meet cash flows even in the event of a financial shock and protect the core assets and value of the club (such as the stadium).
• Appropriate non-financial resources - this could include internal structures, plans or policies that the club maintains, for example to manage risk. 
• Fan engagement - regularly and effectively consulting with fans on relevant matters, including the club’s strategic direction and objectives, the club’s business priorities, operational and match-day issues, the club’s heritage, and plans relating to further/ongoing fan engagement.

3. None of the club’s existing owners and directors have been found unsuitable by the IFR.

If the IFR is satisfied that all elements of this test are met, it will grant the club a full operating licence. A full licence would have no expiry date. However, clubs will be monitored and supervised on an ongoing basis to ensure they are complying with their requirements, and to determine whether any changes are needed to requirements in response to a change in the club’s circumstances.

Discretionary licence conditions

If the IFR thinks that i) a provisionally licensed club will not meet the threshold requirements by the end of its provisional period, or ii) a fully licensed club is not meeting the threshold requirements, it will be able to intervene by placing bespoke licence conditions on a club - known as “discretionary licence conditions”. These conditions should always be proportionate to the issue a club is experiencing and the individual club’s circumstances, to minimise the regulatory burden. The aim of a discretionary licence condition will be to raise, or contribute to raising, a club’s standards to the threshold level. This is the level the IFR considers appropriate given the club’s circumstances and risk profile.

Aside from addressing systemic financial risks (see below), the IFR may only impose discretionary licence conditions that relate to one of the three threshold requirements. 

For the financial resources threshold requirement, the IFR can only impose discretionary licence conditions that:

• i.relate to debt management
• ii.relate to liquidity requirements
• iii.restrict the club’s overall expenditure, or
• iv.restrict funding the IFR reasonably suspects to be connected to serious criminal conduct

For the non-financial resources threshold requirement, the IFR can only impose discretionary licence conditions relating to:

• i. internal controls
• ii. risk management, or
• iii. financial reporting

The IFR will also be able to take action to mitigate systemic risks and structural issues in the game, in line with its systemic financial resilience objective. Certain financial risks may arise that are a concern when the aggregated, correlated, or multiplied effects are considered. These risks may threaten groups of clubs, entire divisions, or even the entire English football pyramid. For example, this might include risks to common credit markets, the global transfer market, or the football broadcasting market on which all clubs are reliant for revenue.

As such, if a club(s) specific relationship with the wider football system means they are exposed or contributing to systemic risks, the IFR will also be able to attach discretionary licence conditions to advance the IFR’s systemic financial resilience objective. Discretionary licence condition(s) set in relation to systemic financial resilience can only relate to debt management or liquidity requirements or place a restriction of overall expenditure.

Commitments in lieu of financial discretionary licence conditions

In normal circumstances, before the IFR can impose discretionary licence conditions on a club relating to the financial resources threshold requirement or to advance the IFR’s systemic financial resilience objective, it will provide the relevant league an opportunity to resolve the issue first. The league will be able to offer a commitment in lieu of the financial discretionary licence condition. 

If the IFR is satisfied that the commitment will resolve the issue and achieve the same outcome as the proposed discretionary condition, it can accept it. The league is then responsible for ensuring the commitment is fulfilled, including any action required by the club. If the IFR does not think the league’s proposal would work, or that a commitment in force does not appear to be working, the IFR can step in and attach the original proposed discretionary licence condition, or a new condition that looks to resolve the issue.

Suspension and revocation of a licence

The IFR will be able to temporarily suspend or revoke a club’s operating licence under certain circumstances: 

• i. The most likely reason for the revocation of an operating licence would be because the club has been relegated from a specified competition, will no longer be in scope of the IFR, and so no longer needs a licence to operate. 
• ii. A provisional licence may be revoked because a club has persistently, and without reasonable excuse, failed to take the necessary steps to meet the test for a full licence, and the IFR considers there is no reasonable prospect of the club meeting the relevant requirements within a reasonable period.
• iii. The IFR may, at any point, revoke a provisional or full licence if a club has, without reasonable excuse, committed a relevant infringement and one or more of the aggravating conditions has been met. The aggravating conditions create a very high threshold for the use of this power in statute. For example, that non-compliance is persistent and intentional, and the IFR has already exhausted all other avenues to bring the non-compliance to an end.

Licence revocation is considered a last resort and will only be used in the most extreme circumstances. The IFR’s powers to remove unsuitable owners and directors should also mean it rarely, if ever, has to revoke a club’s licence. Operating without a licence can be met with an injunction from the court, as well as other sanctions imposed by the IFR such as financial penalties.

Full details of the IFR’s enforcement procedures can be found in the Investigations, enforcement, and appeals factsheet.