The UK Football Governance Bill and the implications for investors

The Football Governance Bill, introduced in March 2024, aims to address financial instability and governance issues within English football by establishing an independent regulatory body, the Independent Football Regulator (IFR).

This body will have a broad mandate covering clubs across the top five tiers of English men's football. Key provisions include a licensing system, ensuring clubs adhere to set standards on financial sustainability, governance, and fan engagement. Overall, the bill represents a significant shift towards centralized oversight in English football, intended to protect clubs, fans, and the overall integrity of the sport in the UK. 

Given the positioning of the IFR and its potential impact on the English football ecosystem, we take a look at some of the key considerations for investors looking to get into this market.

Financial Distribution

• The IFR will hold "backstop" powers to intervene in financial distributions between leagues, a measure aimed at promoting financial stability across the football pyramid. 

• If the leagues themselves cannot agree on revenue sharing independently the IFR is likely to have the power to intervene and set the terms and conditions of the distribution model. 

• Under updated terms in October 2024, in an attempt to strengthen the bill, parachute payments (payments provided to relegated Premier League clubs) will now also be in scope of the IFR. 

Financial Sustainability

• One of the main objectives of the IFR is to prevent financially unsustainable practices, such as clubs spending excessively on player wages and transfers.

•  The bill responds to longstanding concerns around financial sustainability in the game, which intensified after the European Super League debacle in 2021, and financial strains caused by the COVID-19 pandemic.

Owners and Directors Test

• The IFR will enforce a strengthened owners' and directors' test.

• This will include pre-approval for significant changes like stadium relocations.

• It will also safeguard against clubs joining competitions like breakaway leagues that might destabilize English football’s traditional structures.

• The updated bill in October 2024 also saw a requirement to consider government foreign policy in new club takeover deals dropped to aim to cement the regulator’s full independence.

Fans and fan engagement

• The Regulator will now explicitly require clubs to provide ‘effective engagement’ with their supporters on changes to ticket prices, and any proposals to relocate their home ground. 

• The Regulator will now have the power to compel clubs to democratically select the fan representatives the club must engage with, rather than clubs making a unilateral decision. This will ensure meaningful engagement with as many supporters of a club as possible. 

• Rules such as this are aimed at protecting clubs, to empower fans and to keep clubs at the heart of their communities.

Summary

• We do not yet know how soon the IFR will be in place.

• The Football Governance Bill, initially introduced in March 2024, failed to pass through parliament in the UK before the general election was called in May 2024.

• The Labour government reintroduced the bill in July 2024 in which the party set out its legislative programme after winning office.

• Investors entering this market over the next few years need to be aware of the remit of the IFR and what it might mean in relation to clubs that they wish to invest in or own. 

To learn more about the football regulatory landscape or discuss tailoring our services to your needs, visit our solutions at investinsoccer.com.