Football Governance Bill
“A Bill will be introduced to establish an independent
football regulator to ensure greater sustainability in the game
and strengthen protections for fans”
- The Football Governance Bill delivers our manifesto
commitment to introduce an Independent Football Regulator. The
new regulator will protect football clubs across England,
ensuring their financial sustainability and giving fans a greater
say in the way their clubs are run. It will also ensure that
clubs can't be syphoned off from the English football pyramid to
set up their own closed league while providing the certainty and
sustainability required to drive future investment and growth, so
that English Football remains a global success story.
- The Bill will provide greater protections for club heritage
and ensure responsible owners for these community assets. Most
importantly, the Government is strengthening these proposals to
ensure that fans have a greater voice in their own clubs. It will
not change the fundamentals of the game we love - but will ensure
a more sustainable future, with fans at its heart, for
generations to come.
What does the Bill do?
- Despite the phenomenal global success of English football in
recent years, the game has fundamental governance problems that
have led to excessive and reckless risk-taking at too many clubs.
Ineffective regulation poses very real dangers to our national
game, threatening the stability of the football pyramid and
impacting fans across the country. That is why the Government is
introducing legislation to ensure that English football is
sustainable and benefits its fans and communities by:
-
establishing a new independent regulator to address
financial sustainability and ensure fans' voices are
heard. The regulator would operate a licensing
system, where regulated clubs would require a licence to
operate as professional football clubs. The new regulator
would be tasked with ensuring that individual clubs are
financially sound; the overall English football system is
more financially resilient; and safeguarding the heritage of
individual clubs.
-
introducing financial regulation to improve the
financial resilience of clubs across the football
pyramid. Clubs will be required to demonstrate sound
basic financial practices; have appropriate financial
resources to enable the club to meet cash flows, including in
the event of a financial shock; and protect the core assets
and value of the club - such as the stadium. This will reduce
the risk of clubs facing financial failure, which at its most
extreme can lead to clubs ceasing to exist.
-
creating a new, strengthened owners' and directors'
test to make sure a club's custodians are suitable and
protect fans from irresponsible owners. This follows
too many cases of clubs being put at risk of administration
or liquidation due to mismanagement by their owners and
directors. Some of these acquired clubs without having
adequate finances or were involved in criminality. Some
directors made crucial financial decisions without holding
suitable professional qualifications.
-
setting a minimum standard of fan engagement and
requiring clubs to get fan approval to changes to the badge
and home shirt colours, as well as placing the strong
existing FA protections for club names on a statutory
footing. This comes after fans at clubs like Cardiff
City and Hull City had to battle to bring back, or keep,
their club's colours and badge and name.
-
requiring clubs to seek the regulator's approval for
a stadium sale or relocation. The stadium a club
plays in not only has significant value to fans but can also
be a club's most valuable asset, and the recent
administration at Derby County highlighted the issues caused
by the decision to sell the club's stadium.
-
preventing clubs from joining closed-shop, breakaway
or unlicensed leagues, such as the European Super
League. The legislation would set out a number of
duties that clubs would need to comply with in order to
obtain and keep their licence, including not playing in
competitions prohibited by the regulator, where they are not
based on merit, open competition or if they harm the heritage
of English football.
-
ensuring fair financial distributions between
leagues. When authorities cannot agree appropriate
financial flows, and the sustainability of football is at
risk, giving the regulator the backstop power to ensure a
fair financial flow.
-
establishing a ‘Football Club Corporate Governance
Code'. Clubs would be required to report annually on
corporate governance, setting out how they apply the
principles of the Code and why this is suitable for their
circumstances. The code would be developed in consultation
with industry and encourage clubs to be better run.
Territorial extent and application
- The Bill will extend and apply to England and Wales.
Key facts
- The Premier League is a global success, attracting more
viewers and higher revenues than any of its international rivals.
In the 2022/23 season the Premier League's aggregate revenue was
£6.1 billion - compared to Spain's La Liga (£3.1 billion) and
Italy's Serie A (around £2.5 billion). However, this
cannot disguise the underlying fragility of the English football
pyramid. Fundamental problems of perverse incentives, poor
governance, and defective industry self-regulation mean there is
a high and growing risk of financial failure among clubs.
- Clubs are consistently loss making and rely on external
funding. The prevailing business model exhibits a significant
reliance on owner funding to sustain consistent loss-making. In
2022/23, pre-tax losses across the Premier League and
Championship were around £1 billion, typically fuelled by high
spending on transfers and wages. Ten Championship clubs reported
wage-to-revenue ratios above 100 in 2022/23. The result has been
a steady rise in borrowing. Even with growth of 3,500 per cent in
revenue, Premier League clubs have lost almost £4 billion in the
last 30 years.
- Levels of borrowing and debt are increasing. Across the
Premier League and Championship combined, net debt was £4.7
billion in 2022/23. This shows that many clubs across the pyramid
are financially vulnerable. The unique importance of football
clubs to their fans and local communities means the social costs
of financial failures would be significant. The introduction of
an independent football regulator will help to promote and secure
the financial sustainability of clubs and reduce the likelihood
of financial collapse.
- Economic and social costs of club failures (even
administrations) would be substantial. It would be felt by a
range of parties including fans and local communities, and the
cultural heritage of English football risks being irreversibly
damaged. In addition to social impacts, such as the closure of
community initiatives and erosion of local pride, the loss of
football clubs can lead to long-term economic damage, ‘scarring'
local communities, as seen with the collapse of Bury F.C. The
impacts of club financial failures are likely to fall
disproportionately on lower income areas. Approximately 63 per
cent (73 out of 116) clubs in English football's top five tiers
are in regions where the average disposable household income is
below the UK average.
