Impact assessment

Fact sheet - overview

Updated 25 March 2024

This was published under the 2022 to 2024 Sunak Conservative government

Applies to England and Wales

Overview

The Football Governance Bill, following on from the football governance white paper A sustainable future - reforming club football governance (published February 2023), establishes a new independent regulator for English football. 

As set out in the white paper, the Independent Football Regulator (IFR) will have powers to operate a licensing regime, and to monitor and enforce compliance with requirements on financial regulation, club ownership and directors, fan engagement and club heritage protection. It will also set a corporate governance code of practice and have the power to prohibit clubs from joining competitions where they are not fair and meritocratic and would threaten the heritage and sustainability of English football. The IFR will additionally have backstop powers to intervene to bring about a solution on financial redistributions between the football leagues (if certain conditions are met).

The IFR will have no role in sporting rules or ‘on-field’ decisions made by clubs. Furthermore, the IFR will have a duty to ensure that, in exercising its functions, it must attempt to do so in a way that minimises impact on sporting outcomes, and also any adverse effect on the competitiveness of clubs and on financial investment in English football.

The legislation will ensure that any requirements placed on clubs will need to be proportionate to a club’s specific circumstances and to the issue they are seeking to address. The IFR will also have statutory regulatory principles including one to the effect that wherever possible, it will look to work with the leagues when it exercises its regulatory functions and have due regard to existing league rules. These provisions will help to ensure a coherent and effective regulatory regime, minimising regulatory overlap and burden.

What the Football Governance Bill and the Independent Football Regulator will do

The legislation will strengthen the governance and financial resilience of football clubs and the link between clubs and their fans. The legislation will do this by:

• Establishing a new independent regulator. The IFR will operate a licensing system, where all clubs in scope will need a licence to operate. It is intended that all clubs in the top five tiers of men’s English football will be in scope of the regulatory regime.

• Establishing strengthened Owners’ and Directors’ Tests to make sure club custodians are suitable.

• Enabling the use of targeted financial regulation to improve the financial resilience of individual clubs and the system more broadly.

• Setting a minimum standard of fan engagement and requiring clubs to comply with club heritage protections.

• Requiring clubs to seek IFR pre-approval for any sale of, or relocation from, their home ground.

• Preventing English clubs from joining prohibited competitions that do not have the support of the fans or that threaten the heritage or sustainability of English football.

• Giving the IFR targeted backstop powers to intervene in financial distributions if necessary and subject to certain thresholds being met, in order to ensure financial sustainability.

• Establishing a ‘Football Club Corporate Governance Code’, requiring regulated clubs to report on how they are applying the code of practice.

• Periodically prepare and publish a comprehensive ‘State of Game’ report, which will act as a market study for football and provide the IFR with a key evidence base.

Approach to regulation

English football is more than just a sport - it is a part of our history, our heritage, our national identity and our shared culture. It is a major global success story, allowing fans to watch some of the world’s best players play in England every week. This success is built on strong commercial growth, in part down to the investment into clubs. This is why the IFR will be established in a way that protects English football as an attractive investment proposition and exciting sporting competition, but also ensures that the continued growth of the game does not come at the expense of clubs being lost to their communities or the interests of fans being disregarded.

The regulatory regime will be designed to be proportionate and, as such, we expect the IFR will not adopt a “one size fits all” approach. Instead, it should tailor any intervention to the specific circumstances and risks a club faces and in doing so should avoid placing unnecessary burdens on low-risk or already well-run clubs. The IFR’s approach should be participative, aiming to work constructively with the industry to improve standards. This includes taking an advocacy-first approach to resolving non-compliance wherever it can. Only where this has proven ineffective, or in more urgent or serious cases, should the IFR intervene more directly or strongly.

For example, if a club was experiencing financial difficulties the IFR might consider the club’s long-term sustainability is at risk and so action is needed. Under normal circumstances, we expect the IFR would first engage with the club to encourage the necessary changes. If it considered a bespoke licence condition was necessary, it would first offer the relevant league the opportunity to make a binding commitment to address the issue. Failing this, the IFR would attach the condition to the club’s licence to mandate a raise in standards. These conditions would be proportionate to the issue the club was experiencing and to the specific circumstances of the club. This allows the IFR to tailor conditions to clubs and minimises the burden of any intervention.

It is also the case that some clubs may see little direct intervention from the IFR, or may not need to make significant changes to comply with its regime. For example, while clubs will be required to meet minimum standards of engagement with fans, there will be flexibility for clubs in how this is achieved. It is likely that for some clubs who are already engaging appropriately with their fans, no changes will be required.

Scope of the regulatory regime

The regime is intended to cover clubs in the top 5 tiers of English men’s football only. The Bill requires that only clubs competing in competitions specified by the Secretary of State in secondary legislation will need a licence. At present, the intention is that the Secretary of State will specify only the Premier League, EFL Championship, League One and League Two, and the National League.