Regulation of English football to be legislated for

The UK government confirmed last spring that it would legislate to establish a new independent regulator in English football. In doing so, it endorsed the 10 central recommendations arising from a fan-led review of football governance in England, chaired by former sports minister Tracey Crouch, which flagged concerns with the sustainability of football finances and existing corporate governance in the game.

To take those plans forward, the government published a white paper on football governance earlier this year. It has now published its response to the feedback it received to that consultation.

In its latest paper, the government has confirmed that it remains committed to establishing a new independent regulator with a “tightly defined remit focused on financial sustainability”. The body will not have powers to intervene on sporting or commercial matters, which the clubs, league bodies, and the Football Association will share responsibility for.

The government said it is “minded to set up a new body to house the regulator”, citing shortcomings in the current model of industry self-regulation as a factor in the case for reform – notwithstanding “significant moves within leagues and competitions to bolster the rigour with which ownership and director approvals are addressed that will likely be welcomed by government”, said former AFC Bournemouth chairman Trevor Watkins of Pinsent Masons.

“The industry does not have the incentives and the governance structures to guarantee the necessary behavioural and structural changes over the longer term, and government pressure is not a lasting solution to these issues,” the government said. “As such, football authorities cannot provide certainty that their policies will be designed, monitored and enforced effectively and in a way that addresses the relevant issue.”

“Furthermore, these reforms need to be designed with football clubs across all the leagues in mind, harmonised accordingly and applied proportionately. This is not possible without a strong centre to independently apply reformed rules, backed in statute, across all relevant football clubs,” it said.

Under the government’s plans, the regulator’s primary strategic purpose will be to “ensure that English football is sustainable and resilient for the benefit of fans and the local communities football clubs serve”. The regulator will oversee a licensing regime applicable to football clubs in the top five tiers of the English football league pyramid. The cost of operating the new system of regulation will be funded through a levy on clubs “proportionate to their revenue”.

The government said that legislation will establish four threshold conditions of the licence – on appropriate financial resources, suitable owners, fan interests, and approved competitions – and that each of those threshold conditions will be supplemented with detailed, specific, “risk-based” licence conditions for each club “as necessary”.

“This means regulation will be proportionate to a club’s circumstances,” the government said. “The requirements on a club might vary based on criteria like league, club size, and financial health or riskiness.”

The new regulator would also be responsible for establishing a new compulsory football club corporate governance code, which it could enforce via the appropriate financial resources licensing condition, and further tasked with developing new owners’ and directors’ tests. The government said that “clear and coherent statutory tests that root out unsuitable custodians will provide market certainty that will encourage long-term, sensible investment”.

Under their licensing conditions, clubs will also be subject to minimum standards in relation to fan engagement, with fans to be given rights to veto changes to club badges and home shirt colours. Clubs would also need to consult the regulator on their planned sale to new buyers or plans to move stadia, where the regulator would need to take account of financial considerations as well as implications for the club’s heritage and fans’ views.

The government said the new regulator will be given powers to impose “a suite of sanctions”, but that it “will take an advocacy-first approach as the default before turning to enforcement action”.

Further plans to allow the regulator to impose a new financial distribution model are also under consideration, if an acceptable solution is not found by the football clubs and existing authorities.

The government said it is carrying out a further targeted consultation with clubs and other stakeholders in relation to the detail behind its plans and would bring forward legislation to provide for the new regulatory framework when parliamentary time allows.

It said: “Whilst we understand the industry’s desire for greater certainty at this stage, further details on regulatory powers, definitions, thresholds and processes will be included in legislation. From now until the legislation is brought forward, we are continuing to work with stakeholders, as well as leading experts, to further develop the design of the policy and the details of the accompanying legislation. In general, in drafting the legislation, we will be seeking to provide as much regulatory certainty as possible to the industry whilst allowing the regulator to react to changing circumstances in a defined way.”